Over 1.3 million Michiganders hold around $50 billion in student loan debt, according to the latest data from the U.S. Department of Education. The Biden administration's plan to forgive $10,000 of loan debt, and up to $20,000 for those students who had Pell grants, will have a significant effect on those people and on the economy as a whole.
Over half of U.S. student loan borrowers owe less than $20,000 on their student loans. In Michigan, over 700,000, or 53.8% of the state's student loan borrowers owe $20,000 or less.
Ford School professor Katherine Michelmore told the Oakland Press this proposal is significant because student loan debt touches a lot of different facets of the economy.
"Making monthly payments on student loans means there's less money to spend on other things," she said. "That's money not circulating in the economy. Forgiving $10,000 to $20,000 of student debt is huge. This policy could wipe out the debt of millions of borrowers today."
Michelmore said at the root of the rising costs at colleges and universities is the erosion of public financial support for these institutions.
"Over the last several years, state funding to public colleges and universities has gone way down, which means that public institutions have had to find other ways to fund education, such as admitting more out-of-state and international students who pay more to attend those schools, and by raising tuition."