Nation Divided Over Biden’s Potential Student Loan Forgiveness Policy

President Joe Biden is considering to release millions of students from their federal loan responsibility. However, the idea is not supported by all but rather objected to by some Americans as they perceive it as unfair. Will Bach, an Ohio-based financial advisor, is one of the objectors. He said, “While some may view this debt forgiveness as a slap in the face to people who were responsible and paid off their student loans, this is a bigger slap in the face to those Americans who never went to college.”

Indeed, the amount, tens of billions of dollars, required to implement this policy would not burden only the borrower but all taxpayers. Here, what needs to be noted is how likely are those who possess a college degree to generate more income than those who did not go to college.

According to a study by the Georgetown University Center on Education and the Workforce, the median lifetime earnings of those with a high school diploma is $1.6 million, compared to $2.8 million for those with a bachelor’s degree. Although there are other factors — such as age, gender, ethnicity and race, field of study, occupation, and location — contributing to the level of lifetime earnings, the $1.2 million difference is hard to ignore.

“How can we honestly ask people who did not go to college to subsidize the lives of those who did decide to go to college?” Bach continued, “to my knowledge, everyone with student loans voluntarily took them. Every instance of a student loan was a voluntary choice that person made.”

Debt relief raises a host of questions, particularly for right-wing scholars. For example, Andrew Gillen of the Texas Public Policy Foundation points out the problems of this policy, including the question of fairness and fiscal concerns. He argues that student loan forgiveness will not change the fundamental issue: the ever-rising cost of college.

Gillen thinks that Biden’s plan to cancel at least $10,000 (but lower than $50,000) for every student borrower is “really badly targeted.” He said, “There are people who are struggling to repay their debt, and we’ve got an existing set of solutions — and those solutions aren’t working,” referring to the major shortcomings of the income-driven repayment system. He believes that a simple measure like placing an income cap for eligibility will let the government focus on subsidizing lower-income borrowers, making the loan forgiveness policy fairer.

A cap of sorts, similar to what Gillen suggested, appears to be on the table. The Washington Post recently reported that the Biden administration is considering limiting the policy to only those earning less than $125,000 or $150,000 per year for individuals and $250,000 or $300,000 a year for couples.

Gillen also pointed out the unfair policy of unrestricted loans for graduate education, in comparison to the tightly regulated loans policy for undergraduates. Bach referred to the current disparity between undergraduate and graduate loan policies as a “welfare program for the upper class,” which does not benefit those who saved and paid for college education on their own.

The student loan status quo in the U.S. warrants consideration for Gillen’s proposal to differentiate loan policies for undergraduates and graduates. According to Brookings, a non-profit public policy research organization, graduates account for about 50 percent of the nation’s entire student loan, although only 25 percent of undergraduate loan borrowers seek graduate studies.

Those who agree with the idea of student loan forgiveness defended Biden’s potential plan against the critics. Political activist Melissa Byrne noted that higher education was unfairly defunded throughout the 1970s and ’80s, and the plan to cancel student loans is long overdue.

Louise Seamster, a professor in Sociology at the University of Iowa, suggested the opponents of the forgiveness plan to reflect on larger factors — such as graduating into a strong economy, more affordable higher education, or financial support from their family — that helped them to leave their universities debt-free. She added that the critics should consider how monotonous our society would have been, with shortages of teachers and medical care personnel, if everyone prioritized personal wealth in their career decision.

Another aspect this debate must concern is the demographics affected by student debt. For instance, the American Association of University Women (AAUW) reported that 41 percent of female students take loans for college while 35 percent of male students do so. It also revealed that women take about 2 more years than men to pay off student loans.

Student debt appears to affect differently across races as well; Inside Higher Ed’s study showed that after 20 years from college matriculation, the median debt of white college graduates had reduced by 94 percent while that of black students reduced by only 5 percent in the same period.

Representative Ayanna Pressley of Massachusetts has also raised her voice regarding the disproportionate burden on women and people of color, describing student loan forgiveness as “a matter of racial and economic justice.”

A group of democrats, Pressley among them, have recently written an open letter to the president, pressuring the government to make progress on the previously proposed student loan forgiveness plan. In the letter, they stated, “Canceling student debt is one of the most powerful ways to address racial and economic equity issues.” In their reasoning, they pointed out that, on average, students of color borrow a greater amount both before and during their college education and take longer to repay their debt after graduation.

The critics of the student loan forgiveness suspect the motive of the policy to be political as a move by the progressive party to win back support from young voters. Seamster responded to those who feel negative about the policy, “I invite them to join the movement for free college to make the same public higher education benefits available to all and make student debt itself unnecessary.”

 

 

Read More: Biden’s Plan to Double Pell Grants