Forgiving Student Loans Is Not Simple
Republicans have used Biden’s announcement to forgive certain student loans as fodder for culture wars. Why? Let’s be honest.
Many of their supporters did not go to college, let alone worry about how to pay for it.
Republicans want you to think student loan forgiveness is an issue between elitists and working class voters. What they and many other student loan critics fail to understand is that the problems are much deeper and complex than young people carrying debt burdens they may not be able to afford.
Relatively speaking, this issue impacts few Americans, with some 13.5% having student loan debt. Of the Americans it does impact, however, the debt burden can be devastating. About 16% of borrowers are in default, and you basically have to either pay it off or die. Bankruptcy may not even save you.
But let’s dig deeper to explore why this issue is not as simple as the House Judiciary GOP wants you to believe.
The federal government has engaged in predatory lending for decades
If you were lucky enough to go to college during the Great Recession like me, your student loan interest rate was likely a whopping 6.80%. Despite the Federal Reserve slashing interest rates and ramping up quantitative easing, student loan rates didn’t really move. Paying that rate on tens or hundreds of thousands of dollars for approximately 25 years (until it’s “forgiven”) handicaps someone financially.
And it has all been underwritten by the Department of Education. Primarily during the Obama years, believe it or not. Even Nancy Pelosi once said that the President didn’t even have the power to wipe out student loan debt.
Nobody ever talks about the interest rates though. How it was cheaper to get a mortgage most years than a student loan. How these exorbitant rates were set by the federal government. But aspiring students who couldn’t afford insanely expensive college tuition were forced to take it or leave it.
Insanely high cost of college
Instead of ripping on the Biden Administration for forgiving $10k of debt for borrowers earning under $125k, why don’t Republicans and other critics rip on the exorbitant costs of college? Costs have nearly tripled since the 1980s, so all the angry boomers with no student loans, spare me.
All of this came as manufacturing jobs largely left America and the college degree basically became the equivalent of a high school diploma.
Even in-state schools charge tens of thousands of dollars per year, especially if you plan to live on campus and not in your parent’s basement.
So what are people supposed to do when they want to better their lives? Not agree to take out student loans, despite the federal government’s willingness to underwrite just about anything? They hardly look at the borrower’s credit situation or even that of their family’s.
Also, the degree a borrower pursues barely matters when they apply for financing from the Department of Education. So while everyone ragging on the General Studies major with $100k in debt may have a point, maybe also point blame at the lender and school that facilitated it.
The colleges will do anything to get you in
Republicans want you to think it’s a bunch of Harvard and Yale educated borrowers getting their loans forgiven. It’s not. Many of the people from my generation went to non-Ivy League schools and took out massive loans. All in an effort to get the best education possible. For the best life possible.
And guess what? Pretty much all of our parents told us to.
If you went to a middle or lower tier school, the marketing from every department was likely nauseating. They tried to sell you on every and any useless major. The people who worked in those areas depended on students majoring in them.
Of course they wouldn’t complain if you took out $50k to pursue a Philosophy degree that might satisfy you intellectually, but real world application? Not readily apparent.
Nobody talks about the intense marketing of schools, especially the for-profit ones that are fraudulent factories of useless diplomas.
Did I almost forget to mention Trump University? So much banter by Republicans about the injustices of Biden’s decision. Meanwhile, their cult leader once ran a fraudulent “educational” scheme where he was forced to settle for $25 million with “students” he completely duped. Needless to say, Trump University is now defunct.
Blame the individual, but not anyone else
Taking this approach is analogous to saying, “Well, you live in a hurricane zone, you assumed the risk. I know you wanted to live next to the water with this beautiful view and dreams of a nice life, but because you live in this zone and took this risk, we can’t send FEMA to help you. Good luck rebuilding your life.”
Would people in the deep red states lining the Gulf of Mexico be happy?
It’s also akin to only blaming every borrower during the Great Recession who purchased subprime mortgages originated by giants like Countrywide who didn’t care whether they were qualified. For Republicans and other critics, Countrywide (or the big banks) wouldn’t be at fault here. Only the borrowers who assumed the risk.
Think in terms of wealth
Many people saddled with student loan debt today make decent money. Some in the hundreds of thousands or even millions. Many of my millennial friends have done well, despite the deck stacked against us coming out of school in the wake of a recession.
But they don’t necessarily have wealth. They may have high salaries, but they haven’t had enough years in the workforce to enjoy the benefits of compounding interest or a prolonged stock market bull run. Most of them only caught the tail end of the last stock market rise.
Yet for many, student borrowers are still viewed as freeriders. Enjoying the benefits of government money now at the taxpayers’ expense. These critics forget that the people taking out loans for education are not the rich and powerful. They are the people trying to better their lives. They are people trying to make America actually great and smart. They are trying to add value, even if it’s through a Philosophy degree.
As for those liberal artists, at least they are usually able to think critically. Maybe we need more of them in America today, not less.
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