One good rule of thumb is to judge parties and politicians by their priorities. Politicians often pretend to be for every good thing under the sun, so the best way to judge them is to look at which things they actually work to achieve or spend political capital on. This will tell you not only what they’re really for, but which constituents they really care about.

By that metric, it will be very revealing if one of Joe Biden’s first actions as president will be to forgive student debt.

That’s an idea swirling around Democratic circles — particularly among the progressive base, which is worried that Biden might actually mean all that centrist and moderate stuff he said during the campaign. The base turned out for Biden, and now they want their pay-off — literally so, in the case of massive debt forgiveness.

Last week, a coalition of 236 progressive groups led by teachers unions called on Biden to cancel student debt on his first days at the office. Biden himself has already urged Congress to cancel $10,000 as part of a pandemic relief package.

Sens. Bernie Sanders and Elizabeth Warren have called for even greater debt forgiveness. Sanders’ plan would cost an estimated $1.6 trillion.

I think it’s a bad policy, and bad politics.

Let’s start with the policy: As economists on the left and right will tell you, the economic cratering caused by the pandemic is not like a typical recession. In normal times, bailing out failing businesses is a bad idea because, among other things, it creates what economists call “moral hazard” — incentivizing bad decisions people make when they think someone else (i.e., taxpayers) will pick up the tab.

A restaurant that was profitable before COVID-19 hit did nothing wrong. Trying to keep such businesses, and their employees afloat during the pandemic, which Washington did on a bipartisan basis, was a good idea.

Proponents of loan forgiveness are claiming this is just like that. Well, before the pandemic no one was calling for a mass bailout of small businesses, but lots of progressives were calling for student debt cancellation. In other words, they think the pandemic is a crisis that shouldn’t go to waste.

That doesn’t automatically mean they’re wrong, but it doesn’t make them right either. Student loan forgiveness, even according to formulae that exclude the very well-off, has very few broader economic benefits. As Jason Furman (Barack Obama’s chair for the Council of Economic Advisors) notes, debt forgiveness would be taxable — which would cut into any stimulative effect on the economy.

Think about it this way: If you only have $1.5 trillion to spend, what policy would help the most people actually struggling right now? I don’t think canceling student loans would rank in the top 20.

Which brings me to the politics. Most Americans, especially most poor Americans, don’t have student debt, because most of them didn’t go to college in the first place. Moreover, most people who did go to college have no or very little student debt. According to the liberal-leaning Brookings Institution, roughly 30 percent of undergrads have none. Another 25 percent have up to $20,000 in loans. Despite what you may have heard about the student debt crisis, only 6 percent of borrowers owe more than $100,000. Virtually all of them borrowed so much because they attended graduate school.

You can argue that people who choose to get graduate degrees — including many young doctors, lawyers and engineers in training — deserve relief. But do they deserve help more than truck drivers, mechanics or short-order cooks? Heck, do they deserve relief more than the doctors, lawyers and engineers who chose to pay off their loans?

One reason teachers unions — a huge source of donations and political organizing for the Democratic Party — want loan forgiveness is that teachers and administrators can boost their pay by going back to school to get advanced degrees. Other municipal and federal workers — another major constituency for Democrats — have similar rules. Whether or not you think that’s a good overall policy (I don’t), using the pandemic as an excuse to reward workers who are far less likely to lose their jobs and more likely to find new employment if they do, seems awfully self-serving.

The popularity of this idea stems from the fact that the Democratic Party has increasingly become the party of educated professionals, as the GOP has become more working class. Lots of poor people are still Democrats, but they aren’t a major source of power within the party — the bureaucrats claiming to speak for them are. And that’s who Democrats are prioritizing.

Jonah Goldberg is editor-in-chief of The Dispatch and the host of The Remnant podcast. His Twitter handle is @JonahDispatch.

(23) comments

TomWheatley

I have commented on this before, but all the fuss at throwing money at student loans is like fixing the second floor windows when the problem is a bad foundation. Why has the cost of higher education gone sky-high? Case in point: University of Maryland, a land grant college charged with educating the youth of Maryland, has gone off the rails in their costs.

Anyone within the State and a C average could attend. Out of State students like myself needed to be reasonably high up in SATs, grades, etc and get to pay 3 times the going rate of tuition and room/board. I applied for in-state status at the start of my junior year having been in in the Co-op program, paying MD State taxes, and living here for more than 6 months of the year. My $1000 bill ($5.5K in today's dollars) dropped to around $350 or so (just under $2K). I was taught by full tenured professors; got an excellent education and start in life totally debt free and a paid off car as I worked one semester, then school, then work. I then rented a room in group homes until I could buy my own place at age 25. BTW, no scholarships whatsoever.

Our children chose smaller private schools with reasonable rates and followed the same path of graduating debt-free. We discovered the infamous FAFSA, with which one could apply to schools ranging from $18K to $30K yearly and all came back within $1K of one another. The $18K school stayed at $18K and the $30K was $19 or $20K. the difference? Federal funding of course. Today's colleges just feeding at the trough.

UofM now turns their nose up at any IN-STATE student that dares to not have stellar grades or a middling football talent. Money goes to fancy buildings, we have grad students teaching courses while the tenured professors dabble in research. And this is a State public University I am talking about.

Close to the end of my rant :) The guidance counselors at the High Schools are also in the blame mix pushing college over the trades Not every student is up for college and the tendency to go straight to a 4-year college is way overdone. Let's move the big bucks away from the 4 year Universities spending it on self-glorification (aka 75,000 seat football stadiums) and make Community Colleges more affordable. if the students make it past the first 2 years, then send them off to finish out at UofM.

francesca_easa

Right on Tom for telling it like it is.

gabrielshorn2013

I couldn't agree more Tom. Schools like U of MD have been caught boosting their out of state rolls, at the expense of in-state students. Why? $$$ Student loans and public financing have become the trough from which they feed. They have lost sight of their intended mission, to educate their state's students at a reasonable cost. None of my undergrad son's classes are taught by a professor, just graduate student TAs that my son had to correct in his Calc III class. My alma mater, Rutgers, is guilty of the same thing. Land grant college losing its vision of the mission. In pursuit of the $$$ As long as public financing is a bottomless cup, tuition will continue to rise as they continue to drink from it because it just keeps coming. Community colleges with their low cost and actual teachers are the perfect remedy.

MD1756

Let's add the fact that many students are taking longer than four years to complete a four year degree. Only 41% complete their degree on time. As a Chem Eng student at Va Tech, I completed my BS in 4 years. I didn't have much of a social life but I wasn't there to party, I was there to get an education for a good job. At that time, Va Tech only allowed 10% of the students to be out-of-state. My tuition, room and board was roughly $3,600 in 82-83 school year (as an out-of-state student).

I also think some of the drastic price increase is because so many students get loans, so the colleges/universities figure they can charge more and the prices become overinflated.

Finally, my parents had the good sense not to have more children than they could save up and afford to put through college.

I'll also put some blame on public schools for not doing a better job teaching the students about finance.

TomWheatley

I am one of five children and my father was the first of his generation to go to college. My older sister was the second female in the Electrical Engineering program at UofMd and with the co-op program, graduated in 5 years after alternating work and school. Plus she got married in her Junior year. I did some night classes, summer classes and was able to get out in 4.5 years. Mom and Dad had us on the 50/50 plan as they called it. We paid for half our education and knew we were helping to pay for our younger siblings down the line. Anything like the car I needed for my co-op job was 100% repayable with 0% interest from the Bank of Parents.

An interesting read below on Grove City College which offered excellent education at around $10-12K when the other colleges our children were looking at were in the low $20K range. The Government took them to the Supreme Court over Title X (which Grove City was already doing) and in typical Government fashion, wanted to poke their nose in all sorts of places.

https://www.uscourts.gov/educational-resources/educational-activities/grove-city-college-v-bell-facts-and-case-summary

" Grove City College is a private, church-affiliated, co-educational institution of higher education in Grove City, a small town in northwestern Pennsylvania. Since its founding in the 19th Century, the college had refused to accept directly any forms of government assistance on grounds that compliance with the rules that accompany such assistance would compromise its independence and ability to deliver high-quality education at low cost."

MD1756

How about forgiving loans only for certain fields? After all, how many sports related degrees do we need versus technical degrees? Where are all those people who say having children is a benefit to all? If we are all now being asked to pay for college loans, then I want some say as to where my money goes.

NewMarketParent

This article represents a consistently dumb take.

Firstly, we have systemically underfunded education and states have also systematically underfunded universities for a couple of generations. The result has been that the cost of attending state schools has not kept pace with any reasonable measure of inflation of even wages witch have been pretty flat.

Most jobs to support a family now pretty much require a degree and even then because wages remain flat, many people are stuck in perpetuity paying them back.

I was extremely lucky in both that I got a partial academic scholarship that was also pushed for by the football coach at the school where I played football for several years. This, plus it was a state school so it was relatively cheap to go and so I was able to escape college with a usable degree and without any debt.

In so many ways I am part of a ridiculous minority. People love to talk about how the children are the future, but we always come up short when it is time to sacrifice a little money for it.

I personally don't subscribe to survivor's bias.

I look at my peers who some of which are still paying off student loans (mind you I am in my 40's). I think this is horrendous. We need to be investing in our future instead of always pulling back the football like Lucy to Charlie Brown. We should be doing everything we can to continue the American dream and a head start on that would be to put our money where our mouth is and forgive their student debt. Everything else is lip service from a nation that is supposed to be trying to preparing itself to fight in a global economy.

StoneMountain

Holders of college or advanced degrees are statistically wealthier than those without. Aren’t there other segments of the population more in need of assistance or loan forgiveness right now than the wealthiest segment of our population? Forgiving loans freely taken out by relatively wealthy people to purchase what is often a luxury good (and let’s be honest, newly conceived “[insert trendy issue] studies” degrees from prestigious private colleges are luxury goods) during an economic crisis seems like not only poor economic policy but morally indefensible.

Boyce Rensberger

As Greg G notes, student loans cannot be refinanced. That's the law. Given today's historically low interest rates, home mortgages are routinely refinanced. Why deny the same opportunity to holders of student loans?

By the way, Americans owe more money in student loans than in credit card debt. We are talking about a huge wedge of the economy.

gabrielshorn2013

While that may all be true Boyce, that debt was voluntarily acquired. I don't understand why such debt cannot be refinanced if another agency or bank is willing to do so, so that point has merit. With other debt, such as mortgages, car loans, etc., there is collateral (the house or car) that can be foreclosed on in the event of default. What is the collateral that can be collected upon if someone defaults on a school loan? Hence, removing the ability to have such loan debt wiped away by bankruptcy.

Greg F

The issue is that as rates have dropped, the ability to refi is small to none for most. And as for income, statistics can show whatever you want, but there are a ton of degree holders who are NOT wealthy since the job market sucks and pay rates are not keeping up with reality. Many have earned degrees from for-profit or phoney-baloney universities like Trump U that nobody recognizes as decent. For profit colleges an universities exaggerate stats on post graduate employment and pay possibilities, a lot of degrees simply don't pay well, and DeVoss and GOP have worked diligently to stimey forgiveness to those who signed up for loans that guaranteed forgiveness for certain degrees and the promise to work in needed areas...and even military has been working hard to deny the payments they promised for schools. ALL of those are republican initiatives, as was removal of bankruptcy protection. When bankruptcy is not an option, what does a person have to do? Let's hear it from you nay-sayers. Sure...they volunteered, but maybe they didn't volunteer for unemployment or a garbage economy or no jobs or inability to move to where they are, or any number of hardships that will NOT get you an opportunity to start over like bankruptcy would let you (even that...you're 7 years in the toilet to do much after one). Yet we allow corporate bankruptcy at the drop of a hat and multiple times (donnie trump for one) and give tax breaks for companies to supposedly fund jobs that just pocket or offshore the money. The loan reps also mislead quite often and there are plenty of stories about that too, especially at the for-profit universities.

gabrielshorn2013

GregF, lots to unpack there. When exactly did the job market start sucking? Before the pandemic all the way until about March, we had about as close to complete employment as we will ever get, and there were over a million skilled jobs that were open due to a lack of qualified candidates. That means it was an employee’s market, and not an employer’s market. Companies were competing right and left to fill their open positions, causing wages to rise. Look it up. CoViD may have changed that for now, but people were complaining about this issue before CoViD. I just looked up a response from a previous thread from last year with the exact same statements as yours. Yes, some folks went to “phoney-baloney universities”, but what percentage of the student population hobbled with debt is that? Not much. Why did they go to such schools anyway, when highly flexible local community colleges were available? Did someone force them to go there? No. As for certain degrees not paying well, that is the fault of the student themselves for choosing such a major. If you are entering a field of study, don’t you want to know what the ROI is for the investment of your time and money? What is the opportunity cost? That is the point of going to college; to provide higher opportunities than you would have otherwise. Following your bliss into a field with very little job opportunity is silly, and on the onus is on the student. Removal of bankruptcy protection for unsecured, government (read taxpayer-funded) student loans was the proper thing to do when in 1990, 224 out of every 1000 of such loans went into default, stiffing the taxpayer. Should the taxpayer not expect repayment? If somebody borrowed a significant amount of money from you with a promise of repayment, but reneged on their promise, would you just say “Que sera, sera”? I doubt it. Again, these were unsecured loans with no collateral, except the knowledge acquired in somebody’s head. If you can show that the loan representatives lied about the terms of the loan, well, you have a case for fraud. However, as with any contract, you have an obligation to read and understand the terms of whatever you are putting your signature to, because you are ultimately responsible for complying with the terms above your signature and date once affixed to the contract. Like I said below, there are many ways to go to college if you wish, without going into debt at all. Those that are stuck with it made bad choices. You alluded earlier that you are stuck with such debt. Why did you choose to go into that kind of debt?

Greg F

Depends when you graduate. I had the muck of Refan recession out of high school and Bush recession out of college and then Bush 2 when o ran a business.

Dwasserba

[thumbup]Greg F

Greg F

I should say...the one aspect where a loan should not be forgiven is in taking masters an other degrees for things that are guaranteed low income forever. Sociology, Social Work, Phychology, Art, Photography (seriously...there are degrees in this). So...you take loans fully knowing there are few to no jobs and what jobs there are pay terribly. In those, you sort of know what you're getting into....and especially if you go to a high cost university to get them. Unfortunately there are a lot of snake oil salesmen out there who will gladly take your money (Trump U) and give you a degree worth about 3 squares of toilet paper.

shiftless88

There are a lot of jobs in Social Work and it is becoming more and more necessary during the pandemic. I think rather than not forgiving loans for front-line workers like that we should increase their salary so it pays more what it is worth.

LeBlancp01

I believe that a Student Debt reduction plans should be fairly offered and should be at least equivalent to past generation Student Loan program. Not forgiveness but not Bank's major money making sources either. Something like "no or very low interest" loans over a 10-20 year payback scheme with some tax break incentives. A everyone in and everyone can get out. Something that keeps the student/parent barrower whole and does not overburden the lending industry.

Greg F

Forgiving student loans in and of itself is not always a bad thing. Many times, teachers enter into loans under agreements for being forgiven to work in certain schools or impoverished areas that lack teachers. Now, we have Betsy DeVoss (Trumps' Goon in charge of dismantling higher education) purposefully rejecting qualified cases, making it hard to even apply, and doing everything she can to lessen the availability of Government loans vs private (which can't be refinanced like the Government loans...I know...I tried). You can't declare bankruptcy against them either (thanks GOP). Forbearance isn't viable as interest piles up during your non-payment stage adding to the principal. GOP wants funds to go to charter schools and private schools vs public, and simultaneously student fees are becoming (have become) asinine stupid expensive, out of proportion to inflation by miles, while salaries have not kept up. GOP wants nothing more but to make the student loan program a debtors' prison with no hope to get out and so you are a slave to the job market with little hope of ever getting up and out of it. Face it, the program for loans is seriously warped and stacked against students and has been since the 80's. There needs to be something done to take the percentage of burden back off the students to the levels we may have seen up to the 70s...where a one-worker family could afford to send a kid to college. Even two worker families with 3 jobs each have a hard time now. This is all GOP...with the onus on dumbing down the population so we get unqualified people in office to keep funneling the money up...like we have now with Agent Orange...and the like since Regan's "Trickle Down Economics" we all know was built to make it flow up, not down. It's renamed several times now and is still the same thing, but the difference is that we now have a population that literally voted in an imbecile who stacked the agency with the single most unqualified person he could find to do the dirty work for him of wrecking it further. That would be DeVoss. Add that same thing to every agency he has touched....utterly unqualified or direct conflicts of interest or competing interests in companies they own. Unfortunately, the dog-whistles of racism override any common sense, the Jesus card is pulled out to coddle the x-tians into their votes and the snake oil flows on. After 4 years of Donnie Damage, I look forward to someone who actually has a hope to make things right....though I still don't agree with everybody getting free school, there are some that can use help and deserve it.

Guy T. Ashton

If it is a debtor's prison as you say, it is one in which they freely and consciously walked into. To begin a wholesale student loan debt forgiveness ignores the idea that many with student loans do successfully pay off their debts. Students enter into a student loan with the expectation that higher education leads to better paying jobs and generally this is true. I have no issue with helping those who need assistance in paying off the debt, though not necessarily debt forgiveness as the one and only solution. But for those who have taken a loan and have the ability to pay it back, they need to abide to the agreement they made in securing the loan.

Greg F

Really, Guy...have you seen the processes to get these loans and the shady practices colleges use to dole out money and incentivize loans? Many going in think they can refinance....that isn't true at all. Many in the past had bankruptcy protection that was stripped by GOP. Many of these are asinine high rates that many families think they can deal with, but given the job market just can't. Every other loan you can get out of via bankruptcy. Not these. So....given that, there should be some alternative if no bankruptcy is there. Also, you failed to realize that many colleges have (like Trump U) given worthless degrees and are for-profit that jack up prices, put as little out in terms of info as necessary to get them lured in and worry about all else later? Bankruptcy is not a good thing, but if you want to glorify it, ask Herr Trump how many he's gone through. I bet you're fine with that. I bet you're fine with his sham university for which many are still paying off the debt.

Guy T. Ashton

"Many" going in think they can refinance", well, just like the rest of life's obligations read the paperwork! IT has been plainly stated for years that federal student loans are not dismissable in bankruptcy. There are a lot of different situations out there and some are in a better position to pay off their loans than others whether because of opportunities or just bad financial behavior. I am not against some program to help alleviate what may seem like an insurmountable debt; however, there is a measure of personal accountability that borrowers need to face. While there may be plenty of institutions out there with worthless degrees, again the student has a measure of responsibility for the path he chooses. Nobody is glorifying bankruptcy, but it has become increasingly the easy way out. And don't presume because I have an opinion that may be contrary to yours that I'm a Trump supporter- far from the truth. But if that's the level of your discussion and debate then I'm wasting my breath.

atellez31

In a response I see more sense, more logic and better proposals than the actual editorial.

gabrielshorn2013

GregF, the reason that it was made to not allow bankruptcy against student loans was that it had become prevalent in the 1980s to do so, finally reaching a high of 22.4% in 1990. Students went to expensive colleges full-time, voluntarily took out those loans, graduated without any assets other than their knowledge they gained as collateral (try collecting a debt on that), claimed bankruptcy, had their debts erased with a hit to their credit score (which was erased after 7 years). Nice racket, and something had to be done. There is no reason to rack up all of that student debt that folks voluntarily sign on for. We all have choices. Community colleges provide a great and affordable start to a college career. Can’t afford full-time community college? Go part-time in the evenings, and then transfer to a State college or university to continue your education part-time. It may take longer, but who cares? It is affordable. Also, many employers offer tuition assistance where they will refund your tuition for each class that you get above a C for. A student that is not at least getting B’s in coursework should assess if college is the right choice for them anyway. Is it fair to wipe away someone’s voluntarily acquired student loan debt, when others paid theirs or set up an education plan where they could avoid amassing such debt? No. Our choices have consequences.

https://www2.ed.gov/offices/OSFAP/defaultmanagement/defaultrates.html

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