177. Should Student Loan Debt be Forgiven? (English Vocabulary Lesson)

Tom Wilkinson

Host and founder of Thinking in English, Tom is committed to providing quality and interesting content to all English learners. Previously a research student at a top Japanese university and with a background in English teaching, political research, and Asian languages, Tom is now working fulltime on bettering Thinking in English!

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University can be a very expensive experience for young people across the world, and millions of people need to take out big loans to afford tuition fees and living expenses. The US government has just announced a plan to forgive some student loan debt… but is this a good idea? Let’s discuss this topic while practicing some useful financial vocabulary!

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Vocabulary List

Undergraduate (adj) – related to a university student who has not yet taken a first degree

My undergraduate degree was in History and Politics

To afford (v) – to be able to buy or do something because you have enough money or time

I don’t know how he can afford a new car on his salary

Loan (n) – an amount of money that is borrowed, often from a bank, and has to be paid back

He is trying to get a $50,000 loan to start a business

To owe (v) – to need to pay or give something to someone because they have lent money to you

I owe James £10

To forgive (v) – to allow someone to not have to pay a debt

Should rich countries forgive some of the debts owed by the poorest countries?

To take on something (Phrasal v) – to undertake a task or responsibility, especially a difficult one

I took on debt so I could afford university

To pay something off (Phrasal v) – to pay back money that you owe

We should be able to pay off the debt within three years

Disproportionately (adv) – in a way that is too large or too small in relation to something else

The disease disproportionately affects young people

Depending on where you come from, higher education is not necessarily cheap. Of course, in some countries it is free or just a few hundred dollars a year. I paid £9000 a year for my undergraduate degree (not including living costs) – which is pretty expensive.

International students, however, had to spend even more to study the exact same degree and take the same classes. And universities and colleges in the US can charge incredible amounts – a friend of mine starting law school in California is expecting to pay hundreds of thousands of dollars over the next few years.

The problem is that not everyone can afford high tuition fees. Not everyone has wealthy parents willing or able to support them through education. Most people are not able to get academic or sporting scholarships – and a lot of universities aren’t able to offer scholarships or bursaries. How can students attend university in this situation?

What are Student Loans?

Loans. The answer is loans. Student loans are essential for millions of people around the world as they allow people to afford the tuition fees and pay costs. While I received some scholarships and bursaries as an undergraduate, I still needed to take a lot of loans and I am currently in a lot of debt. I don’t have a wealthy family and full scholarships are very rare in the UK.

Fortunately, UK student loans are a relatively “nice” loan (if that is possible…). The repayment structure is not too strict on graduates, and I don’t need to pay anything right now as my income level is very low (please support me on Patreon…).

However, most of the student loans around the world are not so nice. Especially in the Americas, the rising cost of higher education has pushed many people into crippling debt! In 2020, the total amount of student debt owed by Americans was $1.71 trillion… twice the amount 10 years earlier. Over 40 million Americans have student loan debt, and 40% of graduates owe between $20,000 and $100,000.

High levels of loan debt can seriously impact the lives of young people just starting their careers. Many of my friends will never be able to pay of their student debt – in fact most of my peers’ monthly repayments only cover the interest increases! And debt is likely to increase as university becomes increasingly expensive.

What should we do about this? Some people believe that governments should forgive some or all existing student loan debt. US president Joe Biden recently announced he would be cancelling up to $20,000 of student debt (although it will be a much lower number for most students). Is this the right approach? Should existing student loan debt be cancelled?

Let’s think about both sides of this argument. Like in my previous debate episodes, I will introduce arguments from proponents and opponents of student loan forgiveness. I want you to listen to my arguments, think in English, and decide yourself whether you support student loans forgiveness!

Should Student Loan Debt be Forgiven?

Yes – We Should Forgive Student Loan Debt!

First, proponents of forgiving student loan debt believe that the high amount of debt is bad for the economy. Student loan debt reduces spending and makes it harder for new businesses to grow. Business owners and founders stuggle with loan repayments and can find it difficult to get business loans if they have high student debt.

With less small businesses, there are less jobs and less spending – and this means lower national income. Moody’s Sovereign Risk Group has estimated that “U.S. real GDP could be boosted on average by $86 billion to $108 billion per year” with full debt forgiveness.  

Student loans also disproportionately affect poorer and minority students. In the US, black students tend to graduate with twice as much debt as white students. Minority students, especially those from poorer backgrounds, often need to take on higher levels of debt to attend university. Forgiving debt could help to address issues with racial inequality!

Moreover, student loan debt has serious consequences on young people’s journey into adulthood. One study suggests that for $1000 of student loan debt, American women’s chances of getting married decrease by around 2%. Another study suggests that every $1000 of student loan debt lowers the chances of owning a house in the US.  People with debt save half the amount for retirement than those without student loan debt.

Choosing to enter college and study should not damage your chances at building a life, buying a home, and getting married. Yet, for poorer students, this is often the reality!

No – Student Loan Debt Should Not Be Forgiven

On the other hand, there are a lot of people against student loan forgiveness. One of the major arguments used by opponents is that people should be held responsible for their own decisions.

While many people see university as an essential or necessary condition to getting a job, the truth is that you don’t need to go to college – it is your own choice. A high number of Americans believe loan forgiveness would be unfair to those students without loans or who have already paid off their debt.

In reality, less than 20% of Americans have student loan debt… why should the government offer help to these people while the other 80% of the country are ignored? Forgiving debt would undermine the idea that individuals should be responsible for their own economic decisions.

Furthermore, it has been suggested that student loan debt forgiveness disproportionately helps rich graduates. Why? Well rich graduates tend to be people with the higher levels of debt. Any universal forgiveness programme would benefit these wealthy individuals.

Students from rich families borrow twice as much as students from poor families. Lawyers, doctors, and other similar professions hold around 40% of all student debt in the US. And the top 25% of wealthy people in the US have 50% of all student loan debt. These are the people who would benefit most from loan forgiveness – people who don’t necessarily need it.

Loan forgiveness only benefits people who actually went to college – 90% of children from high income families enter college compared to just 35% from the poorest families. People who attend college earn more on average than those who don’t go to college. And the majority of debt is held by people with master’s degrees and PhDs. Surely the government should be helping those who did not attend college.

And finally, loan forgiveness programmes do nothing to deal with the main problem – high tuition fees. In the US, there are already multiple different loan forgiveness programmes for doctors, nurses, teachers, military members, and more. Yet, we still have a debt problem.

A real solution would address why students are forced to take out such large loans to study, rather than reduce their levels of debt without tackling the real problem!

Final Thought

What do you think? Should student debt be forgiven? After listening to both sides of the argument, has your opinion changed?

On the one hand, student loan debt negatively impacts the economy, disproportionately affects minority students, and makes marriage and house ownership less likely. On the other hand, it is a personal choice to take out a loan, debt forgiveness helps rich people the most, and it fails to solve the real problem of high education costs.

What do you think? Should student loan debt be forgiven? How is the situation in your country? Did you need to take out a student loan to study at college?

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