AMAC Exclusive – By Andrew Abbott
While the left has portrayed student debt forgiveness as a benefit for working and middle-class Americans, the facts suggest that it is actually these individuals – many of whom did not go to college precisely because they wanted to avoid the burden of student debt – who will be stuck with the bill, while those who took out the loans – many of whom come from wealthy families and enjoy a comfortable lifestyle – will benefit the most. At the same time, simply forgiving student debt would do little to address the structural problems with higher education that precipitated the student loan crisis to begin with.
Late last month, Senator Elizabeth Warren wrote a New York Times op-ed imploring her party to make a big move now or face calamity in November. “To put it bluntly,” she wrote, “if we fail to use the months remaining before the elections to deliver on more of our agenda, Democrats are headed toward big losses in the midterms.”
Among her laundry list of potential actions was “student loan debt cancellation.” On the campaign trail in 2020, Biden had pledged to borrowers that he would “eliminate your student debt,” but declined to outline any sort of plan for doing so. Once Biden took office, however, he soon qualified that promise, with the White House floating that it may be open to cancellation of $10,000 of student debt per borrower.
But while progressive leaders insist this is something Biden can do with the stroke of a pen, via Executive Order, the President has been waffling, calling for Congress to pass legislation to address the student debt crisis. Perhaps Biden recognizes the disastrous effects of his other massive spending policies, and doesn’t want to be solely responsible for the inevitable uptick in inflation that blanket forgiveness of student loan debt would lead to.
According to estimates, the $10,000 model of student loan forgiveness being pushed by the White House would cost taxpayers as much as $2.4 billion – most of which would be paid for by Americans who did not go to college. Should progressives win their battle and force Biden to up the dollar amount to $50,000 per borrower and remove income restrictions, it would cost a whopping $321 billion.
But regardless of whether the White House forgives all or none of the student debt currently held by Americans, it will do nothing for the students currently in school, and will do nothing to solve the root of the problem – the rapidly increasing cost of a college education. Over the last 20 years, the average cost of tuition has increased more than 180%, exponentially outstripping inflation or other cost-of-living adjustments – an all-important fact which progressives conveniently ignore.
With such a spike, one would assume that product (a college degree) has also increased in value as well. Yet, by almost every metric, the opposite has occurred. Recent data makes clear that the expected income and wealth boost from a college degree is in steep decline. In 2011, two university professors tracked the studies of more than 2,000 undergraduate students. They found that nearly half “demonstrated no significant improvement in a range of skills—including critical thinking, complex reasoning, and writing—during their first two years of college.” Similar studies have also found that, in many cases, four-year college graduates performed worse in general knowledge than high school graduates.
So where are these cost increases coming from? The overwhelming majority of the staggering tuition dollars are being spent on administrative staff, college amenities, bigger buildings, and increased pay for professors. Recently, Louisiana State University’s $85 million gym renovation included the creation of a giant water park-style “Lazy River” in the shape of an “LSU.” Over a dozen major colleges have installed similar water park features at their schools at more than $10 million per project. What effect a water park has on the quality of education a student receives is not particularly clear.
But all these instances raise one central question. Why increase prices so aggressively if the money can be spent so frivolously without need? For decades, individuals would pay for college by joining the military, taking out personal loans through local banks, or simply saving up. Starting in the 60s, the federal government began subsidizing these loans. This led to the creation of the Student Loan Marketing Association (Sallie Mae), a semi-private government agency that would provide and service the government’s student loans.
In the late 90s, Sallie Mae began an aggressive campaign to pressure students to take on more and higher interest loans than they needed, often with the explicit support of the colleges. In some cases, colleges would actively place “Sallie Mae employees in university call centers to field questions from students who thought they were getting advice from college loan officers.” As colleges increased their tuition, the government would offer more lavish government subsidies that only served to inflate the market further. This, combined with the collapse of the manufacturing industry, meant that prospective students believed college was the only chance for a financially prosperous future and were willing to sign anything.
Yet, as a former Sallie Mae employee would reveal after retiring from the industry, “our customer was almost every bit as much the college as the student.” To the government-backed student loan industry, it was just as much about making money for colleges as it was providing loans for students. While the for-profit student loan industry has faced greater scrutiny and Sallie Mae has left the student loan industry, the high-tuition rates are now being maintained and exacerbated by the colleges and universities themselves.
Last year, for example, it was revealed that Columbia University hired a marketing firm to actively recruit college graduates for a prestigious Film Studies Masters in Fine Arts. The school promised its students that this prestigious Ivy League degree was a golden ticket into the film industry. Graduates of the program leave with $181,000 in student loan debt. But despite the “prestigious” degree, barely a handful of graduates worked in the film industry, and half made less than $30,000 a year. While students are undoubtedly making ill-informed decisions about their education, the entire higher education system is set up to keep young people and their parents in the dark about the true risk-reward analysis of taking on massive loans to attend college.
When the state of higher education in the United States is viewed as a whole, it soon becomes apparent that the student debt crisis is just a symptom of a much larger problem inherent in the system itself. Far from a permanent fix, forgiving student loans would only provide temporary short-term relief for borrowers while saddling them and their children with the long-term economic consequences of such a move – not to mention the moral hazard of setting a precedent that the government will simply forgive your debt if you take on more than you can pay. Democrats may soon find, then, that this last-ditch attempt to save their majorities may also backfire and exacerbate the economic crises they have already caused.
Andrew Abbott is the pen name of a writer and public affairs consultant with over a decade of experience in DC at the intersection of politics and culture.
When the federal government took over the issuance of student loans, in 2010 under Obama, and transformed the program into essentially an entitlement program with little to no merit based screening criteria or economic safeguards (real-world criteria to ensure those taking out the loans could either successfully graduate in a normal time frame or obtain gainful employment in their chosen field of study sufficient to repay the balance of the loan in a timely manner), all the conditions were set to create the situation we have today of another trillion dollar bill hanging over the heads of the American taxpayers.
Colleges looked at the new situation and saw there were little to no guidelines placed on them (they were held to no real standards for student graduation rates, percentages of students finding active and ongoing employment in the fields of study pursued at pay levels that justified the tuition rates charged, etc.), so they took full advantage of the lax federal government to “get their piece of the pie” as it were. Colleges had been given essentially a blank check, by way of the federal government underwriting student loans, to increase their annual tuition rates far above what historical rates of increases were justified. Thus, the average student loans became larger and larger over time and completely disconnected from what the world values for your degree.
What is missing in almost all discussions on this topic are the following:
1) The students all signed loan contracts that obligate them to repay the debt. Sorry this the real world and you are expected to pay your legal obligations. The fact that your degree in gender studies, art history, liberal arts, etc. is virtually worthless in a world flooded by several hundred thousand similar people holding equally worthless degrees is a YOU problem, not a WE problem. No one forced you to sign up for a student loan that you should have known ahead of time would be onerous to repay.
2) The students and / or their parents should have sat down and figured out ahead of time, before signing any loan papers, what the field of study they wanted to pursue was actually paying in the real-world. This information is very available, for virtually any commercially viable career field. You should have known the average annual compensation a graduate in the chosen field could expect to make right out of school, 5 years down the road, 10 years down the road, etc. to see if the cost of tuition was economically justifiable. If it wasn’t, that should have told you your field of study was NOT commercially viable and you shouldn’t have taken out the loan. This is you responsibility, NOT that of the American taxpayer to bail you out of your own bad decision or lack of analysis.
3) Little to NO discussion is focused on the colleges for their role in inflating tuition costs completely disconnected from the economic realities of what their product (the college degree) is worth. Neither the federal government, who essentially feeds this broken system, nor most of the American public seem to acknowledge the need for all colleges to be held to some level of accountability for the problem in terms of justifying the cost of their product (the college degree) for the value received (its worth in the marketplace). College graduates used to be somewhat rare and thus, via the scarcity principle, more highly valued in the economic marketplace. Today, with the federal government basically handing out loans to anyone who can sign the forms, college graduates in general are in surplus in most of the non-STEM career fields. Throw in the degrees being issued for the SJW fields of study and the value of most college degrees has come way down in the marketplace over the last 30 to 40 years.
4) Finally, the federal government has to be held accountable (I know good luck with this one) for creating this situation by removing all economic and most academic qualifications for obtaining a college loan. Yet another example of government intervention, for supposedly altruistic reasons, that has resulted in breaking yet another aspect of society. The Democrat Party, and its policies and programs, has been one of the most destructive forces against this country for several decades. Anyone with any understanding of basic economics could see this so-called student loan crisis would occur as soon Obama announced the federal take-over in 2010. Replacing the private sector with government bureaucrats completely unequipped to deal with anything in the real world never ends well. The solution to this particular issue is obvious and straightforward, but there is no will in Washington to address it. All we will get is endless talk and no useful action. Meanwhile the problem will continue to grow.
Well yet another comment censored by AMAC. I guess AMAC is gearing up for the weekend.
Accountability and responsibility, you borrowed you pay it back. Poor decision making should not be shouldered by the taxpayer, just because dems think so!
How do we go from $2.4 billion to $321 billion when Cost went up from 10K to 50K? That is only a factor of 5 not a factor of 133.75.
Stupid people do stupid things. The problems with higher education are so blatantly obvious, yet people still wonder what the solution is. Cancelling loan debt for a select few Americans is the stupidest idea of them all.
I paid my student loan but it wasnt that much.. why would a student sign on for thousands.. I will tell you why .. alot were just going for the PARTY and obviuosly the parents couldnt afford to go with it.. This is a BANK problem giving kids loans WITHOUT looking at specifics.. Like when BANKS gives loans for people buying houses that couldnt afford them in the long run.. ITS ALL A SCAM AGAINST THE TAX PAYER. look in the past .. HOW MANY COMPANIES have USA paid to keep afloat with cronism and good ole buddy BS.. #FJB.. he made a promise and then the words change after he got elected or werent put out there to make it CLEAR thanks to lamestream disinformation puppets to the amount IF YOU MAKE UNDER A CERTAIN AMOUNT.. like 150,00/yr ?? last I read..
and it was like only 10,000 .. what a f’in joke . These student loans was a ploy to have student rely on the govt to dicate their future .. Im sure there are if and and buts in the agreement.. so how does that dictate??
Like the retired Sallie Mae employee said, this business is all about subsidizing the ballooning cost of college.
Loans are pushed to students, a good percentage of whom will not graduate.
Loan forgiveness and free college tuition are doable. First, CITIZENS must alter the way business is done in the interaction between a government providing subsidies, and “educational” institutions providing the facility, format and curricula:
Here’s an idea . How about tying these student loan forgiveness plans to tuition discount plans together with professorial pay cut plans ? This way the sucker taxpayers would be responsible for only 1/3 of the student loan forgiveness while the instigators of higher student tuition would absorb 2/3 of the loans they encouraged . Such enablers are as guilty as gambling houses that encourage gambling .
The best education is not necessarily found in college setting.
Have the colleges pay since students get loans to Pay colleges off.
Force price wars & competition among colleges
What about we scumbags who carefully took out as small as possible an amount of student loans as possible and have scrimped and saved and paid off those loans? Do we get that money back? The records still exist………hell, I have my own records. Do such people as myself file suit for some discriminatory reason we could get an idiot progressive to tell us about?
This sucks. My pay post graduation in my career is a fraction of what some friends I have are paid in skilled blue collar jobs. They took out even lower amounts of loans than I did or took out none at all….
College is a scam…..always has been and now with its government minions its going from brainwashing to outright theft.
This is bull and leads this country further along the road of a “search for Oswald”
The premise of this article is fallacious. College degrees help the students to become a productive citizens, thereby strengthening our society overall. This is also the salient reason for the government to subsidize current, and future college tuition costs. Senator Elisabeth Warren is right in this matter but she should have applied her societal beliefs with more boldness.
Investment in education is the key to building a better society. It should go without saying that students should be assisted in staying in the higher education facilities to gain even more competence in the job markets. By the way, all educational testing needs to be eliminated. There are no credible reasons for such discriminatory scrutiny.
It is the responsibility of the government to help the people in every way possible so that they will be able to face life’s financial burdens. To that end, the government should also underwrite the costs of food, shelter and clothing. Such necessities are too costly for people to face on an individual basis. Collective efforts are not only desirable but they have become unavoidable considering the complexity of the modern world.
We need more visionaries like Senator Warren to be in government. The people who might criticize the costs of these worthy programs should be ashamed of themselves for being too egocentric and mean-spirited. Those who earn more than they need should be taxed at a rate that would bring about societal equality. That would enable the government to fund all of the essential government programs.
(Sarcasm switch off.)
Why should taxpayers, some of whom did not go to college at all, pay the loans of today’s slackers? Those who did attend college, like myself, who paid our loans in full also are expected to pay for students who pursued useless majors at overpriced “elite” schools and know propaganda rather than fact. If the schools charged reasonable tuition, students wouldn’t rack up such high bills! Plus, the students might work a job and cut back on their booze and drugs budget!
The government wants kids to go to college so they can indoctrinate them in to being Democrats. Not to think for themselves, believe in socialism that hasn’t worked anywhere it’s been tried, get them used to taking drugs because it’s easier to enforce the liberal philosophy when your brain is scrambled. Also what no one wants to talk about is college is welfare for teachers that couldn’t get a job doing anything else they figure how to get grants so they can take a paid time off to study how cockroaches that get regular haircuts get more sex than cockroaches that refuse to clean behind their ears!
In the early 2000s, we had 2 in college and 1 on the way to college. My kids worked 2 jobs each during summer break and worked during the school year. I worked overtime at my job 3 nights a week after a full days work to pay for college. It took years of sacrifice. No vacations for us and they went to state schools. I think if the government passes the college loan forgiveness, then they should reimburse the rest of us who sacrificed for our education and our kids education. I’m sure that won’t happen. Colleges charge too much money for what they deliver.
When Mark Warner ran for Governor of Virginia some 20 years ago, he campaigned on a plan to ‘invest’ in higher education in VA in an effort to keep costs down. In reality, it was a massive tax hike that did nothing to keep costs down, but it sure hit my tax bill pretty hard after he became governor and got his little scheme passed. These days, Marky-Mark is in the US Senate and despite the huge tax increase on Virginians, he’s done pretty well for himself, which is a testament to the fact that the politicians who created this mess in the first place haven’t been penalized for their horrible policies.
Maybe that’s the first step in resolution of this ‘crisis’: make the politicians accountable for how this has all turned out and vote them out or disqualify them and remove them from office.
So what did people expect? Honesty, truth, something that made sense, something that would actually benefit America? Face the reality. If Biden and his globalist goblins do anything it won’t be for America. It will be for their Marxist globalist agenda and the forming of the one-world government. These people are Godless satanists and have no human concern. Anything they do that sounds good is just another ploy to buy the votes they don’t steal.
My son took out federal loans for his pharmacy degree. He graduated with almost $2k in loans. The small print says if the loan isn’t paid off in 25 years, it will be forgiven. If you work for a medical facility, they determine what you owe each month and it doesn’t even cover the interest on the loan. He took out a loan at a much lower interest rate and has made significant progress in the payback. it is sad that there are some people that are not responsible for their debt. As his parent, it has something to do with raising your children to be responsible…I feel blessed!!!
If forgiveness takes place there should be millions of POed people in this country and if any continue to vote Democratic their educations will have been a waste.
Unbelievable! Why in Gods name should anyone be responsible for someone else’s college debt? I went to college and couldn’t afford the best university, so I went to a local 2 yr. school and then a 4 yr. to save money. I worked 2 jobs also to pay for my tuition and books. What is wrong with these people that they can’t pay for their schooling? If you can’t afford it, you don’t go. Simple as that! Total BS!
Faux-cahontas Warren’s exhortation to do something now to ward off defeat in November says it all. She wants to buy Dummycrat votes with the taxpayers’ (our) money. Of course they’ve been doing this for years with welfare programs and teachers’ unions.
This doesn’t solve the root cause of the problem – universities selling degrees in underwater basketweaving as a college education. If the degree is marketable, the university needs to repay the student for failing to prepare them for the real world.
I’m not sure but wouldn’t 1099 be sent to the person for whom the amount of the loan will be forgiven. That would mean they would owe taxes on it. Maybe someone out there can clear that up.
the greatest benefactor of the SL program was the colleges/universities. Perhaps they should contribute to loan reductions.
Oh please, this loan forgiveness c r a p is nothing more than vote buying, by the Marxist/Globalist Demoncrap frauds; bunch of anti-Republic traitors.. Totally disgusting! Everyone that has paid for years are swingin in the wind, and those debt free? Well, you got royaly skreeeewed..
The left is doing anything they can to attempt to garner votes in November, and this idiot Warren just proved it. Average Americans are hurting at gas pumps, grocery stores, with this left totally manufactured crisis. The puppet biden is doing anything obummer and these radical demoncraps are telling him to do. The fact of the matter is he is no longer capable of thinking for himself. The more frightening part is that if, and more likely when, his party introduces the 25th amendment we will be saddled with a much worse radical in harris. She will undoubtedly follow the squads, and obummers directions to the letter. My greatest fear is that we will be in so deep before the midterms can hopefully turn the situation around, that people will be losing homes, vehicles that are on monthly payments, all because gas prices, and more importantly, food prices will create the decisions for American families between paying mortgages, car loans, or feeding their families. The left is no longer trying to instill socialism, they are reaching for a compete communist take over. Obummer will be the “leader” with the likes of bezos, and the other billionaires now financing these radicals. God help us!
The Loan document that (you) signed is a legal Contract. Put on you BigBoy Pants and accept (your) responsibility to honor its terms. PERIOD!
Its like having the lawsuit jury pay the plaintiffs. Easy fix: have the universities where they got their gender studies degree forgive their loan! They caused the debt.
Pretty simple, give more freebies and hopefully get more votes. This has nothing to do with integrity or responsibility. The “great American dream” is about working hard to get where you want to be, not to rely on the government to meet your needs. Free anything is a very dangerous path but so transparent for what the politicians want.
Every time the Government gets involved in industry or other private programs it makes all outcomes much worse. The Government should never have got involved in the Student loan programs.
Well the problem doesn’t start with the end but with the beginning. Who approved all these loans especially to students whose parent could and should pay for their college education. There is a course nothing that can not be done with that end be I believe the tightest of regulations should be applied to who get forgiveness and what it will cost. I feel Individuals who have worked in service fields should receive the highest amount of debt forgiveness ie an attorney that volunteers at a legal clinic would get consideration. I know there are many issues to discussed but I think it is time to stop the handouts Thank you for allowing this opportunity to voice my opinion
Under no circumstance should taxpayers be stuck with student loans. Pay your own bills !!
This insanity is nothing new. Keep this in mind, the cost of energy, food and housing has not grown faster for colleges than the general public. Colleges pay less utilities the months when schools are closed. They are tax exempt; they often get a better rate for utilities than a residential customer and yet the tuition has exploded. They are buying up massive property to build new facilities that require more funding and staff just to maintain. All this land then comes off the municipal tax rolls and they lose the income for the community. Thís is the exact same process going on with our federal government. The high schools and colleges are not being clear as to the job market for projecting how students will be able to live after getting this overpriced and often useless diploma. This is vital for parents to help the student make an informed decision about the future. How many grads from art schools are living above the poverty line within the first 5 years? How many Plumbers, electricians, carpenters, HVAC techs, masons are out of work or living below the poverty line? These skills do not require college.
Here they go again, useless joebama and marxist democrat party buying votes at the expense of all the hardworking taxpayers!!
HELL NO , I don’t WANT MY money going to pay off others debts of ANY kind!
These snowflakes need to get off their backsides, go to work and pay what THEY OWE!!
I hope most people recognize that MANY student loan dollars pay for spring break, cars , partying and any other treat these kids desired!!!
If you decided to borrow $$$$ for a degree in grasshopper watching that’s 100% on YOU!
Time to put on your big boy pants and GROW UP!
Nothing is FREE.
I worked hard and payed mine off, so can they!!!
This forgiveness would include forgiving loans on people that went to college, partied for a year, and got kicked out. It would be interesting to compare the total amount to forgive if you removed those that did not get a 4 year degree.
What happened to “Anyone making less than $400K a year will not pay any new taxes”.
Typical career politician. Tell the people what they want to hear and hope they believe you. LIAR, LIAR, LIAR
How about the Universities and Colleges give back 50% to the Loaners?
Does anyone remember when Obama had the government take over student loans? Now they can buy votes by for giving their loans. This would not have been possible if banks had control of student loans. Elections have consequences. Wake up Americ
There shouldn’t be forgiveness of any loans. You know where you are going with this and these people who took these loans gained an education or flunked out or even dropped out so the taxpayers should not shoulder this expense. The government doesn’t generate income they collect money from citizens! When the government says that they are going forgiveness loans they essentially are giving the burden to the taxpayers! SO NO FORGIVENESS!
I paid my student loans back, why doesn’t everyone else have to do the same? In my college years I only took out 2 small student loans to make sure that I could pay them back. If they took too many loans to pay back it’s not the fault of the taxpayers.
Why should I pay for their decision to take up a curriculum that won’t pay them in life. I had the G.I Bill but had to take out loans to finish. Paid everything in 5 years. Many don’t have great health care and didn’t pick their illness. They could use the money instead. Plus, the universities got their money, go after them. And if Warren is so concerned about debt, fork up the money yourself. And quick picking my pocket for every ludicrous idea.
Come on, you can’t buy votes unless you spend money whether it’s yours…or the tax payers. Everything this administration does is to buy votes. Look at every program the Dems have pushed for years and it’s always the same- a giveaway to buy votes. Notice I didn’t say “free”. You’re an idiot if you believe anything at anytime is free. “There is no free lunch”. Same question I always have- where are the Repubs doing anything to to stop the stupidity? Oh wait, they’re too busy sending another 40 billion dollars to what just a year ago was called the most corrupted government in Europe. Glad the defense industry are getting rich at your expense? The oldest adage in the book always still applies- you want to know what’s really going on, follow the money. Vote and prepare folks. This really can’t continue as it is…..
Democrats supposedly are big on “fairness” and “equity”. Let me ask, what is fair and equitable about forgiving student loan debt for some when untold numbers of other Americans have taken responsibility for paying back their student loan debt? The answer is nothing. It would be a serious injustice to those who paid back their student loan debt and then be forced as taxpayers to help cover the cost of loan forgiveness for the freeloaders.
The amount of money to get worthless degrees in today’s world is ridiculous. Students are paying for propaganda and not learning anything except how racist they are or how oppressed they are and to hate our country. Nothing but communist style propaganda. Colleges have always been pretty expensive, but with all the government backing, they’ve gotten out of control.
Student Loan Forgiveness is a new way to fund colleges and their increasingly increased costs.
The cycle has to stop somewhere. I am praying the Republicans make a big sweep and we get our country back on track.