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BIRMINGHAM, Ala. (WBRC) – President Biden released a plan to erase up to $20,000 in federal student loans for borrowers and a local economist is encouraging people to ask more questions.
The Associated Press reports about 43 million Americans have federal student loan debt, totaling more than $1.6 trillion nationwide.
Some people are excited about the forgiveness plan while others are concerned.
“We shouldn’t be making statements, we should be asking questions,” said Ben Meadows, an assistant professor of economics at UAB. “Is this the most bang for our buck we can get when it comes to education?”
The proposal forgives hundreds of billions of dollars in student loan debt.
“In effect, we’re rewarding folks who took out student loans over a narrow band of time and not rewarding those outside that,” said Meadows.
He believes there’s a bigger picture to talk about.
“From an economic framework, we think a lot about opportunity costs,” he said. “The cost of something is not the dollar amount. It’s what you give up to get it and I teach this in my intro class the very first day. When we look at forgiving $10,000 of student loans across the United States, what are we giving up?”
Meadows says we could be losing the possibility of investing into future students.
“As an economist who studies education, this just gives me a lot of pause,” said Meadows. “I think a $300 billion investment in K-12 education might be a better bang for our buck or if we’re thinking about just higher education, what if $300 billion was devoted to Pell Grants so more needy college students could get into college? But instead, we are devoting $300 billion to folks who have already made their educational decisions.”
While Meadows says he doesn’t necessarily have the solution, he hopes more people will ask more questions.
“I think we should all take a pause and think about, is this the wisest, biggest bang for our buck with $300 billion?” asked the economist. “That’s the opportunity cost.”
The student loan forgiveness plan is not official and it is expected to bring lawsuits.
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