Against Being Against Student Loan Forgiveness
The Biden administration has been doggedly trying to erode the student loan crisis by discharging various obligations (they announced another $9 billion in relief in October). I haven’t seen too much complaining about these piecemeal efforts, but their attempt at broader relief last year inspired surprisingly fervid resistance. I’m unsure whether I’ve encountered such vocal disgust about an economic windfall for ordinary people before; reflexive ire like that is typically reserved for faceless corporations or pin-striped financiers, but something about this idea touched a web of nerves in the conservative psyche, and a fusillade of indignation peppered me relentlessly up until SCOTUS euthanized the program.
The proposal had some ugly features: it was a complicated and arbitrary patchwork of half-measures characteristic of governmental efforts; these things are inevitably scarred by compromise until they’re look-away ugly to everyone but their progenitors. Still, maybe certain items were defensible: preventing runaway loan interest that outgrows borrower payments just seems humane. But this isn’t an effort to resurrect Biden’s defunct program. I want to examine the curious reaction to his attempt to tackle an enormous problem that will continue to fester; ignoring the matter isn’t realistic, nor is it the moral slam dunk that many assume, and I doubt that people who disliked these ideas are going to be more excited about the proposals unfurled to patch the issue in 2032 when tuition prices are somehow even crazier.
Comparisons to Other Handouts
Firstly, the characterization of student loan forgiveness as a uniquely immoderate handout is flummoxing. The amount—though sizable and often suffocating for the persons holding these loans—just wasn’t shocking compared with other government spending. Estimates for the proposal ranged widely, but costs probably would have landed somewhere around ½ trillion dollars. For context, federal spending before the pandemic was about $5 trillion per annum; spending reached a local maximum in 2020 at $7.75 trillion (we were back down to $6.5 trillion in 2022). Last year alone, Medicare cost $747 billion, and Social Security cost $1.2 trillion. Worse yet, the total cost of forgiving PPP loans to small business owners (you know, the people Austrian Economics devotees think are flawless planners whose oracular investments are foiled solely by Federal Reserve interference) was $757 billion—well north of most estimates for Biden’s student loan forgiveness program.
There’s an interesting point to be made here about incentives and the opacity of public spending. The first COVID stimulus package was $1.7 trillion, followed by two more bills adding $483 billion and $900 billion, and finally, the American Rescue Plan Act added $1.9 trillion, totaling around $5.18 trillion altogether. Do you have a great idea where all that money went? What about the roughly $800 billion rolled out for “shovel-ready” jobs during the Great Recession? It took years to get many of those projects spun up, and sometimes funds ended up going to stuff like “a $1.25 million grant to use electric fish from the Amazon to study how animals take in sensory information to move quickly in any direction”—a noteworthy cause, perhaps, but hardly the economic rocket fuel we needed back then.
People sometimes talk about the public choice economics issue of concentrated benefits and diffuse costs: some lobbyists might exert great effort to secure millions or billions for their clientele, and those outlays are then lost in a sea of other expenditures and nearly undetectable by the general population. Here, however, we’ve invented some twisted new variant of that problem, where no one cares too much about overspending so long as the packages are atomized and incoherent enough to avoid truly helping anyone. Trying to produce a definable benefit for real humans rather than a nebulous mix of commissions and initiatives suddenly ignites jealousy.
Another argument levied against student loan forgiveness is that it’s an unusually regressive policy and a windfall for the rich. The Dispatch cofounder and LA Times columnist
—who was probably champing at the bit to re-up his conservative bona fides when he saw the waiters tote this out from the kitchen—has been vocal about this.1 Goldberg devoted a podcast interview to AEI Senior Fellow and student loans expert Beth Akers, who endorsed this outlook:The reality is that people who borrow the most come from the most well-off families. That’s because they go to the most expensive colleges, and then they stay in school for the longest… and then people who have debt go on to be themselves the most affluent in the economy.
Claims like this are plentiful; of course, you also see some countervailing findings, like that the least wealthy Americans are most likely to hold student debt (and more of it).
Even if we conceded some of these statistics, this kind of analysis courts rebuttal on multiple fronts. People seem inclined to bypass the fact that these programs can be tailored to dodge payouts to the affluent. Many think Biden’s plan set income limits above the optimal amount, but that hardly justifies the indignation elicited, and it can’t motivate classifying the entire idea of student loan forgiveness as unavoidably regressive.
The statistical categories proffered by the anti-forgiveness folks aren’t so airtight either: arguing that new college grads are better off the modern non-college population doesn’t prove much–it’s like saying South Carolina is more mountainous than Nebraska–like, maybe that’s true, but I’m not going skiing in either place. Using lifetime earnings forecasts as an approach for deciding whether someone currently needs financial help is suspect, too: it’s like claiming JK Rowling never needed government assistance when she was penniless because someday she’d publish Harry Potter. If we analyze these people as they’re currently situated, their wealth is probably less impressive (maybe even negative). Moreover, choosing another comparison (e.g., to past alumni rather than to their even-less-fortunate generational peers) provides a different angle on the matter: “Even when adjusted for inflation, the average student loan burden at graduation has risen by more than 500% since 1970.” Examining recipients of other expensive government programs like Medicare or Social Security gives the analysis a new complexion altogether: those two programs cost more each year than it would to wipe out public student debt entirely, yet Boomers hold over half of American wealth. Millennials hold just 6.6%, and this chasm isn’t merely because Boomers have been acquiring assets for longer: “[D]ata also shows that millennials have far less wealth than boomers did at the same age.” These aren’t necessarily the correct set of comparisons either, but if you are going to make comparisons, then the groupings matter, and appropriately demarcating those groupings isn’t so easy.
Also, to the extent these anti-forgivers are conservatives, any complaint that some program is insufficiently progressive has to be viewed unseriously: conservatives regularly denounce economic equality as a valid policy-making aim in toto, and many will champion something like restricting government revenues to sales taxes—which are canonically regressive—not by asking everyone to stomach those regressive effects as some undesirable byproduct of the policy, but by extolling the elimination of progressive tax schemes as virtuous; reshaping the economic profile of revenue inflows is the very raison d’etre of their sales-tax advocacy. To critique Biden’s plan for being insufficiently equitable—as if it would be crowding out some lineup of redistributive ideas the anti-forgivers have teed up—is fatuous. In Contrast, the pro-forgiveness crowd would gladly cosign a smorgasbord of programs to adjust the overall blend of government activity to be more progressive—much more progressive than those complaining about loan forgiveness would tolerate. Of course, according to many conservatives, the indigents are paradoxically getting rich off welfare programs anyway.
Goldberg has also insinuated that Biden’s plan was an especially bald-faced handout to a Democrat constituency: you know, as opposed to all those other government doings that are… outgrowths of immaculate magnanimity, I guess? As if the reason no one wants to touch entitlements for seniors (that have us continuously perched on the eve of fiscal implosion) is entirely unrelated to their voting turnout and fear of political retaliation. People act like government action benefitting private interests is a novel idea recently cracked open in a lab by the Biden team—what do they think lobbyists do? This NRO quote highlights exactly what I’m talking about:
Public money should have public benefits… the intention must benefit the broader society rather than just particular individuals.…the Biden administration’s partial forgiveness of student-loan debt has no civic intent…
Once we allow public money to be spent on private interests — the interests of either loan recipients or anyone else — the whole of government turns into a battle to decide which people deserve other people’s money. The victors will be the most politically connected groups, not necessarily those neediest.
Once we allow for public money to be spent on private interests? We facilitated a coup d’etat in Guatemala to help out a fucking banana company. Everything from ethanol subsidies to tax breaks for homeowners—none of that counts? The federal budget mostly comprises entitlements that could be portrayed as benefiting particular groups. When seniors—again, a much wealthier cohort than indebted college grads—vote themselves so many resources that we’re perpetually battling over government shutdowns and inspiring ratings downgrades, nobody blinks, but if younger adults leverage a fraction of that political clout to squeeze out some tepid student loan forgiveness everyone pretends like it’s terra incognita and we have to wheel out the fainting couches.
People shouldn’t vote exclusively for their interests, but folks often recommend that younger people vote more to effectuate their political objectives. A more believable criticism would be a cool-headed libertarian dislike for all government handouts rather than denouncing this particular idea as wildly offbeat from the government’s otherwise defensible and parsimonious budgetary practices.
Luckily, we don’t live in some pro rata hellscape wherein each government policy has to benefit every person equally, and few would knowingly make such demands: the national parks will benefit nature lovers, the Coast Guard disproportionately benefits people who live along the coastline, etc. So, I’d admonish people against unsheathing such an Olympian standard unless you want to eat at the Rothbard table with the other lunatics, where they can’t even figure out how to share the salt and pepper without drawing up some scheme for proper remuneration.
Plenty of Blame to Go Around
Aside from the relative profligacy of the initiative or how well-heeled the beneficiaries are, there seems to be an underlying moral outrage about this and some unmistakably retributive atmospherics; the predominant vibe is not that forgiving student loans would just be economically unwise, but that people should reap what they sew and that unsealing the escape hatch for these indebted students would be an affront to this vital maxim.
The theory goes that the student debt crisis results from kids these days being exceptionally improvident: attending college for shits and giggles, or—and you hear this one constantly—because they choose such absurd majors. Several things agitate me about this little canard. Firstly, recent generations have been much more pragmatic and even cynical about their education:
College is increasingly seen by high school students as a means to an end: getting a job. Since the Great Recession, surveys of teenagers — and the choices they are making about their college majors — show that higher education has become less about preparing for life or learning something that interests undergraduates and much more about securing employment.
A recent Harris Poll found that two-thirds of 14- to 23-year-old students want a degree to provide financial security, ranking it above all else when it comes to their motivation for going to college. At the same time, fewer students are majoring in the humanities, according to newly released government data. More flock toward science, technology, engineering and math majors — known collectively as STEM — that they think will burnish their employment prospects.
Maybe older generations are projecting from their own (now outdated) experience:
Reflecting this concern, students are increasingly placing a premium on the job-related benefits of going to college. The portion of incoming freshmen that cited "to be able to get a better job" as a very important reason for attending college reached an all-time high of 87.9 percent in 2012, an increase from 85.9 percent in 2011 and considerably higher than the low of 67.8 percent in 1976.
So, these previous generations were significantly more romantic about college. Really, they lacked the ruthlessness they now allege is missing from campus. However, the world was more forgiving back then: college was way cheaper, and having any degree (even just some education) was a much bigger deal, but folks mistakenly interpret this asymmetry in outcomes as evidence of either boomer levelheadedness or post-Gen-X irresponsibility. If you asked professors, I doubt they’d confirm these notions that students are stubbornly pursuing their curiosities rather than fretting about their economic prospects.
In truth, the universities have been sanding the gears of student pragmatism for years. It can be challenging, for example, for students to gain admission to the business school at universities they already attend, and look what’s happened with computer science at the University of Washington:
Some 7,587 freshman applicants to the UW for next year picked the Allen School as their top choice for a major — more than economics, political science, nursing, and mechanical engineering combined. The program attracts more students than any other UW major, and interest has increased more than 400% over the past decade.
But the Allen School has room for only 550 new undergraduates in the fall. Freshmen can apply for direct admission to the program, as did Baker and Huynh. It's highly competitive: only 7% of direct admission students were offered a spot.
Universities are admitting students and then making them compete again to gain access to profitable degree programs, but everyone is blaming the students for choosing unprofitable majors. What has been dying are the humanities departments, which can’t decide whether to be sneering and aloof about the whole thing or to half-pivot and dishonestly suggest that their coursework equips students with hireable skills.
Of course, asking humanities profs to cater to the caprice of corporate hiring managers is like asking a vegan to open a butcher’s shop—they may not have to eat the food themselves, but their hands will be unclean. The fact is that incentives are mismatched between universities and students, and schools that charge exorbitant prices are openly trying to boost humanities enrollments, uncaring about a possible lifetime of hardship for those students.
This whole just-don’t-choose-a-dumb-major gag also cuts against the arguments presented supra that indebted alums don’t need loan forgiveness because they’re so advantageously positioned. Ultimately, these two primary thrusts of the anti-forgivers are at odds. There are ways to dig out from this anti-logic, but too often, I hear people simultaneously advancing propositions both that (1) college grads with debt are well equipped to pay off their loans, and (2) college grads with debt have it deservingly because they studied some patently useless discipline. These claims are mere inches from complete incompatibility. Anti-forgivers will do something like poke fun at esoteric fields of study and then argue that people with degrees like that are a rarity (and, therefore, most students will be able to repay their loans). I understand the desire to have it both ways: some people can repay loans while others should suffer for some obvious mistakes, but this overambitious double play risks making the anti-forgiveness view circular and unfalsifiable: if you define irresponsible people with crappy degrees as whoever is struggling to repay their loans, then you can’t be wrong ex vi termini: you’ve defined away all possible counterexamples.
Relatedly, exactly which degrees are anti-forgiveness-approved? Should psychology, history, political science, or even biology be off the table for prudential students? Exactly how many majors would be left unscathed? It’s too easy to joke about people majoring in Persian candlemaking or whatever when they could be studying finance; I rarely see these anti-forgivers bite any of the sizable bullets required to justify their stance. If they truly think stuff like psych and history should whither away, then they need to own that. And, if so, are the rest of us certain that we need to live in such an unforgiving and cutthroat late-capitalist nightmare wherein every person needs to attempt majoring in something like computer science or accounting, regardless of their talents or interests, and where not even college can shelter fleeting moments of idealism? With all the advances in society, we somehow can’t permit the lassitude and curiosity we afforded 40 years ago? Maybe that’s pushing us in an economically efficient direction, but is it pushing us in a positive direction?
Even conservatives are sometimes tempted to blame someone other than students for this debt crisis: they’ll readily attribute the multi-decade surge in tuition prices to government bungling rather than the desperate eighteen-year-old trying to guess which credentialing regime will best facilitate economic success and life satisfaction. They claim that federal programs have enabled (to broaden the equality of opportunity said conservatives are persistently touting) unwise lending for unpromising students or unprofitable degrees and juiced the multi-decade upswell in tuition rates. There’s probably a grain of truth to this, which is why it’s so confusing that it fails to mitigate blame for the indebted students in their (the conservatives) eyes: shouldn’t we blame the Boomers who oversaw this dumbass scheme? Or, how about the Boomers who told everyone they needed to go to college? Or, maybe the Boomers that wouldn’t hire someone unless they went to college? The totality of blame does not land squarely and exclusively on students who withdrew those loans. And, if the government is to blame for skyrocketing prices and foolish loans, remind us again why the government shouldn’t be on the hook to eat some of the costs to remedy the situation? As others have pointed out, loans are multi-party transactions, and businesses or lenders issuing injudicious loans aren’t usually blameless or immune from the consequences of handing them out.
Undoubtedly, some students screwed up, and others got screwed; either way, I don’t understand analyzing people’s educational undertakings in a perfect vacuum like this: it’s impossible to divorce the unyielding charges of irresponsibility from the pro-college milieu that dominated the US for decades. Accruing higher education was unerringly characterized as the responsible choice: you had to attend college to succeed. And these remarks weren’t wrong: it’s not like life is peachy for people who don’t attend college, but that picture is incomplete; including the flipside scenario (attending college) presents you with this noxious trifecta: college has simultaneously become more necessary while also becoming less of an advantage in the labor market while also becoming hugely expensive.
What anti-forgivers demand is something akin to the old contributory negligence standard in tort law, where sharing in any fraction of the negligence prevents you from recovering damages. Even if some of these students made errors, was the gravity of those errors so immense that an unrelenting lifetime battle against total economic ruin can be readily categorized as just deserts? Take the people who attended GW to study education or whose depression ousted them from medical school—maybe they are culpable in some measure, but did those missteps evince such moral turpitude that a scintilla of mercy is intolerable? I disagree with this strange new moralism whereby any misjudgment is sufficient for underwriting any fate—as if a simple miscalculation (even when attempting to be sensible) can serve as some kind of archimedean point to support draconian outcomes because personal responsibility ought to be maximized at all costs and elevated above all else. Maintaining good relationships must be an immense challenge when your vocabulary of condolences is limited to stuff like “serves them right” or “had it coming, I suppose.”
Solutions
Some stubborn aspect of human nature requires highlighting that student loan forgiveness doesn’t solve the underlying issue that society is generating so many of these damn loans, nor does it deter parties from entering into them. In fact, Jonah Golberg also brought up the moral hazard issue, which arguably would make both these issues worse. And all of this is fair—it’s just not persuasive: it’s a straw man. Who’s adamantly defending the current system from tinkering? Supporting loan forgiveness straightforwardly implies that you probably also support rehauling the mechanics that engendered this crisis. These observations might be germane if the underlying issues appeared unsolvable, but they’re some of the more treatable problems we have. Here are some ideas for giving people an avenue to escape a lifetime of unbudging loan balances without universal “free” college or periodic educational debt jubilees:
Generational Price Smoothing. Rather than forgive an arbitrary quantity of debt, maybe we could try to unwind price differences between generations and ignore some amount that we think is the byproduct of government subsidies boosting prices, or we could forgive a portion of loans so that recent graduates only have to pay something closer to what earlier graduates paid. If everyone is so hyped about fairness, why not ensure that student debt doesn’t vary so wildly based on what year someone attended?
Better Repayment Programs. One obvious fix is consolidating and upgrading the repayment/forgiveness program to be usable and reasonable. The current situation is messy, and the programs can take 20 or 25 years. The Public Student Loan Forgiveness Plan theoretically permits forgiveness after ten years (though many get rejected); why not generalize this abbreviated program?
Refundable Degrees. Notions that your debt should be inescapable and refunds are an improper remedy because people cannot unlearn the skills acquired by schooling are mistaken in that students are not buying—and colleges are not selling—education. Given that the bulk of university enrollment is for signaling purposes (not for accumulating human capital), why shouldn’t students be able to return their degrees and receive a partial refund?
University Skin in the Game. Much of this mess is connected with Universities’ lack of skin in the game; they’d make different choices if their fortunes were coupled with their students’ earnings (some have suggested risk-sharing strategies). Perhaps schools would quickly discover some extra space in their CS departments.
Maybe you dislike these ideas, but this issue isn’t going to disappear, and unlike many other problems in the US right now, it’s patently fixable. I’m so plainly out-of-sync on this with intellectuals I normally align with that I’m not even sure how radical I ought to be about it, but when I hear/read erudite commentary regarding student loans, the sentiments are incongruous and foreign to me; frankly, none of the proffered arguments pass muster, or are even sufficiently colorable as explanatory forces for the intensity of the backlash I saw to believe all the objections are downstream of careful thinking rather than knee-jerk retributive instincts that—for whatever reason—just aren’t part of my firmware.
Overall, what confuses me most about this is conservatives’ invulnerable numbness toward the mounting hurdles between young adults and the culture/lifestyle those same conservatives are persistently mourning. If you want people to establish the foothold necessary to marry and procreate and live in places other than NY and SF, you can’t hang an immovable fiscal albatross around the necks of newly minted university grads and then fold your arms and watch them desperately attempt to outpace their loan principal into their 40s. It just won’t do.
Goldberg has even tried arguing that widespread car loan forgiveness would be more defensible because of how regressive student loan forgiveness would be. This car analogy just doesn’t quite cut the mustard: you can sell a car and unravel that decision pretty easily, and it’s just never been received wisdom that acquiring a pricey car is a responsible thing to do, let alone something necessary for jumpstarting a respectable career, nor are people stuck for decades in car loans (yet).