Why a $2,000 Stimulus Is Great for You — Unless You’ve Got Student Loans
You may be familiar with the game “Would You Rather?” In the party game, players choose between two equally bad — or equally good — scenarios. It can lead to lots of speculation, conversation, deep thought and laughs. But if you’re paying off student loans, the answer to the question, “Would you rather get $2,000 this month or have your student loan debt wiped out?” should be a no-brainer.
Students who graduated in 2019 left college with an average debt of $30,062, says U.S. News & World Report. A $2,000 stimulus payment per person might help to pay rent, utilities and your car loan for a month. But having up to $50,000 in debt forgiven could open the door to financial freedom for the 42 million Americans facing student loan debt.
If President-elect Joe Biden follows through on his promise to send $2,000 stimulus checks to Americans “out the door immediately” upon taking office, however, those with student loan debt may not have a choice between $2,000 cash now or tens of thousands of dollars in loan forgiveness.
What does one have to do with the other?
First, paying off student loan debt is an expensive choice. Loan forgiveness could cost the federal government $400 to $450 billion, according to Forbes. And stimulus checks, while also expensive, would put money in the hands of more people.
I got my stimulus. I'm going to use it to cover half of this month's student loan payment ????
— NP Amms (@thatgirl409) January 2, 2021
The proposed stimulus checks could be part of The Heroes Act, a stimulus package that was stopped by Republicans in Congress last year. The act also included $1 trillion in state and local aid.
States could, in theory, use that aid to distribute and administer COVID-19 vaccinations faster and more effectively. Giving more people immunity to the virus could help jumpstart the U.S. economy better than any aid packages, but states are struggling right now. The Centers for Disease Control and Prevention stated that more than 70% of our vaccines still have not been used.
When it comes to more coronavirus aid — for businesses, states and individuals — or student loan debt forgiveness, we face a classic case of the good of the many outweighing the needs of the few. Even if the few, in this situation, total 42 million Americans facing student loan debt they might never pay off.
Of course, a compromise is possible. Biden could opt to forgive up to $10,000 in student debt per person, or put income caps on debt forgiveness, and still distribute stimulus checks.
Gave my stimulus check to my student loans. I hope they enjoyed it.
— mar (@maybemarlee) December 31, 2020
But in the midst of negotiations for another coronavirus stimulus package and vaccine distribution woes, student loan debt forgiveness could be tabled in favor of more immediate concerns.
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