Will a Debt Jubilee Happen Under the Current Administration?

Americans are in debt.

According to Experian data, the average American adult’s debt was $104,755 as of mid-2025, with Millennials and Gen X carrying the most debt out of all generational demographics. US credit card debt reached an all-time high of $1.28 trillion in the final quarter of 2025. We have also seen bankruptcy filings and foreclosures increasing throughout 2025 and into 2026. All this data points to a clear picture: Americans are struggling financially.

Over the last decade, various debt-forgiveness proposals have been put forward by grassroots organizations, lawmakers, and economists. Some have focused on a single type of debt, such as student loan debt. Others have focused on specific demographics of debt holders, like the elderly. This kind of sweeping cancellation of debt is called a debt jubilee.

Some experts believe the US is due for a general debt jubilee. But could it happen here?

What is a debt jubilee?

A debt jubilee is the cancellation of public or private debt in an effort to combat economic instability. The intention of the debt jubilee is to forgive specific debts for a large group of people, enabling a general economic restart. A debt jubilee has historical precedent, with governments and rulers throughout history enacting them to avoid economic or social crises. In fact, the idea of a debt jubilee goes all the way back to ancient Syria and Babylonia.

The US has seen some debt forgiveness and relief efforts in recent years, including large-scale debt relief following the 2008 recession and during the COVID-19 pandemic. Still, many fear the consequences of total debt forgiveness.

What kinds of debts would be forgiven with a debt jubilee?

Proponents of a debt jubilee policy point to three major areas of debt relief: student debt, medical debt, and consumer debt.

1. Student Loan Debt
2. This is perhaps the most well-known and highly contested of all the proposed debt jubilee ideas. US student loan debt totals $1.78 trillion, with federal loan debt accounting for 92.1%. Student loan debt impacts 42.7 million Americans. During the COVID-19 pandemic and after, student loan repayments were paused. Payments resumed in October 2023, and defaulted loan collections resumed in May 2025. As of January 2026, wage garnishment letters began going out to borrowers in default. At the end of 2025, 5.5 million borrowers were reportedly in default on their federal student loans.
3. Medical Debt
4. Data from 2024 shows that 36% of US households carried medical debt, totaling $194 billion in active collections. Unpaid medical debt tends to be less damaging to credit reports than other kinds of defaulted debt, but it can still lower credit scores and hinder financing options. With rising health insurance costs, more middle- and working-class families are being priced out of medical care.
5. Consumer Debt
6. As stated above, US credit card debt reached its highest level in 2026. Inflation, high living costs, and incompatible income growth mean more Americans are using credit cards to pay for basic necessities. Of all credit card holders, 46% carry a balance month to month.

A debt jubilee in one or more of these areas could stimulate the economy, allowing consumers to spend less money on debt and more money on goods, entertainment, and services. Supporters of a debt jubilee also point to the opportunity for increased economic and social mobility, allowing individuals and families to build wealth and improve their quality of life—thereby limiting the need for social services.

What are the criticisms of the debt jubilee?

Critics of a debt jubilee argue that large-scale debt forgiveness would cause severe economic disruption. There is concern that widespread debt forgiveness could threaten many of our financial systems that rely on debt to function. For example, while a debt jubilee would help the poor, it could also destroy retirement assets for 401(k) holders whose investments are tied up in the system. Many detractors point to a potential moral hazard—they believe it will lead to increased irresponsible spending. They argue that debt forgiveness is unfair to those who have already paid off their debts.

Still, the idea of a debt jubilee is thought-provoking. Proponents and critics alike can agree that the economic conditions in the USA are difficult enough that debt struggles are an issue for many American households.

What are your thoughts on a debt jubilee?

Veitengruber Law is an experienced NJ law firm focused on debt management, bankruptcy, foreclosure defense, and more. We work with people struggling with unmanageable debt. While a debt jubilee continues to be hotly debated on the national stage, we can help you find solutions to financial issues today.