The Patriot Position: Student Loan Forgiveness

In these early days of President Joe Biden’s term, he must confront a number of crises facing the nation: the global COVID-19 pandemic, the consequent economic destabilization and increasingly tumultuous issues of racial injustice, to name a few. But the financial consequences resulting from the pandemic have illuminated a particular burden that millions of Americans have been struggling with for decades – the student debt crisis.

The Federal Reserve’s economic database shows that students collectively owe more than $1.7 trillion in loans. According to the National Center for Education Statistics, of the 68 percent of people who pursued postsecondary education and borrowed, each person, on average, owes $31,800. Those who pursued a bachelor’s degree at a public institution owe an average of $28,600; for a private non-profit, $33,900; and for a private for-profit, $43,900.

In light of this, Biden and others in Congress have felt pressure to address a complicated problem that demands immediate action to assist struggling Americans amid the pandemic while also implementing reforms to the current system to prevent another debt crisis.

Biden has supported cancelling $10,000 in student debt for all borrowers. Sens. Chuck Schumer and Elizabeth Warren jointly provided a plan that would cancel up to $50,000 in debt. Of course, at the other end of the argument, there are senators, such as Bernie Sanders, who call for the cancellation of all student debt. Each of these resolutions brings out contrasting motivations for the government’s subsidizing most, if not all, student debt or leaving the brunt of the burden to the individuals who decide to pursue higher levels of education.

Literally, with the stroke of a pen, Biden could wipe out everyone’s student debt. Reasonably, such an easy solution can hardly be the most efficient and the most sustainable. Biden’s ability to issue an executive action comes from a passage in the Higher Education Act of 1965 that grants the education secretary the power to “compromise, waive or release” federal student loan debts. This possibility also begs the question of whether forgiving debt should leave out those who had already paid off their loans. Retroactively compensating people who had consolidated their loans is another prohibitive monetary factor in the debate.

Arguably, since the U.S. government is the largest facilitator of consumer debt, its mechanisms to enable people to attend postsecondary education shouldn’t be opportunistic. The federal government is essentially pulling the strings of the economic and educational futures of millions of Americans, yet without any clear directive.

At The Patriot, we want to see a well-defined directive driving our country’s approach to helping Americans best facilitate the means they have. For many people, the opportunity to pursue a better future for themselves and their families oftentimes means taking out substantial loans, gambling on achieving a return on their investment in their education.

Rather than marshal for a full subsidy of college education at this point in time, we would like to see our government address this issue in several smaller capacities.

First, the current economic climate has and will undeniably exacerbate the strain on those who were already likely to default on their loans, possibly forcing them to file for bankruptcy. A relatively small amount of loan forgiveness – say, $10,000 – would be of great relief to low-income individuals. Yes, it would also help high-income earners, but to a much lesser extent. For those who take out smaller loans and who correspondingly pursue lower levels of education, it is often harder to find employment that allows them to meet their monthly payments and cope with other expenses. Forgiving some debt would assist those who are most likely to default on their loans by erasing most of their balance. As a result, we can help keep people working at this critical time.

Second, the federal government could work to equalize access to a baseline of higher education across all 50 states and all demographics, working with already existing programs in each state that are likely to have well-established networks among students and their communities.

Lastly, if we acknowledge that we want qualified people to fill different positions in the workplace, then we have to ask ourselves if want to empower almost anyone to pursue any vocation, and to be able to do so with dignity and fiscal responsibility. This could be achieved, and help stem future borrowing, by institutionalizing aspects of Biden’s revision of the “free college” plan espoused by the likes of Sanders: providing two years of community college for free and eliminating the cost of tuition for students whose families make less than, say, $100,000.