Decoding the Student Debt Order
Terry H. Schwadron
Aug. 26, 2022
No wonder Joe Biden has resisted coming to a public decision to cancel some student debt.
He can’t seem to win public acceptance, even in a program that incents education by canceling $10,000 of student debt in a time when families continue to struggle.
Sure, there was measurable immediate positive reaction, mostly from within his own political party and from millions of students whose direct burden just got a promise of becoming a bit easier.
But, as always, there was also a truckload of criticism for a move seen as much about politics three months before an election as for cementing in some way to lessen month-to-month obligations. In my family, we’re still paying off loans for our kids’ colleges decades later, and anything that makes the load lighter is welcome.
Even while Senate Majority Leader Chuck Schumer has bombarded Biden to lower individual student debt, we all understand that students, former students and families all vote.
Naturally, the required “fairness” of news coverage made it obligatory to get out the negatives along with understanding exactly what a new policy might achieve.
The idea is that there are 43 million Americans still paying off student loans, and that having that kind of cash tied up for decades will never be useful to investments needed for personal or national economic growth. About a third of people in the U.S. with student debt owe more than $40,000, says CNN, and the write-off might wipe out debt for about half owing money.
In other countries, of course, the state may underwrite college education costs as a general investment in having a steady stream of trained engineers and mathematicians, medical and scientific personnel, and creative arts. Not so in America, though Pell grants and lower-cost, long-range borrowing can make ever-rising college costs seem more handleable.
Biden’s basic economic question is how to make people ready for jobs that require more sophistication and technical training — and letting younger generations get started on jobs that pay back. That, of course, is not the question others are asking.
The Criticisms
We want lower costs and help with inflation except when we don’t, seems to be the critics’ message.
Republicans joined in right away with criticisms matched by centrist economist Larry Summers who see any government spending program right now as contributing to shorter-term inflation and longer-term debt. Or as One America News Network headlined it, “Biden’s Student Loan Handout: Crushing The Poor To Bribe The Rich.”
Biden says in contrast that the limited student debt reduction is relatively affordable, adding that cutting federal debt will free up funds to pay for this program. The Atlantic magazine offered as its headline: “Actually, Canceling Student Debt Will Cut Inflation.” It’s the by-now usual argument that prove almost meaningless for the moment.
Some Democrats, notably Sen. Joe Manchin (D-W.Va.) have underscored the inflation argument. But we also heard straightaway from Sen. Bernie Sanders (I-Vt.) who argues that if we can afford to bail out corporations and Wall Street when there are troubles, we ought to be able to help the generations on whose work we count.
Tim Ryan, who wants to the be Democratic senator from Ohio, argued loudly that we would be better using the same money in a tax cut, so as not to favor college-educated families over working families.
Helping to write off $10,000 of loan for current and former students earning under $125,000 — and up to $20,000 of debt for those with Pell grants — and capping family income already presupposes a lot of the debate that has gone on behind closed doors toward ensuring some degree of economic fairness. No one wants to back loan write-offs for wealthier families. And delaying repayment plans further, as Biden also announced, is in line with what has been the case over two years of pandemic and its economic effects
Biden’s message was clear: He wants to help families facing pressures on all sides. He also proposed rules to making the student loan system more manageable, capping payments after 20 years.
What Won’t Change
Of course, none of these loan write-offs will keep down the ever-rising cost of education, a point that New Hampshire Democratic Rep. Chris Pappas made in saying the move should have address university tuitions as an “underlying issue” of higher education’s high costs.
At the same time, universities are having troubles making financial aid packages work at the same time they face rising costs as well. Still, no faculty member — exempting football coaches — is getting rich any time soon; the rise of hiring of adjunct faculty members at miniscule salaries is exponential, as is the build-up of online classes without numeric limit.
Nor will these write-offs, however they will work practically, come close to eliminating all student debt. One Washington Post columnist noted that for those just going to college, this deal may worsen the situation because tuition costs seem only to rise.
Indeed, we ought to be having a national conversation about how we are going to keep supporting college-level education and appropriate vocational training growing to match the emerging job market.
Instead, we’re busying ourselves with inane discussions about how we should avoid encouraging critical thinking exactly at a time when skills for rationale data collection and the necessary sifting of ideas and values is undercutting our very democracy.
We should be able to recognize that Biden is focused on an approach that, while a compromise at best, could help to focus on the strategic goals we ask government to set.
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