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We’ve become a nation that treats symptoms versus the cause. Sometimes it’s necessary, but it feels like it’s become the default. Look no further than student loans.

The student loan payments pause was extended again – potentially setting up a scenario for President Biden to make good on his campaign trail promise of forgiving $10,000 per borrower before the 2022 midterms.

Though controversial, 62% of voters support student loan forgiveness, while nearly 30% said that student loan debt shouldn’t be forgiven at all. 10% had no opinion.

No matter where you stand, we’re treating the symptom – $1.75 trillion in student loan debt versus the cause – the cost of higher education. Over the last twenty years, average private university tuition and fees have grown 144%, out-of-state public tuition and fees up 171%, and in-state public tuition and fees up over 211%

Average tuition growth among national universities from 2002-2022

Student loan forgiveness of any amount would help nearly 46 million individual borrowers. However, reducing student loan debt by $10,000 or completely wiping it out does nothing to address the root cause.

The institutions aren’t the only problem. Lenders will continue to pump out loans, regardless of the sticker price or the student’s ability to pay them back, because roughly 93% are backed by the federal government and generally can’t be discharged in bankruptcies.

Over the preceding five years, an average of 19,731,593 students enrolled in higher education. An expected 19,778,000 students will enroll in 2022. If we assume an even split between private, out-of-state, and in-state enrollment, students will pay an average of $27,881 for 2022 tuition.

Using these numbers, a college senior would end the year with $111,525 in total costs. $10,000 in forgiveness would wipe out just 9% of the total debt – but what about future students? They’ll miss out on the forgiveness, and tuition will continue to outpace inflation by 2-3x.

Even if 100% of the $1.75 trillion were forgiven, the root cause is still there. Unfortunately, student loan forgiveness is like putting a Band-Aid on a bullet wound.

Regardless of where you stand on loan forgiveness, we can likely agree that the student loan problem won’t change unless we start treating the cause versus the symptoms. 

Opinions expressed are those of the author and are not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice.