Is it fair to forgive student loans?
President Biden last week unveiled his long-awaited plan to write off some student loan debt. Biden said his administration forgive up to $10,000 in federal student loans for borrowers earning less than $125,000 per year, and an additional $10,000 for Pell Grant recipients under the same income threshold. Biden also extended the coronavirus-triggered repayment moratorium, which was set to expire at the end of August, until December 31. driven repayment plan must pay monthly. Biden said he knows people on all sides of the issue will be unhappy with parts of his plan.
Some progressives have called for deeper reductions in outstanding student loans, arguing that generational wealth disparities burden black and Hispanic families with heavier student debt, and inequality is compounded after graduation because minority graduates typically earn less, making them more likely to default and preventing them from improving their financial situation by starting businesses or buying homes. Senate Minority Leader Mitch McConnell (R-Ky.), echoing complaints from other conservatives, called Biden’s plan a ‘grossly unfair redistribution’ of wealthand Senator Ted Cruz (R-Texas) said so amounted to a gift to any “lazy barista who wasted seven years in college studying completely useless things”. Is Biden’s student debt policy fair?
It’s unfair and reckless
Biden’s Student Loan Forgiveness Plan Is a Mistake, and, with a ‘Breathtaking’ $330 Billion Price, It’s Expensive, says Althea Cole in Idaho Gazette. As The Washington Post noted in an editorial, it’s regressive, because it takes money from the larger tax base, which is full of people who didn’t go to college, and hands it over to people with valid degrees. It also âallows tuition fees to continue to riseâ and ârewards financial decisions that are naÃ¯ve at best and downright reckless at worst.â All it will do is âinspire a whole new generation of Americans to make the same simple and consequential mistake borrowers before them made: buying an education they canât afford.â And why? To buy votes in November? âRegardless of what you think of loan recipients who will benefit in ways that others will not, three things are clear: what is right is not always right; what is right is not always fair; and the actions taken by the President and his Department of Education are neither fair nor just.”
Every allocation of federal resources is unfair to someone
âI understand that it is unfairâ says Megan Schrader in The Denver post. It is understandable that many people feel slighted because they have sacrificed to repay their student loans on their own. But Schrader and her husband came from “upper-middle-class families who were able to get us through college debt-free,” and when they left college they “were able to buy a house in the depressed market of 2010 and get the $10,000 First Time Homebuyers Government Grant.” Was it fair to people who were not entitled to the same largesse from the government? When the banks betting on bad mortgages were on the brink of collapse in 2008, “(the equivalent of betting big on a college degree that went south), the feds bailed them out.” Wouldn’t you rather “bail out 18-year-olds for bad choices” than Wall Street bankers? With their loans canceled, these borrowers will be able to pump their savings back into the economy and perhaps cover a down payment on a home. “Is it unfair? Yes. Is it good public policy? Absolutely.”
It rewards elite institutions for producing graduates without useful skills
Higher education is “supposed to be an investment” in the student’s future, says Allysia Finley in The Wall Street Journal. “The real problem is that federal subsidies have distorted this investment and resulted in a misallocation of human capital. America’s bureaucratic and educational complex has produced too many young people with too much debt and too few skills that employers want, and not enough of skilled workers. they do.” We’ve all heard that college graduates earn more than people with only high school diplomas, but that’s not always true. An anthropology major from Columbia â(annual award $85,967)â would do more work for Deere & Co than doing something related to their degree. Biden’s bailout will only benefit “woke” universities and help them attract students who might otherwise get marketable “vocational training” at coding boot camps and trade schools that often aren’t “eligible.” with federal aid. It’s not “good for the US economy or democracy.”
There’s nothing elitist about forgiving student loans
Ted Cruz’s claim that Biden is taking money from the working class for the benefit of the unworthy “betrays an ignorance of working-class life in this country.” says Jamelle Bouie in The New York Times. “To work as a truck driver or medical technician or building inspector or any number of other similar blue collar jobs, you need training, licenses, certifications. People go to school to meet these requirements”, often relying on the same federal government. student loans to pay for tuition that students use. And many blue-collar workers are also college-educated, racking up debt without earning a degree. Add to that the fact that most people who stand to benefit from Biden’s plan earn less than $75,000, including a disproportionate number of young and black people, and it’s clear that this debt forgiveness would help those who have the most. suffered “in the history of capitalist inequality in the United States.”