With only a few weeks until Joe Biden moves to the White House, there is a lot of speculation about what he will prioritize early in his presidency. In a recent interview with Anand GiridharadasSenate Minority Leader Chuck Schumer suggested that Biden enact a significant student loan forgiveness by issuing an executive order. Schumer’s proposal, along with former presidential candidate and Massachusetts Senator Elizabeth Warren, envisions an FDR-style agenda within Biden’s first 100 days.
The Inquirer turned to two experts and academics to discuss: Should Biden cancel student loan debt?
By Bishop Jalil Mustaffa
Cancellation of student debt is morally required for racial justice and urgently needed to repair massive political failure.
Since the start of the pandemic, I have co-led one of the largest studies black student loan experiences. Each week, our team interviews black borrowers and reviews responses from our national survey. We cried as we heard how education was more of a debt trap than an opportunity. We explained how student debt traumatizes black lives across generations. The stories have been devastating.
By focusing on black voices rather than big data, it is clear that debt education is immoral and racist. Student debt is an injustice at the intersection of historic racism, a racially stratified higher education system, and a discriminatory underpaid and underemployed labor market.
Blacks, as well as Latinx students, borrow more student loans to attend institutions with the lowest funding levels, endowments, and graduation rates. Groups then navigate Labor markets who refuse to hire them with a living wage. The result: Black and Latin borrowers have the worst repayment and default rates at all educational levels, from no-degree to graduate degrees. In Philadelphia cream, student loan borrowers in majority minority neighborhoods are four times more likely to be delinquent. The promise of higher education simply cannot be real if student loans have become a requirement for black and Latin communities.
In addition to the fact that student loans are a racial justice issue, they are also a political failure.
“The promise of higher education simply cannot be real if student loans have become a requirement for black and Latin communities. ”
While many think of student debt cancellation as a new idea, it has been part of student loan policy for almost 30 years. Since the 1990s, policymakers have continuously developed Income-Based Repayment Plans (IDRs) as a solution to policy failure. The plans reduce payments for those who cannot afford it and write off debt after a set payment period (usually 20 or 25 years). Although IDR plans offer short-term relief on monthly payments, they allow for negative long-term consequences. The majority of student loans borrowed each year from 2009 to 2018 are now higher than their original balances. Borrowers cannot afford payments that will lead to full repayment of the loan. Also, those who should benefit from a cancellation did not receive it. For example, only 206 borrowers in 2018 were approved for a utility loan discount, and a investigation found over five million errors in the student loan service that hampered eligibility for cancellation.
To address policy failure and racial injustice, the Biden administration already has the power to write off student debt via decree. Critics of the cancellation insist that it is a policy for the rich and that extended IDR is a better solution. For their evidence, many critics use income instead of wealth, monthly payments instead of debt-to-income ratios, and colorblind myths instead of race-conscious arguments. First, opponents ignore that the rich don’t have student loan debt – those with little wealth do. Then the cancellation is not about the monthly payments, but the relief of those who have the most debt. relative to their income. Finally, the expanded IDR does not solve the debt crisis, but rather forces people to experience the trauma of a life sentence for student debt. The insidious part is that reviews agree that student loans and the promise of higher education have failed blacks and Latinxes. Yet IDR solutions effectively tell those most affected to simply “wait” for racial justice, when cancellation can take place now.
Cancellation of student debt is not a silver bullet, but it is necessary now. It is a gateway to building a society where our livelihoods, from education to health care and housing, do not depend on debt. Find out more @ https://citrusnorth.com/
Jalil Mustaffa Bishop is Postdoctoral Vice-Chancellor in the Division of Higher Education at the Graduate School of Education at the University of Pennsylvania.
By Marie Claire Amselem
Having our burdens cleared seems pretty nice. Wouldn’t we all like someone else to pay our mortgage or maybe our Christmas credit card bill? But at the end of the day, any scheme to get total strangers to pay my bills doesn’t seem right at all.
The same could be said for student loan debt. Student loan debt has increased in part because of federal policies and universities eager to swallow federal grants. But no one is forcing someone to take out a student loan, and canceling the loan is paying the price for innocent passers-by. Forcing others to pay for someone’s college education is inequitable and unfair. Moreover, it would only add a band aid to the problem of the bleeding costs of education.
The vast majority of Americans currently do not have a bachelor’s degree. Many of these Americans have chosen to follow a different path, deciding to forgo higher education altogether. Whatever the reason, those two-thirds of Americans have nothing to do with the student loan debt of those who graduated (and who presumably have higher incomes). Yet some suggest that as US taxpayers they should pay off student loans taken out by others.
For this reason, canceling student debt is perhaps the most regressive policy ever proposed by progressive policymakers.
A new working paper from Wharton economist Sylvian Catherine and Constantine Yannelis of the University of Chicago finds that total student loan cancellation would distribute $ 192 billion to the richest 20%, while the bottom 20% poorest would receive only $ 29 billion. Like Catherine Put the, “The outstanding student debt is inversely correlated with economic difficulties, so it is difficult to design a policy of remission that does not accentuate inequalities. “
“The cancellation of student loan debt is perhaps the most regressive policy ever proposed by progressive policymakers.”
Ultimately, canceling student loans would disproportionately benefit higher income earners as well as colleges and universities. There is currently no incentive for higher education institutions to keep costs low, due to the ease of access to loans through the federal student loan program. This probably explains why tuition fees have skyrocketed in recent decades.
It would also create a moral hazard. If lawmakers force taxpayers to repay student loans from current borrowers, this would (in the absence of a federal student loan program reset) only encourage prospective students to borrow more, in the hope may they, too, ride another wave of forgiveness. . Inflationary pressure on tuition fees would explode.
And yet, we sympathize with students who are struggling to repay their student loans, especially during the COVID-19 era economy. The solution, however, would be to turn to the real culprits here: debauchery universities and bad federal policies.
As for universities, it’s safe to assume that – if a student gets a bachelor’s degree, but fails to find enough employment to pay off student loans – the university has failed that student. It did not deliver a dollar value of tuition.
Some members of Congress want to require universities to pay off a portion of delinquent student loans. This policy means that schools would have some responsibility for the game and would be held accountable for the quality of the product they make.
As for federal policy, it remains clear that the federal student loan program must be eliminated – or at least significantly capped – in order to reduce college costs. The “Skin in the Game” proposals, along with the return of student loans to the private loan market, are a much better solution than giving large-scale student loan forgiveness to generally affluent graduates.
Mary Clare Amselem is a policy analyst at the Center for Education Policy at the Heritage Foundation.