Illinois Congressional Candidate Junaid Ahmed has had first-hand experience with the burden placed on people by student debt. He and his wife paid her student loan to the tune of several hundred dollars a month. While they were under the impression that they had been paying down the balance of the loan over the years, a deep-dive into their monthly statement rocked Ahmed to his core.
“To my surprise, we owed double what we had owed several years ago,” said Ahmed, “I picked up the phone and called them. I thought there was an error.”
There was no error. The original lender had sold the loan to a processor, and Ahmed found that he and his wife had only been paying on the interest. The balance hadn’t budged. In fact, it had ballooned.
Predatory Lending Tactics
When kids directly out of high school sit down and agree to take out loans to go to school, they are often unaware of the repercussions of that decision. School costs have risen exponentially in the last twenty years. The average cost of college has more than doubled since the year 2000, with an annual growth rate of 6.8%. Still, even with the rising higher education costs, the narrative pushed on high school students was that a four-year college education was critical to success and achieving the proverbial American dream. Students were pressed to make a college education happen—no matter the cost.
Now, as many of those students venture out into the world outside of college, they find that American dream hard-won. The albatross of student loans around their necks is preventing them from homeownership, being able to start families, or having the ability to save for the future. The student loan burden is pinching the middle class, especially.
“We could have done so much more with that money,” said Ahmed.
The Gut-Punch of Inflation
Now, more than ever, the punch of inflation is hitting Americans regularly. As of late, inflation has been a keyword in economic and social politics discussions.
“Very young people — children graduating from high school — were lured into a system not understanding that the cost of higher education has been outpacing inflation for decades,” Ahmed explained.
Students have been absorbing the rising administrator salary and building costs to the detriment of their future spending capabilities. Worse yet, the promise of high wages that come with four-year degrees has not materialized for many. Wages have remained relatively stagnant, while prices on everything from food to housing have risen astronomically.
The economic impact of canceling student debt can vary, depending on how much debt is canceled and who the cancellation recipient is. A widespread cancellation of student debt would be one of the most significant wealth transfers in American history. It would most certainly have an effect on the economy at large. Currently, over 45 million Americans are hamstrung by student debt. The problem disproportionately affects black and brown communities, who find it nearly impossible to build generational wealth when burdened by excessive student loans.
Canceling student loans could have the positive outcome of returning millions of dollars to the pockets of Americans, allowing them to build wealth, participate in the economy, and putting them closer to achieving that elusive American dream that was initially sold to them.
A Question of Outcomes
Another issue running parallel to rising inflation and decreased spending by those shackled with debt is the issue of outcomes. Completion and outcome rates at colleges and universities are falling, and the problem of student debt still follows those students who do not complete their degrees. They signed on the dotted line at the beginning of their studies, and they still must pay back their loans whether they complete their schooling or not.
“Those who haven’t graduated still have immense student debt with no way to pay it back,” Ahmed said. “We need to hold administrators accountable. Students can’t keep funding expensive buildings named after donors. There needs to be a creation of systems where students can succeed.”
The Necessity of Canceling Student Debt
To Congressional Candidate Junaid Ahmed, the question is not should we cancel student debt; the question is why we haven’t already. In Ahmed’s opinion, it is a move that must be made.
“We need to support expunging student debt because the economy demands it,” said Ahmed. “We need whole-scale reform of the entire higher education system. It has to be made affordable again.”
The higher education system is one that simply no longer functions as intended. It is one that could continue to financially devastate generations to come, without massive steps towards change.
Some have been loath to discuss expunging debt that others have taken on. One of the most-used arguments against the cancellation of student debt is one of “I paid for mine, why can’t you?” Debt cancellation has been viewed as a progressive stance supportive of government handouts with no emphasis on the bootstrap ingenuity that capitalists love so much. Contrarily, Ahmed sees the support for cancellation as very pro-capitalism.
“Once you have a whole generation worrying about student debt, the economic health becomes so bad that they are no longer contributing to society in a meaningful way. That’s bad for capitalism,” Ahmed explained.
Ahmed does not envision a one-time cancellation as a quick fix to the student debt crisis. He sees an entire overhaul of the higher education system as crucial. Strong policies such as those ensuring access to tuition and debt-free public colleges or universities, investments into trade schools and minority-serving institutions, and closing equity gaps in higher education will allow students to secure their future without fearing financial risk.
Ahmed stresses that significant actions like what he is proposing must be collective. The student debt crisis has burdened multiple generations, and its adverse effects are resoundingly clear.
“Education is a human right. We need to guarantee the right to a good, public education for all,” said Ahmed. “Canceling existing student debt and placing a cap on it for the future would free millions of Americans from financial burden and allow them to build their lives—encouraging innovation and entrepreneurship that would undoubtedly benefit individuals and our communities.”