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๐ŸŒˆ Abstract

The article discusses President Biden's executive order to forgive billions of dollars in student loan debt, which has received mixed reviews. It examines the nuances of the student debt crisis, the potential benefits and drawbacks of the debt relief plan, and the underlying issues in the higher education system that contribute to the problem.

๐Ÿ™‹ Q&A

[01] The Student Debt Crisis

1. What is the current state of the student debt crisis in the United States?

  • The student debt load in the U.S. has reached $1.6 trillion, affecting 45 million people.
  • Student debt now accounts for 36% of all non-housing debt in America, up from 12% in 2004.
  • Before the pandemic, 7 million people had defaulted on their student loans, with 70% of them not having completed college.

2. How does Biden's debt relief plan address the student debt crisis?

  • The plan aims to shrink the size of the "student debt tumor" by 20-40%, at an estimated cost of $300 billion to $1 trillion over 10 years.
  • The plan will provide up to $20,000 in debt relief for Pell Grant recipients and up to $10,000 for other borrowers, with an income cap of $125,000.
  • The plan also extends the moratorium on loan payments and caps repayment at 5% of discretionary income.

3. What are the potential drawbacks of the debt relief plan?

  • Many taxpayers, including those who did not attend college or have already paid off their loans, are unhappy about having to bear the cost of the relief.
  • While the plan targets lower-income borrowers, some higher-income individuals may still benefit, which some view as a "bailout for the wealthy."
  • The plan addresses the symptom (debt) but not the underlying issue of rising college costs, which the author argues needs to be addressed.

[02] The Higher Education System

1. What are the key issues with the higher education system that contribute to the student debt crisis?

  • The price of college has accelerated three times faster than inflation over the past five decades, with Pell Grants now covering only 30% of tuition costs, down from 80% previously.
  • Tuition has risen three times faster than U.S. college enrollment since 1990, making higher education a "luxury good" subsidized by student loans.
  • The author's own institution, NYU, charges over $74,000 per year, with many students borrowing more than they earn two years after graduation.

2. How has the higher education system become more exclusive and less accessible?

  • The acceptance rate at UCLA, where the author applied, has dropped from 74% to 9% over the years.
  • The author argues that the current system has allowed the beneficiaries of public education to "entrench their own wealth and influence and limit new entrants into the market."
  • This has contributed to age inequality, with the average 35-year-old being 19% poorer than the average 35-year-old 30 years ago.

3. What are the author's suggestions for addressing the underlying issues in the higher education system?

  • Restore higher admission rates (e.g., 76%) and Pell Grant coverage (e.g., 70% of tuition costs).
  • Explore different formats of higher education beyond the traditional four-year degree.
  • Hold universities accountable for rising costs and high student loan default rates.
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