There is widespread concern about the crippling financial challenge to some 43 million Americans of their federal student loans. Proposals to deal with the challenge run the gamut from outright forgiveness of all federal loans (proposed by Sen. Bernie Sanders [I-Vt.]), which would cost an estimated $1.6 trillion; to the forgiveness of debt up to $50,000 per borrower (proposed by Sens. Elizabeth Warren [D-Mass.] and Chuck Schumer [D-N.Y.]), which would cost about $1 trillion; to loan forgiveness up to $10,000 (proposed by President Joe Biden), which would cost about $373 billion.
The magnitude of such massive debt forgiveness under any of the proposed levels is staggering. Indeed, even the more “modest” Biden-proposed forgiveness of up to $10,000 per borrower would exceed the cumulative spending over the past decade on many antipoverty programs that are uniformly recognized as meaningful and effective.
And, of course, there is something troubling about a governmental debt forgiveness program that has no clearly defined social purpose or income or financial need component — other than recognition of the magnitude of overall student debt and its impact on those who cannot afford to repay what they have borrowed. Is that really fair or appropriate? Indeed, why should student debt borrowers be treated differently than any other people who cannot afford to pay money they owe to the federal government, like everyday taxpayers? More to the point, why shouldn’t similar financial benefits be considered for those families that struggled mightily and stretched financially to pay crushing school tuitions rather than require their children to assume student debt?
Studies abound about the characteristics of the population that would get the greatest benefit from any across-the-board student loan relief program. While the conclusions differ somewhat, they seem to agree that beneficiaries of an undifferentiated loan forgiveness approach would be higher income, better educated and less diverse than the beneficiaries of virtually every other socially conscious governmental program.
On balance, we favor student loan relief that is designed to assist those in greatest need, seeks to advance economic opportunity, helps relieve social inequities and promotes the educational goals for which the initial loans were made. Across-the-board student loan forgiveness doesn’t account for those considerations, and seems wasteful. Thus, for example, those who borrowed federal funds to get college or graduate degrees who are now in jobs that are paying well may not need loan forgiveness. On the other hand, those who have taken government jobs at lower earnings levels, or teaching, social work and other public service-type jobs, may need more help. We believe that targeting programs for debt forgiveness that meet clearly defined economic, social and educational purposes is preferable to an undifferentiated, across-the-board approach.
We support adoption of a more comprehensive and thoughtful analysis of the student loan challenge that focuses on relief to students from low-income families and the expansion of existing plans like public service loan forgiveness.
Ultimately, it’s about fundamental fairness, and helping those who really need it.