BUFFALO, N.Y. (WIVB) — Student loans have become the largest source of consumer debt in this country, with close to 50-million Americans owing more than a trillion-and-a-half dollars on those loans.
The issue, can the economy stand to cover all that debt or can it survive if it does not?
By the time the average student graduates from college, he or she will owe nearly $50,000 on their student loans.
That $1.6 trillion they owe is a drain on a generation of millennials.
New York Senator and Senate minority leader Chuck Schumer is calling on President-Elect Joe Biden to order forgiveness of all student debt up to $50,000 which would wipe out most debt for the average college graduate.
“The bottom line is that college should be a ladder up, but student debt makes it an anchor down,” said Schumer.
Schumer and many economists believe all that student debt is a drag on the economy; millenials are not buying homes, or cars, or other goods because of it.
“They stand in the way of people getting the job they want, they stand in the way of buying a home, of starting a family, of buying a car, and they hurt our economy dramatically,” he said.
Elise Murphy, a certified financial planner at Level Financial Advisors, points out there are other student loan proposals all over the map.
“We’ve got some extreme proposals, some in the middle, and some on the other end that they don’t want to provide any relief at all,” said Murphy.
There is also an important stipulation in Schumer’s plan limiting the income of the borrower to $125,000, which Murphy says would affect graduates differently based on their zip code.
“Depending on where you live and what your costs of living are because they can vary significantly if you are in rural America versus a big city,” said Murphy.
Forgiving student loans would fall on taxpayers, and there is disagreement over who would be responsible.
President Trump froze collection activity, and the Education Department has cut the interest rate to zero.
But the power to forgive loans, many say falls on Congress.