Forgiving Student Loan Debt: Just Don’t Do It

A lot of progressive Democrats seem to think an aggressive cancellation of federal student loans by President Biden will generate a big bump in support for their party in the upcoming midterms.

They’re dreaming.

The most outspoken progressives are pushing for cancellation of $50,000 per borrower.  Biden has said “No way” to that amount, but appears to be amenable to cancelling $10,000.

“…finding ways to provide relief to students to make sure that these working-class, working families are getting relief is more important than tax cuts to millionaires, billionaires, and corporations,” White House press secretary Jen Psaki said Thursday.

Forgiveness of up to $10,000 per person would cost the federal government about $373 billion. according to the Brookings Institute, while forgiveness of up to $50,000 per borrower would cost an estimated $1 trillion.

Biden has already been taking action to eat away at student loan debt in a kind of stealth program by doing it piece by piece. CNN recently reported that the Biden administration has expanded existing loan forgiveness programs for borrowers who work in the public sector, were defrauded by for-profit colleges and are permanently disabled. These measures, CNN said, brought relief totaling more than $17 billion.

On May 5, Biden’s Education Department said it would cancel the loans of 28,000 student borrowers who attended the Marinello Schools of Beauty, a now-defunct for-profit chain of cosmetology schools, between 2009 and its closure in 2016. The relief, which will even go to those who haven’t applied for relief, could cost the federal government $238 million.

Biden has also been pausing student loan payments, the most recent extension moving the expiration date to August 31, 2022. Lest you think these pauses are free, the Committee for a Responsible Federal Budget says they are costing the government about $4 billion a month, 

According to the Oregon Department of Justice:

  • The average Oregon student loan borrower owes over $38,000 by the time they graduate 
  • Oregonians have more than $20.5 billion dollars in student loan debt
  • An estimated 85,000 Oregonians are currently behind on their loans.

So what are the downsides to helping out all these folks? Don’t people love free money?

People who made tremendous sacrifices by working their way through college, rather than taking on student loan debt, and students who have sacrificed to repay their student loans, aren’t likely to take kindly to loan forgiveness by the Biden administration now. More likely, they will resent such action and take it out on Democrats.

A lot of student loan debt is also held by people who are in a position to pay it off because they are in high-paying positions, sometimes because they borrowed money to attend graduate school. Low and middle-income Americans aren’t likely to appreciate these folks getting off the hook.

Student loan forgiveness would also be likely to tick off a lot of Americans who never went to college at all, particularly those who skipped college because of the cost. Aren’t many of these folks supposed to be  part of the Democrats’ base.

David Bahnsen, the author of Crisis of Responsibilityhas argued convincingly in The Dispatch that the government created the problem in the first place when it decided to subsidize student debt. “The injustice is the runaway inflation in the cost of higher education disproportionate to the benefits it provides,” he wrote. “That dynamic is a direct result of the very existence of the loan market college administrators have so exploited. That subsidy has facilitated a reckless allocation of resources to the absurd and the indoctrinating—dormitory amenities for recruitment purposes, exorbitant “diversity” departments—but it has not facilitated a greater experience for college students.” 

Left-leaning Brookings has asserted that that if the government really wants to spend a ton of money on something to advance the progressive agenda, there are a lot of better things to do than forgive student loans. “Increasing spending on more targeted policies would benefit families that are poorer, more disadvantaged, and more likely to be Black and Hispanic, compared to those who stand to benefit from broad student loan forgiveness,” Brookings said.  “Indeed, shoring up spending on other safety net programs would be a far more effective way to help low-income people and people of color.”

And then, of course, there’s the question of what to do about students who take on college debt after the loan forgiveness cohort? Talk about a conundrum.