Today's announcement by President Biden to forgive up to $10K for college grads earning less than $125K per year (and double that for PELL grant recipients) is a classic example of a compromise regarding a problem that likely won't go away... unless the government does something to reduce the constant increase of college tuition and fees.
The amount may be incredibly helpful to millions of young people but the amount is either too much or too little, depending on politics.
Here's what one analyst says: “Canceling student debt is expensive, inflationary, and unfair to those who paid their student loans and most likely illegal,” said Brian Riedl, a policy analyst at the Manhattan Institute, a center-right think-tank. “It does nothing to prevent universities from raising costs and students from borrowing more money in anticipation of future loan forgiveness."
This is a case where the basic Republican stance of opposing helping out people who overspent and who made questionable decisions is much more appealing than some of their more cruel positions (as with no exceptions regarding abortion or intentionally taking children from undocumented immigrants).
The cost IS expensive ($230 billion is one estimate). It MIGHT be inflationary, though even that large number is just a small sliver of the American economy. It IS, almost by definition, unfair to both people who found ways to pay back their loads, but also to students and their families who made more budget-conscious decisions about where to go to college. It is clearly problematic for many Americans who made the choice to NOT attend college.
There are some compelling arguments in favor of making some student debt disappear, mostly based on long-term benefits for the economy (allowing more leeway for young people to buy a home, for instance, or move to take a new job). Those arguments will fall on deaf ears among the majority of Americans who don't go to college and feel they are "losing" to the educated class.
It's hard to argue against Mr. Riedl's position that this forgiveness program may actually INCREASE borrowing. After all, if the government forgave some debt once, why would it not do so again?
The root of the problem, left unaddressed by the loan forgiveness program, is the incredible inflation in college costs over the past couple decades. The estimate is about 180 percent increase in 20 years, which averages to about 9 percent per year. Overall inflation over the past 20 years is about 3 percent.
Can there be any doubt that college costs are out of control? Is it likely that college education is WAY better than it was 20 years ago? As one of academia's serfs (adjunct professors), I can testify that my compensation for teaching those college students spending all that money has not risen very quickly. Educators cheer at 2 percent raises every couple years or so.
I teach a couple courses for CSU that are online-only, three hours of credit, and cost about $1,400. My pay comes to a bit over $250 per student. I'm sure there are some substantial costs of maintaining our Canvas course management system, but I am wondering about the $1,000 per student that doesn't go to my salary or to supporting a complex website. No one really knows, or no one is willing to be honest.
The pundits are in full argument mode today about whether this decision by the Biden administration will be good or bad politically. I would guess that it won't make much of a difference since most voters have already circled the wagons and are entrenched in their positions.
My major objection is that the debt forgiveness is not paired with anything that might rein in college costs. Yesterday it was announced that Alabama football coach Nick Saban will be paid $90 million over the next nine years. I know the money doesn't come directly from tuition and fees, but when university employees who have nothing to do with the essence of college are paid "funny money" amounts, holding down future college costs looks daunting.
Maybe a few more college grads will vote Democrat in the midterms, but I wouldn't take bets on that. Same with (maybe) a few more high school grads voting Republican in protest.
So much more needs to be done. Government seems incapable in this area.
We have just pushed any true progress into a hazy future.
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