Biden’s debt forgiveness plan ignores the root problems of the student debt crisis
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CounterCurrent:
Passing the Check on Student Loans
Biden’s debt forgiveness plan ignores the root problems 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 Statement - "Unjustly Enriched Colleges, Unjustly Impoverished Americans" by the National Association of Scholars ([link removed])
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On Wednesday, President Biden announced his long-awaited student loan forgiveness plan ([link removed]) . The details were more or less what everyone expected, with $10,000 in debt forgiveness for those earning less than $125,000 per year and $20,000 for those who received Pell grants due to their low-income status. Also as expected, the plan lacks any mechanism to curb rising tuition costs ([link removed]) and limit the effects of the policy-induced moral hazards that led to the student debt crisis in the first place. Why fix a problem when you can just kick the can to the next election cycle?
The move was, of course, met with much rejoicing from those who find themselves struggling to make payments on student loans. But policymakers on both sides of the aisle ([link removed]) are frustrated by the Biden administration’s refusal to address the root causes of the debt crisis and by its decision to issue the executive order in a time of widespread inflation. The plan will not only cost upwards of one trillion dollars ([link removed]) over the next decade thanks to the restructuring of income-driven repayment plans that accompanied the one-time debt forgiveness; it also won’t even keep the total student debt level down for longer than five years ([link removed]) . In other words, we’re paying hundreds of
billions of dollars to end up exactly where we started—with college costs soaring, student debts skyrocketing, and taxpayers footing the bill.
In a statement ([link removed]) published last Friday, the National Association of Scholars (NAS) encapsulated the number one problem with the debt forgiveness plan: it lets colleges off the hook, enabling them to raise tuition with impunity. They’d be foolish not to hike tuition further knowing that the federal government is ready and willing to clean up the mess (or at least spread it around). As the statement explains,
[Colleges] got the money but none of the debt, so they will continue with business as usual—that is, they will continue to raise tuition at five times the general inflation rate. What’s more, current students will now expect future debt forgiveness, which means American taxpayers will likely again be on the hook.
The conclusion is simple:
The Biden administration prolongs the problem of unjustly enriching colleges while unjustly impoverishing American taxpayers. It’s high time that public officials get serious about real higher education reform and slay the immoral beast that is the American college industrial complex.
Debt forgiveness only makes financial sense as part of a broader restructuring of higher education financing—a truly one-time deal, designed to wipe the slate clean and reboot the system. There are numerous different ways to go about such a restructuring, many of which NAS outlined in its 2021 policy recommendations Freedom to Learn ([link removed]) . But whatever the chosen avenue for reform, the guiding principle must be to hold colleges accountable ([link removed]) . When students who were promised a worthwhile education and a job upon graduation receive neither, the colleges that made these promises should be the ones left on the hook—not the swindled students or the American taxpayers.
Absent broader reforms, we are simply paying to pass the debt load on to future generations of students, whose only recourse in the face of massive tuition increases will be to take out even larger loans and hope that they, too, will enjoy the favor of a president and party desperate to ward off an election loss.
Until next week.
Marina Ziemnick
Communications Associate
National Association of Scholars
P. S. NAS invites any members who are interested in the behavioral sciences to join the Society for Open Inquiry in Behavioral Science ([link removed]) (SOIBS), a new organization dedicated to promoting free inquiry, open discourse, and rigorous standards in the behavioral sciences. SOIBS was founded by longtime NAS member Richard Redding in 2021, and its founding members ([link removed]) are among the most distinguished researchers in the field. Membership is free and open to anyone who shares SOIBS’s commitment to open inquiry in behavioral science.
Additionally, the Oregon Association of Scholars (OAS) released a new diagnostic tool yesterday to help students, parents, taxpayers, and legislators measure the extent to which “diversity, equity, and inclusion” ideology has spread into a given college and university. The 36-item tool is divided into four categories related to university administration, students, faculty, and the library. The items can be summed and then compared to a stages-of-sickness chart that describes the effects of DEI ideology on institutional quality. For more information and to access the tool, check out the press release ([link removed]) published on the OAS website.
Read More ([link removed])
For more on the student debt crisis and American higher education:
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August 09, 2022
** A 645 Billion Dollar Hole in Taxpayers’ Pockets ([link removed])
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Marina Ziemnick
Over the past 25 years, 645 billion taxpayer dollars have been lost thanks to the federal government’s careless calculations about student loans.
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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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August 17, 2021
** Student Debt is Crippling College Grads. What Can Be Done? ([link removed])
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David Acevedo
Three ways to better inform prospective students of the reality of the debt crisis and to help those who are already trapped in it.
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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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