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Student loan forgiveness good or bad idea for 2021?

Published: Dec. 1, 2020 at 8:28 AM EST
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LEXINGTON, Ky. (WKYT) - There are calls for student loans to be forgiven, others say it primarily benefits the top half of earners already. Retirement planning advisor Josh Smith of Strategic Wealth Designers joined the newscast to talk about the pros and cons of the discussion. President-elect Joe Biden has said he will consider forgiving up to $10,000 in student loan debt per person when he takes office in January. If this actually happens remains to be seen. Smith says it is likely to create more division than unification among the nation.

“Right now, the economy is hurting, people are hurting as they deal with all the lockdowns,” Smith says. “To some forgiving $10,000 in student debt seems great, but to others, it seems unfair as they’ve scraped and clawed to pay off their debt through hard work. The majority of those holding student debt is in the top 40% of all earners in the country so those who didn’t go to college and who are struggling to make ends meet feel overlooked by this proposal.”

The bigger potential roadblock for the proposal to be passed is if a president has the legal authority to enact such a measure while bypassing Congress. Smith says it is unlikely that the action would take effect anytime soon without the blessing of Congress.

“If the House and the Senate are not on board with the idea, it’s not likely the president could issue an executive order that would hold up in a court of law,” Smith says. “It is really going to need bipartisan support to go anywhere. The lawsuits would come from many directions if executive action was taken on this proposal. This is not a red and blue issue it’s a fairness issue.”

For now, investors and Wall Street will keep an eye on the new president taking office but not be phased simply by the general discussion around student loan debt. With the coronavirus likely being near an all-time high at the turn of the year and the economy struggling while America tries to remain open, the stock market has greater topics of interest at this point. To see additional stories surrounding business and economic news for the Lexington area, visit https://WKYT.com/MoneyMatters and if you have a question for Josh send an email to info@swdgroup.com.

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