Forgive all student loan debt? A former U.S. Education Secretary explains why it will help the economy

Former U.S. Secretary of Education John King has a bold proposal for speeding the nation’s economic recovery from the coronavirus pandemic and putting millions of people on a better path to achieve financial security: Forgive all $1.7 trillion Americans still owe on their student loans.

King, who served under President Barack Obama, told CBS News that the federal government paid roughly 80% of the cost of college for students through its Pell grant program in the 1980s. But the government’s move in recent decades to cut its investment in higher education has left many students deeply in debt, with today’s Pell program covering less than a third of annual tuition for grant recipients.

“We’ve got to make up for that policy mistake of the last 40 years by addressing the crushing burden of student debt that so many young people feel today and fixing the problem going forward by committing to debt-free college in the United States,” King said.

More than 43 million Americans — nearly 13% of the U.S. population — carry student debt, according to the St. Louis Federal Reserve. The average borrower owes about $37,000.

That anvil of debt often weighs borrowers down for years, forcing them to postpone plans to buy a home, start a business or even have children, King said. Other prominent lawmakers, including senators Elizabeth Warren and Chuck Schumer, have also urged the government to cancel student loans

The White House, dating back to 2020 under President Donald Trump, placed an interest-free forbearance on student loan payments during the pandemic. As a result, since March 2020 nearly 37 million borrowers have been excused from making payments on their student loans — an estimated $195 billion worth of waived payments, according to the New York Federal Reserve.

But the forbearance ends May 1, and many borrowers are worried about being able to resume payments. 

Current Education Secretary Miguel Cardona told CBS Mornings last week that Biden administration officials are talking internally about how to offer more student debt relief. 

“We’re definitely, since day one, putting borrowers and students at the center of conversations,” Cardona said. “In just one year, President Biden has forgiven over $17 billion already.” 

Separately, the Education Department has stepped up efforts to cancel debt for thousands of former students at for-profit colleges after evidence showed that their schools may have misled them into loans. 

It’s not enough to cancel past school loans, said King, who is now running for governor in Maryland. The U.S. government must also ensure that future college graduates do not end up weighed down by student debt, he said. Two ways to help that cause is to make community college free and to increase the amount each student receives in Pell grants, King said.