Student Loan Debt: Will Biden Cancel Debt to Fix Problem? | Opinion

If you had to guess which major political party supports putting more money in the pockets of wealthy Americans, which would you choose?

This is a trick question. The real answer is that both do, but in different ways.

Republicans tend to help the wealthy by adjusting tax rates to stimulate economic activity. Democrats, meanwhile, may be on the verge of helping the wealthy by canceling student loans.

The Biden administration has been vague on specifics, although the reports say the president is seeking to forgive up to $10,000 in federal student loan debt for those earning less than $150,000 a year.

How many people do you know who earn $149,999 and are struggling with student debt?

Republicans tend to oppose any loan forgiveness, for a variety of reasons, not the least of which is that it would pump more money into an economy already reeling from inflation.

Utahns tend to agree. The latest poll by the Deseret News and the Hinckley Institute of Politics found 46% opposed to any loan forgiveness, with the rest of respondents more or less evenly split on the other options. The second highest percentage, 17%, favors forgiveness only for low-income borrowers.

But both sides miss the point. The real problem with loan forgiveness is that it does nothing to address the fundamental problem, which is the high cost of higher education. The president may cancel the loans in the coming days, but when new students enter colleges in September, they will need new loans to cover tuition and other expenses, and the problem will persist.

In a recent test published by The Atlantic, Republican Nebraska Senator Ben Sasse, a former college president, offered several intriguing ideas to address the cost issue. Among other things, it suggests charging variable tuition fees depending on the chosen field of study. Those who pursue careers with lower-paying jobs would pay less than engineering students, for example.

“Different majors generate widely divergent outcomes in the labor market and thus provide varying returns on student investment of money and time,” he wrote. Why would everyone pay the same price?

This idea could have the added benefit of attracting more people to the teaching profession.

It would also remove current accreditation practices and make schools more accountable for the performance of their graduates in the workplace.

The nation needs a system that transforms “more lives by providing more accountability, more experimentation, more institutional diversity, more intellectual curiosity, more adaptive learning, and more degrees and certifications. We have needs an overhaul, renewal and expansion – tinkering around the edges won’t be enough,” he wrote.

About the loans, he said, about a third of them are held by the richest 20% Household.

“The fact is, the typical holder of student debt is more likely to be white, better educated, and has higher earning potential than the median American.”

write for the Brookings Institution, Adam Looney, executive director of the Marriner S. Eccles Institute at the University of Utah, echoed some of those concerns. It supports loan forgiveness, but only if done in a way that targets low-income borrowers. He notes that the president has campaigned to provide an income-driven reimbursement system backed by expanded Pell Grants, which could “fix the failures of the current system” and make college funding fairer and more equitable.

“Cancelling the debt of wealthy, high-income, well-educated, mostly white Americans makes society more unequal, not less,” he wrote.

In the meantime, if you’re worried about federal debt (and you should be), loan forgiveness won’t help.

The last thing we should do is blatantly make this problem worse. Estimates from the Committee for a Responsible Federal Budget it would cost $245 billion to cancel up to $10,000 in loans. The Congressional Budget Office, meanwhile, just published a reportit paints a bleak future for the economy as spending continues to outpace income, and that’s before it figures in loan forgiveness.

No one can seriously argue that people with college degrees aren’t among the wealthiest Americans. The studies supporting this are numerous and compelling.

At the same time, no one can credibly claim that the ability to repay a loan does not differ depending on what field of study a person chooses or whether they dropped out before earning a degree.

A blanket loan cancellation plan would ignore all of this and the need for higher education reforms. It might be great policy for election year, but it would help a lot of wealthy people while doing nothing to address why students need loans in the first place.

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