Biden's Student Debt Forgiveness Plan
Biden's Student Debt Forgiveness Plan
A reaction to the reactions
Biden’s debt forgiveness plan was announced yesterday and the bad Twitter takes keep pouring in.1
This is nonsense.
There’s a reasonable case to be made for student debt forgiveness but saying people are ghouls if they don’t support the plan is not it. “Agree with me or you’re scum” is not an argument. It’s also a bit rich coming from a successful media personality. I don’t know how wealthy Mr. Cohen is but he scored a one-on-one interview with President Biden in the White House so he seems to be doing pretty well. Ten thousand probably doesn’t matter to him as much as it would to most people.
Anti-debt forgiveness Twitter has its fair share of idiocy.
Let’s count the ten thousand ways pregnancy and college tuition are entirely different things, but hey, it sounds cool and will get retweets from my followers, so… go for it!
Price’s tweet is much better than average (keeping in mind the average would embarrass most toddlers). He’s right that most Americans don’t attend college and much of the plan’s benefit will go to those who have graduate degrees and will, they hope, be making better than average incomes. The plumber to the lawyer analogy, however, is a bit iffy. Sure, who doesn’t hate lawyers (apologies to my lawyer readers, some of my best friends are lawyers, I swear!) but there are many people burdened by college debt who didn’t go to law school. I saw a list of some of the worst predatory lending colleges and they were beauty and technical “colleges” for what are still essentially blue-color jobs.
Bias alert! I’m a Nate Silver fan so I’m going to think his tweets are better than average.
It’s hard to deny this one (although read the replies!). Biden’s plan may have economic and societal benefits but it’s going to disproportionately help people who disproportionately supported Biden. There was political pressure from Biden’s base to issue this order and doing so will score him political points. Giving your supporters some perks is standard in politics. Silver points out that Trump did the same with tax cuts that favored wealthier Americans.
I’m also a fan of Noah Smith and he’s right that taxpayer money is most definitely involved in student loans. If people don’t pay their loans, the government isn’t going to get the billions that it was expecting to receive. To replace that money and keep spending like a sailor on shore leave, it’s going to have to either raise taxes or borrow money (raising the national debt). That’s all a cost for taxpayers.
Finally, there’s the question of how the heck can the president just wave a pen and cancel billions in debt? That’s not my focus, but like Nicholas Grossman, I’m troubled by a tendency (not unique to President Biden) to do far too much by executive order.
So is the plan good? I’m inclined to think not.
A lot of folks are suffering and they are not all upwardly mobile bougies and to say their debt is all their fault ignores how life can sometimes rig the system against us. Remember that the plan has an income cap of 125k, so it’s not going to help the richest folks. (Although the 250k cap for couples is definitely in upper-middle-class territory.) It also gives special help to Pell Grant recipients, who come from poorer backgrounds.
Still, for the people who didn’t go to college (which is most Americans) or who tightened their belts to the last notch and paid off their debts, this may feel like a slap in the face.
(Full disclosure: I worked my way through college, a public university, and accumulated no debt and I might be expected to resent those who now benefit. However, I have a kid just out of college who still needs my help and he’s sitting with 20k in debt. Him saving $10,000 takes pressure off my wallet.)
The New York Times has a both-sides piece, “Student Loan Relief Kicks Off Heated Debate,” that offers arguments from those in favor and against. The article doesn’t take sides but provides more anti than pro arguments. They quote Democratic Representative Tim Ryan who says the plan sends “the wrong message to the millions of Ohioans without a degree working just as hard to make ends meet.”
Noah Smith put out his own explainer and he comes down against Biden’s plan. In different times, he says, it might be good to forgive debt, but we are dealing with an inflation crisis and pumping hundreds of billions of dollars into the economy (which is essentially what loan forgiveness does) is clearly inflationary.
Moreover, the plan does nothing to solve the debt’s root causes, which are fed by colleges raising tuition because predatory systems have made it easier for students to borrow to pay those higher tuitions (and the money has gone to making fancier buildings and adding administrators not improving the college experience).
The bigger problem with student debt cancellation, however, is that it’s an ad-hoc, one-off move that does absolutely nothing to fix the deep pathologies in the way America financed undergraduate education.
And as Matty Yglesias says, what do we do next?
If your kid is a freshman this Fall, do you rack up debt assuming there will be another loan forgiveness plan in the future? Is Yglesias right that colleges will use this as an excuse to raise tuition even higher? I know it seems unlike those kindly generous colleges, but it just maybe might possibly happen.
Politically, will this plan help Biden? I don’t know. It’ll please big chunks of his base. My own progressive Facebook peeps are thrilled. The Times reports, “some polls so far suggest that a narrow majority of Americans favor some level of student debt relief.” But will that counter the backlash from those who feel this plan is unfair? And will support wither if inflation starts to spike again?
Find out in November.
The basics of the plan are outlined across the media universe. Here’s the Wall Street Journal:
“President Biden will forgive up to $20,000 in federal student loan debt for tens of millions of Americans, a move that will provide unprecedented relief for borrowers but is certain to draw legal challenges and political pushback.
Following more than a year of internal debate, the president said Wednesday that he will cancel $10,000 in federal student loan debt for borrowers making under $125,000 a year or couples making less than $250,000 a year. In addition, those who receive federal Pell Grants and make less than $125,000 a year would be eligible for total forgiveness of $20,000.”