Is forgiving student debt fair?

·Senior Editor
·7 min read

“The 360” shows you diverse perspectives on the day’s top stories and debates.

What’s happening

President Biden on Wednesday announced that he would cancel $10,000 in student debt for those making less than $125,000 a year, an action that will reduce or erase the loan burden of more than 40 million Americans.

The executive order reportedly came after months of debate within the White House over how much, if any, of the country’s $1.6 trillion in total student debt he should forgive and which Americans should be eligible. The final figure of $10,000, or up to $20,000 for Pell Grant recipients, is consistent with a pledge Biden made during the 2020 Democratic primary — a time when some of his more left-wing rivals were calling for eliminating much more, or even all, student debt.

In addition to loan forgiveness, Biden’s order extended the freeze on payments and interest that has been in place since the start of the pandemic until the end of the year. It also revamped income-based repayment plans, which will now require borrowers to pay only a maximum of 5 percent of their income each month, and shortened the time period for some people to have their loans completely forgiven from 20 years to 10 years.

Why there’s debate

Arguments over the merits of student loan forgiveness have been rehashed over and over since the idea gained attention more than two years ago. One of the most contentious aspects of the debate — perhaps even more than whether it makes economic sense — revolves around fairness.

Republicans have decried Biden’s order, accusing him of giving a $300 billion handout to a relatively small share of the U.S. population at the expense of everyone else. Senate Minority Leader Mitch McConnell called the move a “slap in the face” to Americans who didn’t go to college or paid for college with their own means. They point to research that suggests a majority of the benefit will go to middle-class college graduates who have high levels of long-term earning potential, rather than poorer Americans who need the most help.

Defenders of loan forgiveness say the policy is a step toward correcting a wrong that led millions to be saddled with unmanageable debt that’s crippling their ability to build stable lives. They argue that contrary to conservatives’ claims, needy Americans — especially people of color — will gain the most from having their debt burden eliminated. Others make the case that debt relief will indirectly benefit all Americans by freeing millions of people to spend their money in ways that boost the economy, reduce their reliance on other government assistance programs and start businesses that create jobs.

There’s also a group of commentators who say the concept of fairness is irrelevant when it comes to debt forgiveness. They argue that rather than squabbling over who “deserves” help, the only question that matters is whether the policy is beneficial or harmful to society as a whole.

What’s next

In addition to the debate about whether forgiving student debt is a good idea, there’s also disagreement over whether it’s even legal. Some conservative groups have signaled their intention to try to block the order, and legal experts are split over whether the courts will agree with their argument that Biden overstepped his authority.

Perspectives

What’s unfair is the system that saddled millions with crippling student debt in the first place

“Not only will it bring significant relief to millions of Americans; it is also a decisive example of policy-making that directly seeks to repair past mistakes.” — Suzanne Kahn, The Nation

Working-class Americans shouldn’t be subsidizing the bad decisions of elite college students

“Those who will pay for this write-off are the tens of millions of Americans who didn’t go to college, or repaid their debt, or skimped and saved to pay for college, or chose lower-cost schools to avoid a debt trap. This is a college graduate bailout paid for by plumbers and FedEx drivers.” — Editorial, Wall Street Journal

The claim that debt forgiveness helps only elites is untrue

“Republicans will try to wage class war over Biden’s announcement as part of their effort to separate Democrats from the working class, defined demographically as people who hold no college diploma. But a lot of working-class people carry a lot of student debt.” — Timothy Noah, New Republic

Americans shouldn’t have to pay for a handout to Biden’s political base

“Any serious discussion surrounding student debt would ask the fundamental question of how best to reduce tuition price tags, as ours dwarf those of peer nations. But this isn’t a serious discussion. It is a bribe to Biden’s base in anticipation of the midterm elections, and the US taxpayers are the ones footing the bill.” — Erielle Davidson, New York Post

No government program can offer direct support to everyone

“Some have criticized student loan cancellation as unfair because it reaches only those with current balances, not those who have already repaid. But this makes no sense. It’s akin to complaining that one could have benefited from a government program that did not previously exist.” — Jonathan D. Glater and Dalié Jiménez, Los Angeles Times

People carrying other forms of debt have reason to feel spurned

“Some taxpayers will strenuously object to debt relief for borrowers who could have made other choices. … What about some relief for people struggling with credit-card debt at a 30% interest rate? If the government bails out college grads, why doesn’t it pay off my mortgage? Or my small-business loan? Why doesn’t Uncle Sam just buy everybody a BMW? They’re not wrong.” — Rick Newman, Yahoo Finance

A policy helping one group doesn’t have to come at the expense of support for others

“The core argument for debt forgiveness is not that college graduates are more deserving than their degree-less peers. It’s that there are enough public resources to help both.” — Kevin Carey, Vox

Debt relief costs revenue that could be used in more effective ways

“The combined impact of canceling debt and extending the repayment freeze will cost taxpayers hundreds of billions of dollars. Worse, by depriving the government of expected revenue, it will reduce funding available for investments in K-12 and early childhood learning that would do far more to promote economic opportunity and future growth.” — Editorial, Bloomberg

Student debt relief will boost the economy in ways that benefit everyone

“Because continuing to build up our labor force and help people find jobs better matched to their skills is so important, a comprehensive student-loan debt-cancellation program will have a valuable economic upside.” — Joseph E. Stiglitz, Atlantic

As a whole, student debt holders are doing just fine

“There is no possible definition of ‘need’ in which college graduates in the United States of America would rank first.” — Editorial, National Review

Fairness is the wrong lens to view any public policy through

“Even if it is unfair, it is still worth pursuing. A mass student loan forgiveness scheme is an essential policy correction to a worsening social crisis: These loans have strayed from their original purpose as a means of transcending a borrower’s circumstances to allow them entry into a comfortable middle-class life and have now become albatrosses around the necks of loanees.” — Elamin Abdelmahmoud, BuzzFeed News

Other policies would be more equitable, but those aren’t politically feasible

“Nobody would ever propose these specific actions if they could simply legislate a full solution to the overall college financing question. But in our bizarre political system, we find ourselves faced with a bizarre set of policy options that don’t fit well into any specific vision of how to create a well-designed college financing system.” — Matt Bruenig, People’s Policy Project

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