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Just last month I finished paying off my student loans from 2001. The debt amount wasn’t that much in the scheme of things, but I put off paying it for several reasons. One, the interest rate was low, and I had higher interest rate debts to tackle. Two, I am notoriously bad with my own financials. Three, the closer I came to paying it off, the more politicians began talking about student debt forgiveness. I wondered if I should wait to see how that played out. In the end, I concluded my debt was no one else’s responsibility and it was mine to pay back. As the Biden Administration pushes forward with student loan forgiveness for some, the GOP should take the lead on the crusade ahead of the 2022 midterms. There are compromises to be made that make it a winning issue for conservatives.
I am no fan of David Brooks, however, his opinion piece in The New York Times contains many of the same thoughts I have been having over the last few years. As with most things from David Brooks though, he still gets it wrong. Brooks piqued my interest with his hypothesis and then lost me completely with his conclusion:
“Social change over the past few decades has made me much more supportive of income redistribution than I used to be — especially redistribution that invests in human capital. But it’s got to be distribution downward, not upward.”
No David, income redistribution is not logic we should have when it comes to support for student loan forgiveness. I don’t care whether it’s upward OR downward. Any consideration of student loan forgiveness should not be based on student incomes upon graduation. Certainly not via the writ of the President’s pen. If a debt is to be repaid by anyone other than the debtor, then the debtor should make the request with explanation and supporting reasons. The GOP could and should lay out what supporting justifications might be however, giving them a winning message ahead of November.
Who should or shouldn’t be the recipient of any student debt forgiveness is the central debate at the moment. As David Brooks points out in his NYT article:
“…forgiving student debt is exorbitant. As Adam Looney of the Brookings Institution has pointed out, widespread student loan forgiveness would rank among the largest transfer programs in American history. And plans to forgive all federal loans would cost more than was spent from 2000 to 2019 on unemployment insurance, the earned-income tax credit or food stamps — programs that actually go to those in need.”
Any loan forgiveness we consider at a federal level should be based on not only the family income before entering higher education, but the societal conditions of the family as well. For example, a student outperforming his peers in a troubled neighborhood and/or high school should be rewarded for his effort to escape his current position within it. I think the GOP could find much bipartisan support around this suggestion.
Just a few weeks ago, I was having this debate with a young black man in my office looking to buy his first home. As I pushed back against the idea of taxpayers forgiving student debt at all, he kept using the phrase “people who look like me” in his justification to support the concept. I responded that I didn’t think race should play into the matter at all. By the look on his face, I don’t think he even realized I might interpret his phrasing that way. “No, no, I didn’t mean it that way. I don’t think race should be used either. I meant coming from a poor urban neighborhood!” Granted, I do believe the stats might still conclude there is racial component to who lives in poor urban neighborhoods, but that’s secondary to who should get student loans forgiven.
Another question we need to address is who SHOULD take advantage of higher education. We keep pushing kids to go to college and not everyone needs nor should get a higher degree. My favorite speaker on the topic is Thomas Sowell. Watch as he digs into the many facets of the question:
What type of student loans should be forgiven is the next piece of the equation the GOP should spell out for taxpayers. Irma the housecleaner might not love her taxes being used to pay off someone’s $120K choral singing degree! I did not make that up. I know someone who paid good money for his daughter to get a degree at Baylor University for a choir degree. Not even a performance arts degree. Just how to sing in a group. What does she do with that degree now? She manages a convenience store for low-income residents in an Austin neighborhood! Seriously! I am not shy with my eye rolls and ridicule when I they tell me this.
Biden says he’s going to forgive federal student loan debt.
— Senator Melissa Melendez (@senatormelendez) April 28, 2022
The waitress, the truck driver, the fast food worker, who didn’t go/couldn’t afford college, will pay the college debt for others.
On the other hand, however, are several industries that need qualified employees and can’t find them. We do need more nurses, tradesmen, and assembly-line workers. Many others that I can’t think of to be sure. But we do have gaps in what universities are putting out versus what America needs in terms of job opportunities. Most of the roles needing to be filled don’t require a four-year degree to begin with. Most simply need a two-year degree or certification program. Again, The GOP should lead the discussion on what jobs America needs filled and the programs taxpayers should support.
Why should we support some concept of student loan forgiveness? Again, David Brook’s gets it wrong. He says in his opinion piece at The New York Times:
“Anybody with a degree already owns an incredibly valuable resource — a college education. Adults with a bachelor’s degree generally earn about $1 million more over their career than people with just high school degrees.”
This is a faulty premise on its face. Having a college degree doesn’t necessarily lead to good employment opportunities at all. Not all degree programs are equal. See my niece above. Her choral degree begat her a $40K/year job IF she was lucky. Why the hell should taxpayers fund anything of the sort? There is no societal value to some types of degrees. Degrees, like everything, are devalued the more of them you give out. Simple supply and demand.
Government backed loans and subsidies directly to colleges is a horrible way for us to fund higher education. We are not discriminating on what degrees or purposes those loans are supporting. Instead, we are encouraging administrative bloat at colleges and inflating the cost of getting a degree to boot. This is sheer madness.
A better way to manage the goal of increasing higher education for our youth is to have a tri-lateral buy-in from government, the universities AND private industry.
That last point leads me to the next point in the equation. Where do we need graduates to go within the U.S.? Texas doesn’t need more people in Austin! America does need more tradespeople everywhere. We might need more agricultural graduates in some parts of the country. I gather we need more teachers in both urban areas and rural areas. We need certain tech-based graduates where manufacturing plants are located.
The GOP could create a unifying message of education loan forgiveness based on where degree recipients choose to gain employment with their degrees.
Lastly, when a loan needs to be repaid or forgiven should be part of the calculation. Should students who elect to take on educational debt just have some of it wiped out because of the aforementioned reasons? Or should graduates have a timeline in which they are required to pay it off themselves BEFORE being able to apply for forgiveness? Perhaps five to seven years of repayment is necessary before considering any government-based write-off. No one put a gun to a student’s head compelling them to take out debt for higher education. There are thousands of grants and scholarships for students to take advantage of. The GI Bill offers another taxpayer opportunity for students to get an education. Should those options be utilized first before taxpayers are on the hook for more money?
Again, the GOP should be creating the messaging around this topic instead of letting the Democrats run away with the narrative. It’s a winning conversation for Conservatives to have. Now is the time to have it as Biden fumbles another ball:
113,000 borrowers will get $60,000 in student debt relief from updates made to the Education Department's public service loan forgiveness program https://t.co/pmCsmZIBjT pic.twitter.com/sY8PbhNs2y
— Bloomberg Quicktake (@Quicktake) May 6, 2022
Look, I’m not even sure I want more kids to go on to college now that I have a better grasp of what universities are cramming into our children’s heads. Ideas like CRT, reparations, gender fluidity, socialism, etc… But if we are going to support the idea of taxpayer dollars funding formal education beyond high school, then we need to discuss the parameters openly. The Progressives are bringing the debate to the table, but the GOP should be the one winning the arguments.
Welcome Instapundit Readers!
“College Student Debt at OWS 10/9/2011” by hardtopeel is marked with CC BY-SA 2.0.
Cujo says: Very interesting article which raises a lot of issues that most commentators ignore.
That said, it continues to gall me that we the taxpayers are going to be stuck with the bill for debt forgiveness, so here’s my plan for dealing with that issue. Two of the major drivers of student debt are, 1) easy availability of student loans, which drive up tuition; and 2) student loans are not dischargeable in bankruptcy, so lenders have no incentive to look at the likely career earning potential of someone with a degree in underwater basket weaving.
So, first, let’s tap university endowments for some of that loan repayment. Total university endowments are ~$700B – as they say, Harvard University is a trust fund with a university attached. Undoubtedly universities don’t want to share their wealth, so the government should require that universities participate in the loan repayment plan as a condition for receiving any federal funding. Second, going forward, student debt will be dischargeable in bankruptcy.
These features could be folded into a loan forgiveness plan that includes the features that you describe.
Cameron says: I have a simpler approach that I think would be much better:
The entirety of the debt for student loans is taken from the universities. Oh, Yale has students with debt totaling 1.3 million? Time to pay out of your endowments and maybe sell some land. Think of how quickly colleges will start getting rid of useless degrees and trimming administration staff.
Cujo says: I think we’re on the same page here, but I like the idea of withholding all federal funding as a big stick to encourage compliance.
Cameron says: Why not both? “Pay off the worthless degrees your graduates have and then the federal funding comes back.”
And yes; loans dischargeable upon bankruptcy would be a good idea.
GWB says: Social change over the past few decades has made me much more supportive of income redistribution than I used to be
Well, we’ve all known Brooks was a socialist the last decade or more. Glad he figured it out finally.
The GOP could and should lay out what supporting justifications might be however, giving them a winning message ahead of November.
Except for one little problem. THERE ARE NONE.
Why the hell should taxpayers fund anything of the sort?
I totally agree. Why should taxpayers fund any of this?
Look, it’s not within the purview of the federal gov’t within the bounds of the Constitution.
It’s the politics of envy. And it’s OPM.
It forms a bad habit in a generation that already doesn’t understand hard work.
If you suddenly switch who’s responsible you violate the law of contracts (which is in the Constitution).
Making it dispensable under bankruptcy means it is either of no actual value or that you can somehow take the value of it from the person who ‘earned’ it. Or that we will just by fiat declare there’s some stuff you can do with no risk.
No, Republicans should NOT embrace this, even from an anti-elite stand.
There are things they should work toward to make “higher education” less of a protected realm and less Progressive. But not by forgiving loans in any way, shape, or form.
mer says: Forgiven student loan amount should be treated as taxable income.
Student loans should not be backed by the Federal government.
Chad King says: How about student loan relief to be paid by the schools? Step #1: a former student defaults; Step #2: the federal government sends a bill for the unpaid principal to the school–along with the right to collect the debt; Step #3A: the school assumes the full amount of the debt and bears the entire loss if it can’t collect; Step #3B: the school refuses to pay the debt–no student of the school may participate in any federal student loan program and the school receives zero federal funding of any type whatsoever. Step #4: publish an annual report with the record of each school (the amount of defaults and the action taken by the school).
In Step #3A, the taxpayer is kept whole. In Step #3B the school will have a marketing challenge on its hands and the taxpayers will have no exposure on future debt. And Step #4 will tell the world about each school.
GWB says: They screwed up step #2 by guaranteeing the loans. (The national gov’t, that is.)
Robin H says: So what are we going to do going forward? Have this same debate every year? No loans should be forgiven until the whole system is fixed. Every year there’s a new crop of kids with worthless degrees and debt. Until we stop the treadmill this debate is stupid. Give the loans back to private banks and institutions and you’ll stop the 4 year degrees in Choral Singing. I had my kids take out loans for their college along with what we paid. They had some skin in the game and chose degrees with a real job and salary attached. We scrimped and took less vacations along the way so that we would have the money to send them to college. I was the one that filled out the FASFA forms online and I can tell you that they let you know up front what that payback will look like. Anyone claiming they had no idea how much or how long is lying. This is nothing more than an election year red herring, colleges have no intention of scaling back their spending and they love all the money that gets thrown at them.
Cameron says: Your third sentence touched on the main problem. The system itself needs to be completely overhauled.
Mark Gray says: This was an extremely disappointing read, and something I would expect to see in a far left publication. I certainly hope that no DC based Republicans are dumb enough to take this advice. In fact, the answer to Government developed problems (high guaranteed student loan debt) is not more government prescriptions. The market itself can take are of the issues, if left to its own devices. If a field (nursing, for example) is short of employees, the pay will ultimately rise to a point that an education in the field is worth the pursuit. If there are too many nurses in Austin, pay will stagnate or go down until working in a Rural area becomes more attractive. And if someone wants to borrow money so that their daughter can get a degree in Choir singing (or whatever) to work in a convenience store, by all means let them. Eventually, people will stop making such fooling choices.
But in the end, let the market settle this and keep the government (and my tax dollars) out of it.
John says: Government should NOT be in the Student Loan business (or any loan business, for that matter). Student loans should be contracts between students, banks and loan providers, and colleges/universities.
GWB says: And if they weren’t guaranteed by the gov’t, then the banks would be interested in things like ROI – the ability of the individual to pay the loan back. They might even insist on knowing what the degree will be in before loaning.
Chuckle says: This could be done without taxpayer funds, by rewarding employers who offer student loan reimbursement programs to their employees with dollar for dollar reduction in their corporate federal tax bill.
Snidely Whiplash says: The federal government has no business in “social engineering” of any sort, much less in picking winners and losers via student debt forgiveness.
If a person owes a debt the person is responsible to settle that debt, period.
PhilZ says: Before cancelling existing student debt, the cost of college education going forward must be dealt with.
The first thing that must be done in that regard is to mandate 3 year degrees so that 1/4 of the cost is trimmed. Also, the graduate is in the work force 1 year earlier. The 4 year degree is arbitrary. It can be done in 3.
Second, no government subsidy if the tuition is above a certain amount determined to be reasonable, adjusted for inflation. Let’s say the amount is $25,000 per year. If Harvard wants to charge $50,000 tuition then none of its students qualify for federal subsidy (they can of course qualify for scholarships from the Harvard endowment). What is a reasonable rate of tuition? One possibility is the amount a worker earning the median wage could get a ten year loan for. If a Uni could show that a diploma from the Uni generally results in a higher than median wage for the recipient of the diploma (or a particular degree did) it would be allowed to charge a higher tuition for that diploma (or degree) and still have government subsidies as long as the Uni shared the loss from defaults.
Current tuition must be dealt with before loan forgiveness. If people aren’t incurring excessive educational debt going forward we can then start whacking existing student debt.
GWB says: THREE years? Some large chunk of these kids aren’t even able to complete them in FOUR.
if the tuition is above a certain amount determined to be reasonable, adjusted for inflation
So… wage and price controls? No thanks.
The easiest way to deal with tuition costs is to 1) eliminate gov’t subsidy (direct and loans), and 2) stop demanding everyone go to college to get a job (especially one where it’s just a replacement for the old job aptitude tests).
The best solution I have seen is still Glenn Reynolds’ from ten years ago: allow student loans to be dischargeable in bankruptcy after a reasonable (10 year?) wait time. The lost money should come from some mix of the government, university and bank.
Note that this does not require MORE government interference, but less. It also restores market mechanisms and lets prices work.
GWB says: Dischargeable in bankruptcy REMOVES market mechanisms.
Repaid my undergrad and grad loans says: There are several ways to address this that the GOP should look into. Here is my suggestion:
Transfer the debt from the students to the educational institutions immediately, send a bill to the schools, and give these institutions the power to legally collect the debt from the students who used that money at their schools. Externally, no harm no foul: the status of the students is the same, the government is repaid instantly, and the universities can get their money at a decent interest rate. Also, the universities are free to forgive as much debt as they want, without impacting taxpayers at all.
Then let the students focus their whining attention on the institutions that actually took their money, not the White House and Congress. This forces the institutions to be the “bad guys” if they want to collect the debt, because the truth is that they already put the money in their coffers years ago; none of the borrowers saw the cash. It would be interesting to see how “progressive” these universities are when it is they who have to forgive the debt, not Uncle Sam.
It would also have the effect of encouraging the universities to be more careful about who they let in, what they teach, and who they lend money to, because they will suddenly have skin in the game as to whether their students are performing, whether they are people who can be counted on to repay their loans, and whether they can and will actually earn a living after graduating.
The fact is, tuitions (and professor and administrator salaries) have gone up precisely because Uncle Sam was handing out money. The universities, including private ones, have been getting wealthy off the government (read: taxpayers).
Many of these schools have enough in endowments to offer student loans at generous rates. Further, the GOP should prohibit any federal loans or any federal grants whatsoever to schools whose endowment is above a certain amount, say $100 million. These schools with significantly large endowments make the tuition they charge nothing short of obscene.
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