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Canceling Student Debt and Other Regressive Education Policies

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The Democratic Party bills itself as the party that champions the working class. But, if you look underneath the surface, its actual agenda increasingly emphasizes policies that would largely benefit the well-off and well-educated.



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From Representative Alexandria Ocasio-Cortez to Senator Elizabeth Warren, the party’s most prominent voices are pressuring President-elect Joe Biden to make student-debt “cancellation” one of his administration’s first priorities. Warren, for her part, wants Biden to take the legally dubious step of unilaterally canceling (i.e., making taxpayers pay off) $50,000 in debt per graduate via executive order. Almost all mainstream elected Democrats have coalesced around $10,000 as the baseline for debt cancellation via legislation, with more-progressive voices calling for its total elimination.

 

But wait: Isn’t such prioritization of support for struggling students exactly what progressive working-class solidarity should look like? Not exactly — though one can certainly be forgiven for thinking as much. In actuality, forcing the average taxpayer to pay college graduates’ debt is a regressive redistribution of wealth to a better-off segment of society.

How so? It’s simple: Most Americans don’t actually have college degrees.

According to the Census Bureau, just about one in three adults over age 25 have a bachelor’s degree. This slice of society, naturally, holds almost all student-loan debt. (Some is held by those who failed to graduate). Yet college graduates also typically make 85 percent more than those with only a high school diploma — and earn roughly $1 million more over their lifetime.

So, while many might think of student-debt cancellation as helping broke young people, it actually uses the government’s scarce resources to help a relatively well-off subset of society. Even (in a 2019 blog post) writers from the liberal-leaning Urban Institute took a look at data contained in the Survey of Consumer Finances for 2016 and found that the lowest 25 percent of income earners would only see 12 percent of the benefits from canceling student debt. In their view, “debt forgiveness plans would be regressive — providing the largest monetary benefits to those with the highest incomes.”

Similarly, a new working paper published by the University of Chicago found that canceling all student debt would give $192 billion in benefits to the top 20 percent of income earners, yet just $29 billion to the bottom 20 percent. In what universe is that “progressive”?

Yet student debt is not the only aspect of education where progressive-sounding Democratic rhetoric masks big-government policies that favor the well-off.

Consider also the shutdown of schools, public and private, for in-person education during the COVID-19 crisis. To be sure, it’s true that both Republican and Democratic elected officials embraced this unwise measure early on. But in the many months since, an undeniable trend has emerged. Democratic politicians, at the behest (it seems) of teachers’ unions, have fought to keep schools closed for

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college 

Betsy DeVos bashes student debt forgiveness, free college movement

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Biden has said that canceling at least a portion of the $1.6 trillion in student debt held by 44 million Americans is part of his economic recovery plan. He has supported at least $10,000 in federal loan forgiveness, while other leaders in the Democratic Party, including Sens. Charles E. Schumer (N.Y.) and Elizabeth Warren (Mass.), are calling for the cancellation of up to $50,000.

“We’ve heard shrill calls to cancel, to forgive, to make it all free,” DeVos said in her speech. “Any innocuous label out there can’t obfuscate what it really is: Wrong.”

Since taking office, DeVos has been accused by liberal lawmakers and consumer groups of going out of her way to limit loan forgiveness through existing federal programs.

The secretary imposed a methodology that curbed debt cancellation under a federal program known as “borrower defense to repayment.” That program, which dates to 1994, provides federal loan relief to students whose colleges lied to get them to enroll. DeVos scrapped an Obama-era overhaul of the law that made it easier to seek forgiveness and accused opposing lawmakers of wanting “blanket forgiveness for anyone who raised their hand.”

Biden campaign national policy director Stef Feldman said in October that the Obama-era update of the borrower defense rule would be revived. That would require lengthy rulemaking at the Education Department. But in the meantime, a Biden administration could clear out the backlog of borrower defense claims using a more generous methodology for approval and loan forgiveness.

On Tuesday, DeVos took aim at another popular policy backed by Biden: Tuition-free college. She called the policy “a matter of total government control” and “a socialist takeover of higher education,” with ominous predictions about how it will reshape the sector.

“None of you would like the way it will work,” DeVos told financial aid professionals on Tuesday. “You won’t like being forced to tell students they aren’t eligible to attend your school, or that they aren’t allowed to choose the degree program they want, or that your quota for ‘free college’ students is full and that they now have to pay full price.”

DeVos warned financial aid officers that they will be “forced to merely oversee rationing of state-approved higher-education options.” Colleges and universities, she said, will “begin to resemble a failing K-12 school, with the customer service of the DMV to boot.”

It is a striking position on a policy that has garnered bipartisan support in recent decades. There are 30 states that cover tuition at community colleges or universities, part of a national movement to use higher education to strengthen the local economy. College Promise programs, as tuition-free initiatives are commonly known, have resonated with elected leaders across the political spectrum.

Biden has pledged to make such programs universal by covering tuition at public colleges and universities for all students whose family incomes are below $125,000. He has proposed that the federal government cover 75 percent of the cost and states contribute the rest, a policy that could be a heavy

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education 

Biden’s Plan for Student Debt and Education Policy

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Education has become a major issue in the 2020 presidential election, driven in part by the growing burden of student loan debt. About 42 million Americans currently owe money on student loans, according to the Brookings Institution, which estimates the total debt load at about $1.5 trillion. That makes it second only to mortgage debt, Brookings says, and larger than credit card debt. This article looks at Democratic presidential candidate Joe Biden’s higher-ed proposals, which his official campaign website calls “The Biden Plan for Education Beyond High School.” 

Key Takeaways

  • Joe Biden’s higher education proposals would make public colleges and universities tuition free for families with incomes under $125,000.
  • Community college and workforce training programs would also be free for many students.
  • Students with federal undergraduate loans would not have to pay more than 5% of their discretionary income over $25,000. After 20 years of payments, the balance would be forgiven.

Biden’s Student Debt Proposals

The Biden website lists 10 major initiatives to address the cost of higher education and the availability of financial aid to help pay for it.

1. “Make public colleges and universities tuition-free for all families with incomes below $125,000.” Biden credits this proposal to Sen. Bernie Sanders, who, with Rep. Pramila Jayapal, introduced the College for All Act in 2017.  Biden’s plan would also make up to two years of community college tuition free, apparently regardless of income.

2. “Target additional financial support to low-income and middle-class individuals.” Biden proposes to double the maximum value of Pell Grants and significantly increase the number of Americans who qualify for them. Unlike student loans, Pell Grants never need to be repaid, except in rare instances. The current maximum Pell Grant is $6,345 per school year.  Biden’s plan would also make Dreamers eligible for financial aid if they meet other requirements for that aid and restore financial aid eligibility to people who were formerly incarcerated. 

3. “More than halve payments on undergraduate federal student loans by simplifying and increasing the generosity of today’s income-based repayment program.” Borrowers who make $25,000 or less a year wouldn’t have to make payments on their undergraduate federal student loans, and those loans wouldn’t accrue interest. Others would pay 5% of their discretionary income over $25,000 toward their loans. After 20 years of regular payments, the remaining balance on the loan would be forgiven. Biden’s plan would also change the tax code to make debt that’s forgiven through an income-based repayment plan nontaxable.

4. “Make loan forgiveness work for public servants.” Biden proposes to revamp the Public Service Loan Forgiveness Program, launched in 2007, which has failed to deliver relief for many applicants. He would also create a new program to provide $10,000 of undergraduate or graduate student debt relief for every year of national or community service the applicant performs, up to five years.

5. “Create a ‘Title I for postsecondary education’ to help students at under-resourced four-year schools complete their degrees.” This initiative

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college 

How to Weigh Student Loan Debt During the College Search | Student Loan Ranger

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The college application and decision-making process can be a very exciting time as you picture your life on campus and dream about the future. But it can also be a significant source of anxiety, especially when it comes to paying for tuition and related expenses – and thinking about how much you may need to borrow in student loans.

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Despite the rising cost of college, the good news is that postsecondary education is still generally a good investment for most people – even when it’s necessary to borrow student loans to cover a portion of your expenses. In general, you should not be afraid to borrow to pay for college if that will allow you to gain the skills and knowledge needed to earn more money and build a career.

The best data available consistently shows that more education leads to higher-paying jobs. In fact, according to the U.S. Bureau of Labor Statistics, median weekly earnings in 2019 for workers with a doctoral degree were more than triple the amount earned by those who didn’t earn a high school diploma. Meanwhile, a bachelor’s degree holder earned $1,248, compared with $746 for a worker with only a high school diploma.

While the data is reassuring, it’s equally important to consider whether you personally are making a wise investment when choosing a school and program of study, especially if you need to borrow student loans to finance your education. One reason for this is that some professions simply have more earning potential than others, and the more you earn the easier it likely will be to repay any debt you have after graduation. In addition, some schools do a better job than other of preparing students for a career, which can help you get the job you need to repay your debt.

Therefore, when you consider colleges, you may want to think about whether your degree will be worth the amount of debt that you need to take on to finance your education. Here are four things you should do as you weigh student loan debt during the college search, along with tools to help you make decisions:

  • Go beyond sticker price.
  • Estimate the full cost of earning a degree.
  • Consider if you will be able to afford monthly payments.
  • Compare financial aid award letters.

Go Beyond Sticker Price

The sticker price of any given college or university can be quite high. Fortunately, most schools offer financial aid packages that can help lighten the load if you qualify. In fact, you may even be able to qualify for enough financial aid at a more expensive school to make the portion of tuition that you will be responsible to pay comparable to that of a far cheaper school.

Before you rule out a school you love because it seems too expensive, check the school’s net price calculator to see whether you may be able to lower the sticker price with financial assistance from the school.

Net price calculators are available on

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