Biden looking at student debt relief

During the campaign and since, Biden has supported debt relief for student borrowers. There’s a debate going on within his administration about what his authority to act is, without legislation by Congress, and what shape student borrower relief might take. (Read story here.) Right now, it’s too early to guess what help might be coming for student debtors, but this president is committed to doing something.

There’s a fairness element in this. Students and their families are pressured to go in debt for a degree, because they’re told they can’t get a good job without one. Employers have come to demand degrees for jobs that don’t strictly require them. (Creeping credentialism.) College costs have risen faster than inflation, while state support for public colleges has declined, resulting in a shift of higher education costs from the public as a whole to individual students.

Public schools have existed in America since 1639 (source here). Universal literacy was a key factor in the United States’ rise. While the focus then was on “reading, writing, and ‘rithmetic,” and college was a luxury most couldn’t afford, the transformation to a technological and information economy has turned higher education into an extension of public education, with the same rationales for public support of it.¬† As a measure of how pervasive postsecondary education has become, as of 2018, two-thirds of Americans had “some” college education by age 30, and over a third of under-30s had a 4-year degree (source here).

There are vital societal interests at stake. A better educated workforce results in a more productive economy and greater prosperity for everyone. Technological literacy enables our workers to compete in the global economy. Our technological edge, vital to our military superiority, wouldn’t exist without an educated citizenry.

Public investments in education aren’t a giveaway. College graduates tend to earn more, and thus pay more taxes, over a lifetime; so it’s an investment that pays returns and is paid back. Doctors, engineers, and managers don’t just earn a better living; they cure us when we’re ill, build bridges and ports and highways, and run enterprises that create jobs; we all would be poorer without people who know how to do those things.

We can afford college debt relief. At the end of 2020, student borrowers owed about $1.68 trillion total (source here), which seems like a big number, but it’s manageable in a $21 trillion-a-year economy. (By comparison, the CARES Act cost $3.2 trillion, and Biden’s request for the next round of Covid-19 relief is $1.9 trillion for this year. Apple’s market capitalization is $2.3 trillion, Microsoft’s $1.8 trillion, and Amazon’s $1.67 trillion; any one of these companies is worth more in the stock market than the total owed by student borrowers.)

So the question isn’t whether we can afford to pay off that debt, but who’s going to do it. Some public participation in that is reasonable and makes sense for all the reasons stated above. And by relieving recent graduates of a portion of their debt burden, they could more easily buy homes and start families, giving the economy a boost.

Update (2/5/21): Democrats are pushing legislation in Congress to forgive up to $50,000 of federally-backed student debt (read story here). What this would cost the government is detailed here.

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  1. Mark Adams #

    There is also a fairness issue toward those who have paid back their student loans. I t is complicated by debt that are student loans from Uncle Sam and student loans by banks.

    Congress may not have left much wiggle room. It may come down to Congress acting, and aside from the fight over another trillion dollar bill, there are practical limits to what can get through Congress. The white House is being ambitious, but Congress is dancing to other players, And the world just may provide complications and distractions that could push aiding students lower on the to do list. There maybe some bipartisanship on the issue, just there are only so many hours to the day. Maybe Congress could spend more time in session or Representatives and Senators spending less time on the phone seeking donations.

    Perhaps it needs to be explained to the oligarchs that they need to be more willing to open the purse strings and accept they need to pay for a trained work force. Then again they can get highly trained people in India, and other nations. The oligarchs could relocate or fly workers in. Also since they may think this is Chinas century just get in cozy with the future Chinese overlords and our best and brightest do not matter to the elites. Harvard and Yale will be replaced by Beijing U.

  2. Roger Rabbit #

    Yes, there is. But the fact not everyone gets relief is a thin argument for saying no one should get relief. Biden can’t forgive private loans; he can only write off federal money, so we’re only talking bout federally guaranteed loans. As far as Congress goes, there are two tracks of student debt relief, which shouldn’t be confused: The payment moratorium which is part of the larger Covid-19 stimulus packages, and debt forgiveness. Bipartisan support is stronger for the former than the latter; for The Hill’s recent take on where Congress stands on these issues, see this 1/12/21 article.

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