Forgiving Student Loans
July 5, 2023 | 738 words | Politics
The student loan forgiveness plan the Supreme Court threw out last week, just before adjourning for the summer, was one of the Biden administration’s more ambitious and controversial proposals. So it should come as no surprise this latest ruling is generating such a passionate response.
As with any contentious issue, it is always a good idea to take in both sides of the argument, and respect an honest difference of opinion. But in this case, some of the opinions I am hearing strike me as less than honest.
Referencing how your wife responsibly scrimped and saved back in the day to pay off her student loan, as one partisan TV commentator staunchly declared, when judging by the speaker’s appearance that activity presumably took place some forty years ago, is hardly germane to the struggles today’s young people face when paying for their higher education.
When this same commentator goes on to talk about student loan forgiveness “sending the wrong message,” and encouraging people “not to be responsible for their actions,” it comes across as dismissive and condescending. “What’s next,” this old grouch harrumphed on TV, “not paying your mortgage or your credit card bill?”
A wide-ranging proposal such as student debt forgiveness deserves careful review before being implemented. But the conservative scrutiny we are hearing in the wake of this latest ruling strikes me as simplistic, and designed to ”fire up the base.” It generates a visceral reaction from that segment of the population fortunate enough to have made it through the gauntlet of paying for higher education with their financial viability intact. Which is just another example of the “haves” lacking any clue about the economic realities faced by their “have-not” neighbors who live in a different part of town.
It also demonstrates zero recognition of a basic fact: Increased federal aid to students over the last forty years has enabled colleges to raise tuition far beyond the cost of inflation. Check out the insider testimony of Al Lord, former CEO of Sallie Mae. When he led that organization, Mr. Lord viewed student loans as a good investment for families, and he made Sallie Mae the biggest student lender. Then in retirement he joined the Board of Penn State and learned first-hand that colleges are incredibly inefficient businesses, with the student-loan program enabling that inefficiency.
Salaries rise; bureaucracies expand; more courses – like “History and Analysis of Rock Music” and “Ultimate Frisbee” – are offered; dorms, dining rooms, and recreational centers become more lavish. Mr. Lord was stunned to learn how big Penn State’s budget was, about $5 billion in 2014. And how quickly it grew, to $7.7 billion in 2021.
Al Lord was also stunned to discover how much his grandchildren’s college educations were costing, as much as $75,000 a year per child. He had known colleges were raising their prices faster than inflation, but he figured it would have to stop. It hasn’t. “They raise them because they can, and the government facilitates it,” Mr. Lord told the Wall Street Journal.
With all that said, a college education is still a good idea, for a variety of reasons, not the least of which is enhanced employment opportunities. But the way middle-class families currently finance that education is clearly not sustainable. It is also clear colleges have taken advantage of the situation – of the expanded access to loans made available to students – to add lots of window dressing and beef up compensation for their headliners.
As with so many of our dicey political issues, in this case there is plenty of blame to go around, now that the time has come to find a solution. Conservatives have a point when they blame “big government” for creating the student debt problem. But instead of smugly applauding the Supreme Court for striking down the Biden plan and leaving it at that, why not consider turning the other cheek? Instead of pounding your chest and patting yourself on the back, take a moment to consider the struggle families of modest means face in gaining access to higher education.
If the idea of student debt forgiveness offends your sense of personal responsibility, let me ask you: Given today’s inflated tuition costs, what is your alternative to having these young people postpone marriage and family and home ownership for decades while they pay down this onerous debt? If the Biden plan is not to your liking, show me yours.
Robert J. Cavanaugh, Jr.