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Richard Kyte: The moral failure of student debt relief | Columnists






Richard Kyte is director of DB Reinhart Institute for Leadership Ethics at the University of Viterbo in La Crosse, Wis., and co-host of “The Ethical Life” podcast.


A few years ago, when the topic of student loan forgiveness started to be a major talking point among leading Democrats, I asked my students what they thought. I assumed they would be overwhelmingly in favor of it. I was wrong.

I’ve spoken to professors at other universities — private and public — and heard similar stories from them. They were also surprised by what they heard.

My students are largely from the Upper Midwest, lots of rural communities, and most are working at least part-time jobs while earning their degrees. Like most young college-educated Americans, they tend to be quite progressive when it comes to social issues. I expected that almost all of them would like the prospect of having some of their loans repaid by the federal government.

What I didn’t expect was that so many students would consider this unfair.

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They gave many reasons for their objection. Several noted that they had worked through high school and college to keep their loan burdens to a minimum. They knew other students who were not working and running up massive debts. Why should those who partied while in college get the same benefits as those who worked?

Other students noted that they had younger siblings who would go to college in a few years. Who was going to help them with their loans?

Finally, many students had family members struggling to make ends meet due to stagnant wages, high mortgages, car payments, or medical bills. Why should students receive handouts from the government when others who were in financial difficulty did not?

What they said, in short, was, “I would like to get my loans forgiven, but that wouldn’t be fair.”

The idea of ​​equity is an underestimated concept in our current political debates. The term is used frequently, of course, but rarely with the thoughtful attention it deserves. People usually only talk about fairness to complain about something they don’t like.

One way to think about fairness is to ask whether a certain law or policy gives an undue advantage or preference. And that’s a good question to ask about student debt relief because, after all, it’s a huge transfer of wealth. In general, wealth transfer programs are justified because they take from those who have the most money and give to those who have the least.

But student debt relief is not like other wealth transfer programs. The median household income of those with student debt is $76,000 per year, compared to $44,000 for the average household. Even with the income caps proposed for eligibility, much of the wealth transfer will increase, not decrease.

In addition, 56% of student debt today is held by the 17% of adults with a graduate or professional degree. And they have even higher incomes — around $106,000 median household income. In general, those with the most student debt have the greatest ability to repay it.

Debt relief will of course be good for university graduates who are in financial difficulty. As proponents of the measure note, it will help many young people get off to a better start. This will increase geographic mobility, improve credit scores, and possibly make it easier to start a family. Moreover, the benefits for those at the bottom of the income scale could be transformative. These are undoubtedly good things.

But there is a major problem. By adding an estimated $500 billion to the federal debt while doing nothing to address structural problems in funding higher education, the overall effect will be to reinforce a flawed system that is largely responsible for economic and racial inequality in this country.

Since 1980, the cost of a college education has increased by 1,200%, while inflation has increased by 236%. On the contrary, the debt relief program could aggravate the problem by inducing higher tuition rates and a greater willingness of future students to accumulate debt.

Every student I talk to is angry about the high cost of a college education. They are angry with university administrators, angry with government officials, angry with society in general. They are outraged that the cost of accessing many of the highest paying jobs in our society is so high. When they learn that the Biden administration’s student debt relief package is a one-time deal, that it won’t do anything to lower education costs for future students, they’re also angry about it. They will accept loan forgiveness if that is what is offered to them, but they want a better solution.

Democrats hope this issue will help them win more educated voters in the election this fall. Republicans are betting their opposition will bolster support among working-class voters.

I think both sides are wrong. We have a real problem with how the rising cost of a college education contributes to economic inequality in this country. Neither side is even talking about meaningful reforms.

I predict that after the controversy over the current curriculum subsides, the high cost of a college education will become just one more issue that politicians in both parties will lack serious morale about.