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.
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