It’s time to address the root causes of the student debt crisis
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CounterCurrent:
Death, Taxes, and
Student Loan Forgiveness
It’s time to address the root causes
of the student debt crisis
CounterCurrent is the National Association of Scholars’ weekly newsletter, bringing you the biggest issues in academia and our responses to them.
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Category: Student Loans/Debt; Reading Time: ~2 minutes
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** Featured Articles - The Latest Batch of Forgiven Loans Shows Why Student Loan Forgiveness Is Such a Bad Idea ([link removed]) and How to Fix Borrower Defense ([link removed])
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Let’s talk about the never-ending topic in higher education: student loans. When the COVID lockdowns first began in March 2020, Congress suspended student loan repayments and froze interest rates for what was supposed to be six months. Now, just over two years later, we’re on the seventh extension ([link removed]) of the suspension (yes, you read that correctly). According to an announcement from the White House last week, borrowers won’t have to resume payments until August 2022 at the earliest—and some have speculated ([link removed]) that the pause will be extended until after the midterm elections (surprise, surprise).
That’s not all that’s been going on in the student loan department lately. In March, the Education Department (ED) announced that it would be forgiving an additional $6.2 billion in student loans through the Public Service Loan Forgiveness (PSLF) program. This latest batch of loan forgiveness applies to 100,000 students whose work in politically favored sectors ([link removed]) made them eligible for the program.
On top of that, the ED committed in February to forgiving $415 million in student loan debt for graduates of DeVry University, ITT Technical Institute, and Westwood College through the borrower defense program ([link removed]) , which allows students to seek loan forgiveness if they feel they received an inadequate education from their university or were misled about salary and employment potential post-graduation.
In total, the Biden administration has canceled approximately $16 billion in federal student loan debt since the inauguration in January 2021. That averages to just over $1 billion each month Biden has been in office.
The National Association of Scholars has long been concerned about the rising cost of higher education ([link removed]) . We have sympathy for the students who have been told over and over that taking on a crushing amount of debt opens the door for success in life—regardless of whether higher education is necessary for their intended career or whether they have any realistic chance of repaying the loans. But indefinitely suspending student loan payments and forgiving massive amounts of student loans leaves the root causes of the student debt crisis untouched.
Over the past two weeks, we have published two articles at Minding the Campus that address the problem with student loan forgiveness and explain why we need to rethink the entire federal student loan system. In “The Latest Batch of Forgiven Loans Shows Why Student Loan Forgiveness Is Such a Bad Idea ([link removed]) ,” Andrew Gillen outlines the foolishness of repeatedly providing loans that will not be paid back and then forgiving them years later. He argues against the PSLF, which he says constitutes a “taxpayer-funded giveaway to the politically powerful and connected.”
In “How to Fix Borrower Defense ([link removed]) ,” NAS Senior Research Associate Neetu Arnold proposes one way to address the perverse incentive structure that drives the student debt crisis: “cut off federal funds to universities with high default rates and investigate universities that rely heavily on federal student loans.” By raising the default rate cap for universities to match other industries, Arnold suggests that we can “raise the standards for university performance”—and stop propping up predatory universities with taxpayer-funded loan forgiveness.
The current cycle of delaying repayment and forgiving student loans will not end on its own. Policymakers must take action to reform the incentive structures in higher education and hold universities accountable for financially crippling students. And voters must hold them accountable until they do.
Until next week.
Marina Ziemnick
Communications Associate
National Association of Scholars
P. S. This week, we’re highlighting the work of our NAS affiliate in Ohio, which has been engaged in an ongoing battle against discriminatory hiring practices at Ohio State University.
In February 2021, Ohio State University president Kristina Johnson announced a new initiative to hire 150 faculty whose work addresses social equity and racial disparities and/or who were “underrepresented and BIPOC hires.” She claimed that the initiative followed the “initial draft recommendations” from OSU’s Task Force on Racism and Racial Inequities. In the months since, Professor Emeritus Boris Mityagin has sent several letters requesting a copy of the “initial draft recommendations” to review whether the president’s claim is justified or whether she has usurped the authority reserved to OSU faculty. However, despite repeated requests, the university continues to insist that no such document is available.
The OSU Office of Compliance and Integrity (yes, that is actually its name) has been giving Prof. Mityagin the run-around for months now. Nonetheless, the Ohio Association of Scholars are determined to keep working to bring the information to light. For more details about the ongoing situation in Ohio, check out this article by the President of the Ohio Association of Scholars ([link removed]) .
Read More ([link removed])
For more on federal loans and the student debt crisis:
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September 15, 2021
** The Student Debt Relief Band-Aid ([link removed])
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Teresa R. Manning
Student debt forgiveness doesn't resolve the problem of skyrocketing tuition.
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July 13, 2021
** $300,000 for an M.F.A. in Film—Why Not? ([link removed])
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David Acevedo
A Wall Street Journal article exposes America’s broken student debt system—what can be done?
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May 12, 2021
** Toolkit: Encouraging Fiscal Responsibility in Higher Education ([link removed])
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National Association of Scholars
Use this new toolkit to encourage Congress, state legislators, and college presidents to rein in excessive college costs.
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February 25, 2021
** Priced Out: What College Costs America ([link removed])
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Neetu Arnold
This report details the spending habits of 50 universities across America and provides perspective from students, parents, and college administrators.
** About the NAS
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The National Association of Scholars, founded in 1987, emboldens reasoned scholarship and propels civil debate. We’re the leading organization of scholars and citizens committed to higher education as the catalyst of American freedom.
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