Student rates

Cancel student debt? Cue the anger

ALBANY — Two years ago, I wrote a column proclaiming the evils of the college loan racket. The federal government should cancel student debt, I said.

As part of my persuasive argument, I mentioned what student loans had meant to me, a child from a poor family. I also argued that the country’s outstanding $1.6 trillion student loan debt was a societal burden weighing us down and preventing a generation from marrying and having children. Debt was an obstacle to human happiness, I wrote, that the government should not ignore.

Great points I thought I made, maybe even some compelling arguments. So how did the column go?

Readers hated it. Many were irritated by it.

In fact, as measured by the response in my inbox, it was the most unpopular column I’ve ever written.

I heard from readers who had worked hard to pay off their own student loans. Why should this sacrifice be meaningless, they asked, with a gift to others?

I’ve heard of readers who avoided debt by working in college and attending cheaper schools. Why, they asked, should those who weren’t so financially responsible, perhaps racking up debt in fancy private schools, be rewarded?

And I’ve heard from readers who didn’t go to college at all. Why should taxpayers’ money from a generally less fortunate group, they asked, be used to benefit those with college degrees?

There is validity to all of these points. Indeed, one of the strongest arguments against canceling student debt is that this decision is a gift to the privileged. Men with a bachelor’s degree earn about $900,000 more over their working lives than high school graduates, while women with a college education earn $630,000 more.

Are these really the people who should benefit from a major boost from the federal government? Canceling student debt could simply worsen income inequality, rather than improving it. (Note: Students who don’t graduate often get the debt without the income benefits.)

Meanwhile, if the reaction to this column two years ago is any indication, canceling student debt could also provoke a significant political backlash, especially among working-class voters who have already abandoned the Democratic Party. .

This strength have been one of the reasons President Biden has seemed so reluctant to tackle college debt, despite persistent pressure from Senate Majority Leader Chuck Schumer and others.

Debt, Schumer once told me, “changed the world view of young people. They worry about the future. They are late getting married. They are slow to start a family. jobs they really don’t want, but who have to pay back their loans. »

This week, Biden finally acted by issuing an executive order that will forgive $10,000 in debt for those earning less than $125,000 a year and $20,000 for those who received Pell grants for low-income families.

The reaction was mixed, with even some Democrats criticizing it as a new perk for the more prosperous. Here, for example, was U.S. Representative Tim Ryan, also a Senate candidate in Ohio: “Waiving debt for those already on the path to financial security sends the wrong message to millions of Ohioans without a college degree. who work just as hard to achieve their ends meet.”

Meanwhile, the response from Republicans has been scathing, including that of North Country Congresswoman Elise Stefanik. She said Biden’s “reckless and illegal executive action will fuel record inflation that is crushing all Americans and force the 87% of American adults who don’t have student loans to pay off the debts of the wealthy.”

Other critics note that the indebted voluntarily signed up for the money. Why should they do without the bill?

This argument, however, ignores the role of the federal government in creating the system that helped make a college education so expensive and forced students to borrow. Colleges and universities, after all, have been able to raise tuition to levels above what most families can afford over the past few decades because Congress has spent billions on student loans regardless of cost. .

“Colleges can set the price, knowing that the government is just going to give their customer, the student, a blank check to pay that price,” Josh Mitchell, author of “The Debt Trap: How Student Loans Became a National Castastrophe “,” said in an NPR interview. And so not only is there no incentive in this current system for colleges to control prices, but there’s actually every incentive for them to raise prices.”

And students are paying the price.

Given the federal government’s role in creating the problem – while working in tandem with Sallie Mae, Navient and other highly profitable private companies – I continue to believe that it is right for this same federal government to help reduce the debt burden faced by many former students. . Yes, canceling student debt may spur some who don’t need help, but it could also help fix decades of bad policy.

Still, Biden’s decision is just a band-aid.

Next month, a new group of students will enter colleges and universities. Many, of course, have already signed the promissory notes indebting them and limiting their future choices. The cycle continues.

[email protected] ■ 518-454-5442 ■ @chris_churchill