With the election of President Joe Biden and a Democrat controlled House and Senate, the progressive dream of student loan forgiveness may soon be a reality. For the 44.7 million Americans who owe a combined $1.7 trillion in student loans, this is likely exciting news.
For most of America though, including the nation’s poorest citizens, this is not a good idea.
On President Biden’s first day in office, he froze student loan payments through September, but has yet to cancel any student debt.
During the presidential campaign, Democratic Sens. Chuck Schumer and Elizabeth Warren called on the future president to provide $50,000 in student loan forgiveness per borrower. Last month, 17 state attorneys general asked him to do the same.
However, Biden has said he would only support up to $10,000 in loan forgiveness, and that instead of an executive order, he would ask Congress to craft legislation.
Even this scaled back proposal would cost an estimated $373 billion, and while it would lift a burden for millions of Americans, there are far better ways for the federal government to spend this kind of money.
Student loan forgiveness has been promoted as a step toward racial and economic justice, but if the goal is to support racial minorities and the poorest Americans, this idea does not do a very good job of it.
Simply put, this supposedly progressive policy is actually a regressive one, benefitting higher-income Americans more than low-income ones.
The top quintile of earners owes 24% of student debt, while the lowest quintile owes only 8%. This makes sense, since graduate students usually borrow more money, but also make more money in careers as doctors and lawyers.
The unemployment crisis brought on by the pandemic has hurt Americans of all levels of educational attainment, but the brunt of the issue has been felt by Americans without any college. Again, student loan forgiveness would only help a group that is more well-off to begin with, making this a regressive policy.
Perhaps this proposal will not help close the wealth gap in America, but what about racial economic inequality?
Black college students are hit harder by student debt after graduation than their white counterparts, as nearly 85% of Black bachelor's degree recipients graduated with student debt compared to only 69% of white bachelor’s degree recipients.
However, 40.1% of white people over the age of 25 have a bachelor’s degree, while only 26.1% of Black people and 18.8% of Hispanics have one. Of Americans who attended college, minorities may receive a larger benefit than whites, but it is important to recognize who may not have gone to college and taken out student loans at all.
In fact, among people aged 25-40, white people hold 63.4% of student loan debt, despite making up 58.8% of the population.
I am not against a policy solely because it helps white people, but if the purpose of student loan forgiveness is racial justice, this sure is a strange way to do it.
I do recognize the severity of the student debt crisis in this nation, and something should be done to slow the alarming rate at which it is intensifying. Student debt has increased by more than 100% in just 10 years and college costs have increased by 55% in the same timeframe, far outpacing an inflation rate of 18.7%.
Forgiving student debt, even up to $10,000 per borrower, could reduce the student debt substantially, but it would likely have the opposite effect on the soaring cost of higher education. With the precedent set for future loan forgiveness, colleges could continue to hike their price tags, encouraging students to borrow an excessive amount of money with the hope that they may not have to pay it all back.
Canceling student loans could be life changing for millions of families across the country, but progressives are missing a chance to help another side of America that never even had the opportunity to consider college.
If every student loan borrower were given up to $50,000 in forgiveness, it would cost the government about $1 trillion. However, if that $1 trillion were split equally among the 6.5 million American families living below the poverty line, each could receive a check for over $153,000.
My latter proposal would clearly need some refining, but my point is that a lot of good could be done with $1 trillion. I admire the desire to close the wealth gap in America, but student loan forgiveness is not the best way to get that money into the hands of those who need it the most.
Brian Beach is a sophomore journalism major. Reach him at firstname.lastname@example.org.