On the Matter of Student Debt
Why President Biden’s Plan to Forgive a Fraction of Student Debt Was Morally Defensible
This essay from Civic Way’s global democracy series was written by Will Arrington and edited by Bob Melville. Will is an advisor to Civic Way with a Bachelor of Arts in Political Science from the University of North Carolina at Chapel Hill. Will, a former Peace Corps volunteer, works in Washington DC. Bob is the founder of Civic Way, a nonprofit dedicated to good government, and a management consultant with over 45 years of experience.
The question of whether the government can, or more importantly, should, forgive all or some of the outstanding federal student loans is a contentious one.
On the one hand, many feel that student debt is a problem that has grown out of control and demands intervention. Recent estimates indicate the amount of student debt in America is 1.7 trillion dollars, more than is owed in credit card or mortgage debt. The average student borrower owes more than $35,000.
On the other hand, many feel that taking on student debt is ultimately a personal decision, and that taxpayers should not feel obligated to pay off any of it. They point to estimates that the average college graduate will make over a million dollars more in their lifetime than one who does not attend college.
A recent plan by President Biden would have erased up to $20,000 of student loan debt but was blocked by the Supreme Court in a 6-3 decision (the six conservative justices voted as a bloc). At the center of the Court’s argument was that such a plan cannot be unilaterally made by the executive branch. Many rejoiced. Many others were furious.
Sure, I can see why people would be angry about the plan or about student debt in general. Many have struggled over the years to pay off thousands of dollars in student loans. Those who did pay off their loans in full (especially recently) could understandably feel cheated.
Conservatives generally believe in leaving the government out of our lives as much as possible—with some exceptions like reproductive health and libraries. Perhaps not entirely incorrectly, cynics have criticized student debt relief schemes as a ploy to win the support (and votes) of young people.
Our founding fathers believed that executive powers should be strictly limited, and it was on those grounds that the Supreme Court majority made its decision. Logical legal arguments have been fielded as to why this minor attempt to restructure student federal debt was the wrong way to attack the underlying problem.
Still, even if doomed to failure, the President’s plan was a morally defensible step to take in the face of crushing student debt.
There are a few reasons for this. The first involves the hypocrisy of those who favor the forgiveness of other private loans. Many of those leading the charge against Biden’s plan were “conservative” icons who preached about the moral obligation to pay back loans no matter the circumstances. While a good principle, there is evidence that they do not think the principle applies to them.
Marjorie Taylor Greene called the plan “completely unfair” despite having nearly $200,000 in COVID PPP loans forgiven by the government. This can be said of many Republican politicians. The White House named 13 Republican representatives who had hundreds of thousands of COVID-related debt wiped away. While the PPP loan program was designed with forgiveness in mind and many Democrats also participated, the double standard is clear. If a loan is never to be forgiven—according to conservative principles—the PPP loan program should shackle recipients for the rest of their days.
This double standard also applies when the government forgives similar private sector debt. Government bailouts have been a mainstay of American politics dating back to 1792, when Alexander Hamilton authorized the first federal bank to purchase stocks to prevent a meltdown of the fledging American securities industry.
The government has initiated multi-billion-dollar bailouts of private industries several times in the past 50 years, most recently in 2020 when they bailed out the American airline industry due to the pandemic. While many Americans complain about the way these funds are used (the backlash to lavish bonus payments to banking executives in 2008 comes to mind), there seems to be little opposition to these sorts of bailouts in principle. In this context, calling student loan forgiveness unfair seems hypocritical.
Second, the argument that we should never forgive or restructure student debt is at best amoral, particularly if the argument is rooted in the self-centered perspective of “why should I help somebody that isn’t me or a loved one?”
Should we oppose aid to victims of natural disasters if we are unaffected? Should we have opposed the TARP program (problematic as it was) if we were immune to the 2008 economic crisis? Should the government have done nothing during the COVID-19 pandemic? Faced with such crises and the refusal to help , wouldn’t you be infuriated—not to mention bitterly disappointed—with the society in which you live? Is this really the kind of nation we want to be?
And why is it such an unreasonable ask for 87 percent of the country (those without student debt) to help the other 13 percent that does? Our government helps statistically much smaller groups during all kinds of crises (COVID-19 not withstanding). What is it about those who worked hard to earn their college degrees that is so offensive?
Third, President Biden’s proposed debt reduction program was far more modest than most opponents would have us believe. The average student debtor has about $38,000 in federal student loan debt. In most cases, the President’s plan would only forgive $10,000 of that debt. Private student loan debt would have been unaffected. The average student borrower from a private source (like a bank) has about $55,000 in debt. Unlike most other forms of debt, it cannot be discharged once taken and few options for renegotiating it.
The cost of Biden’s modest student debt proposal would have been quite reasonable, especially given our other federal expenditures. Some voices, liberal and conservative, have decried student debt relief as an expense we cannot afford. Really? We foot the bill time after time for far more wasteful programs. The cost of President Biden’s plan, while admittedly not insubstantial, pales in comparison to other government expenditures.
The worst culprit is American military spending, According to the National Priorities Project, the average taxpayer pays nearly $3,500 for military programs annually, over half of which goes to military contractors for weapons development and research. This includes billions wasted on programs such as the F35 Lightning fighter jet, a 20-year development project that will probably be shelved (even if ever allowed to fly).
Price gouging by military contractors for replacement parts and ineffective weapons costs taxpayers billions of dollars a year. Very little goes to benefit our troops. And these budget items are usually increased—and always paid for—with very little complaint from the average citizen, year after year. The student loan plan as it stands now would occur only once.
The rest of our federal budget goes to Social Security, Medicare, and paying interest on the federal debt. Any student debt relief program will likely be part of the remaining five percent of the budget which funds everything else, including disaster relief, international relations, scientific research and infrastructure. A very small percentage indeed.
Fourth, contrary to Republican claims, President Biden’s proposal would have been largely paid for by the rich. The average citizen making between $20,000 and $50,000 would have paid about $190 for the plan while those making over $200,000 would have paid about $12,000.
Finally, regardless of the fate of President Biden’s proposal, our nation must still tackle the skyrocketing costs of higher education. While this is a topic for an another essay, a few facts remain.
Average college costs have tripled since 1963, from an average of $4,300 a year to $13,800 a year. There are numerous reasons for this. State funding for public institutions has declined in most states. The student body has increased dramatically since the 1960s as well. During the same period, more jobs have come to require a four-year college degree (probably more than justifiable).
Yet, almost nothing has been done to control the rise in costs. Some universities have programs for underprivileged students that allow them to enroll tuition-free or at dramatically reduced costs. However, this could increase costs for other students. Many plans floated to reduce these costs seem far-fetched (e.g., Senator Sanders’ plan for a federal takeover of college funding) or risky (Senator Rubio’s plan for private companies to pay tuition in return for later income). The inability or unwillingness of politicians to offer serious solutions to this issue is disheartening.
Finally, I cannot help but wonder if the real reason that so many politicians oppose student debt relief is simply another act of political theater. Many politicians seem fond of portraying the college-educated as out of touch, “woke” liberals (despite most Republicans in Congress being college educated). Perhaps much of the opposition to student debt relief is more about winning political points than high-minded arguments about executive authority or the federal budget.
The recent Court decision will not significantly affect most of us, and it will do nothing to address the underlying issues. Still, let’s not mistake at least some of the more sanctimonious opposition to student debt relief for what it really is. It is less about concerns for fairness and budgets than it is about politics. It is more about hollow hyperbole and gratuitous schadenfreude than the wellbeing of Americans.
All sides are correct in one respect. Biden’s plan would do nothing to fix the skyrocketing expenses of higher education. Worse, there is no consensus to fix that issue, nor is there likely to be one in the foreseeable future.
Ultimately, the failure of President Biden’s plan and the vitriolic opposition to even the most modest attempts to address the bigger problem bode ill for the future of American students and the America economy.
Bob, your article is not only balanced but brilliant. The only way racial imbalances and economic inequality can be addressed is through opportunities. Jasmin and I miss you and Gabriella