On Thursday, October 17, the Biden Administration announced it was canceling student loan debt for approximately 60,000 public service workers pursuant to its authority under the Higher Education Act of 1965.
So, the “chipping away” approach to student loan forgiveness is now preferred. These actions fly under the radar, unlike last year’s ambitious move to cancel millions of dollars for millions of borrowers, pretending a post–9/11 law for military families—the HEROES Act—authorized it. That initiative invited scrutiny, outrage, and then lawsuits. And the United States Supreme Court correctly stopped it in June.
Now we wonder: was that case a shiny, jingling keychain to distract the public from the more understated and incremental steps to erase student loan debt?
Some background: Approximately 42 million Americans owe some amount of student loan debt, comprising about 17 percent of the adult population. The amount still owed by any given individual varies depending on how long the individual has made payments, what was studied and when, as well as the number of years of study and the number of deferments, grace periods, and defaults since graduation, among other things. According to the Department of Education, approximately 20 percent of borrowers default, though the percentage is higher among younger graduates. Delinquencies are expected to increase now that COVID-related relief measures—suspending payment obligations, for example—are expiring.
Student loan debt is a real issue, especially for younger Americans. The question is how to address it.
Both before and since last summer’s Supreme Court opinion, the Administration has been quietly forgiving student loans in batches—borrowers with disabilities, borrowers from subpar technical schools, borrowers from shady “for-profit” institutions, and now borrowers in public service.
The National Association of Scholars has consistently lamented these band-aid measures that treat symptoms while doing nothing to cure the underlying disease.
Authorities dodge the real causes of out-of-control tuition—the easy money of student loans is itself a big part of the problem—for fear of seeming anti-education. But facing reality and asking questions would improve education, not harm it. In fact, it’s the current system that is undermining education: survey after survey shows that today’s college graduates are more ignorant and less able to think critically than their counterparts in years past—in math, world history, American civics, and matters of basic finance.
This is occurring while tuition increases remain far greater than the general rate of inflation. American families are paying more and more, in real dollars, for less and less.
Worse, American salaries have stagnated in recent years in almost all occupations—from journalism to law. Graduates now have the worst of both worlds—high debt and low compensation.
Meanwhile, the schools received most of the cash, but young Americans received all of the debt. As we’ve written previously, this is unjust enrichment and unjust impoverishment.
Obvious reforms include the need for schools to have skin in the game. They must share the financial burden for duping unqualified students into a lifetime of debt. Otherwise, our public funds will keep rewarding poor outcomes.
The timing of this latest Biden move suggests it’s yet more election sop. Whatever happens in November, both Republicans and Democrats should get serious about this issue—less stop-gap, band-aid policy and more substantive, long-term reform. Only that will help not just current borrowers but future ones—who are also much of the future of America.
Photo by zimmytws on Adobe Stock
