Student loan debt just hit $1.53T. Will the government forgive any of it?
In the second quarter of 2018, student loan debt reached a staggering $1.53 trillion -- a burden that’s largely being borne by millennials -- but the Trump administration has no plans to forgive any of those loans.
“We would like people to repay their debts,” Director of the Office of Management and Budget Mick Mulvaney said. “We think that’s a fair thing to do.”
Because the federal government is now the largest originator of student loans, Mulvaney said it’s “not surprising” that loan debts have skyrocketed. And as the acting director of the Consumer Financial Protection Bureau, he said the agency has been tasked with educating young people about taking out a loan, since it’s largely the first major debt they’ve taken out.
“It’s like, look, if you’re going to borrow this money make sure you’re using it to get an education that can get you a job that helps you pay it back,” he said.
But even Federal Reserve Chair Jerome Powell has warned that burgeoning student loan debt could derail an otherwise-flourishing economy by hindering people’s “economic life” and hurting their credit ratings. In fact, according to a new survey from the NeighborWorks America at Home, 59 percent of millennials knew someone who delayed buying a home because of student loan debt.
Although he said it was Congress’ problem to tackle, he wondered why student debt couldn’t be discharged as bankruptcy.
And in March, when asked whether student debt could hurt economic growth in the long-run, Powell said, "It will over time. It's not something you can pick up in the data right now. As this goes on and as student loans continue to grow and become larger and larger, then it absolutely could hold back growth."
Mulvaney, however, warned that if people defaulted on their loans -- or if the government offered them some type of financial break -- that would ultimately fall on the taxpayers.
“Face it: If you’re borrowing money right now to go to school, you’re borrowing from the taxpayers,” he said. “And if you ask for loan forgiveness, what that really means is you want other taxpayers to give you money to go to school and that’s not part of our program.”