The Biden administration has, as expected, announced a plan to forgive up to $10,000 of student loan debt for those making under $125,000, and up to $20,000 for low-income Pell Grant recipients.
This may be the first direct bailout of student loan debtors, but it surely won’t be the last. In just four years, student loan debt will be right back to where it is today, and we will have the same debate over what to do about it.
The proposal has been talked up by its supporters in terms of fairness and compassion. Leftist darling and failed congressional candidate Nina Turner went even further, tweeting that there are no arguments against debt forgiveness not “rooted in cruelty.” As with so much of our political discourse, nearly the opposite is true.
Biden’s debt forgiveness plan is no exercise in compassion for the poor. Rather, it’s grossly unfair to people who never took out loans, or who paid them off. Moreover, it’s a crass exercise in rewarding your political supporters at the expense of your enemies, and a finger in the eye to the working- and middle-class Americans footing the bill so that lawyers and administrators can benefit.
The obvious political dimension of this forgiveness program is dramatized by the fact that the Biden administration will potentially be granting debt relief to more than half of its own employees. But even if they don’t work in the Biden White House or live in Washington, D.C., the beneficiaries of this federal largesse are the Democrats’ true constituency: woke managerial elites staffing agencies, administrative jobs, and the DEI and HR departments in Fortune 500 corporations. The true one percent are too rich to care, but the top quartile will happily accept its payout in this massive vote buying scheme, while making life both financially and culturally more hostile for the rest of America.
The most significant beneficiaries of these bailouts, however, are America’s universities. No major household expense has more explosively soared than college tuition. Colleges and universities have been chowing down at the gravy table facilitated by offering every high school graduate a six-figure government check, and escalating tuition accordingly. An obvious effect of this cash flow has been the university “building boom,” with millions of square feet of new construction, much of it not qualifying as classroom space. But even more pernicious might be the 60% increase in administrative positions since the 1990s, especially among the diversity bureaucracy.
The effect for those on the “trickle-down” side of the economic scale, however, will be markedly different. Poorer Americans will be underrepresented among beneficiaries of Biden’s jubilee, largely because the skyrocketing costs of college, buttressed by government loans, dissuaded them from pursuing advanced degrees in the first place. Students from that economic background make up a smaller percentage of college campuses than they did back in the 1970s, before we were dumping trillions into loans ostensibly for their benefit.
Subsidizing the college track has also distorted the job market for lower-income Americans by inflating the number of degreed job applicants, thereby imposing artificial degree requirements for entry-level positions, often without corresponding salary increases. Two generations of young people have now faced the unpleasant choice between going into ever-higher debt in order to credential themselves for many of the same jobs that once didn’t require it, and refusing to take the college route but competing for a shrinking pool of jobs that don’t ask for a degree. We’ve put everyone on a credentialing treadmill that ratchets up in incline level every half-decade.
And now, to add insult to injury, those who picked the latter option are expected to chip in to pay off the tuition tab of their degreed but underemployed high school classmates, and also to support a university staffed by well-paid academics who regard them as deplorable.
Since the origins of the Great Society, our government decided that going to college was an intrinsic good for everyone. We have backed up that belief with trillions of taxpayer dollars, at the expense of other routes to a successful life. That choice, the cost of which is now borne by people who avoided both the debt and the indoctrination that come with a degree, has worked out great for cultural revolutionaries granted the power to ideologically certify the entire workforce of elite institutions. For everyone else, there’s not much in the bargain.
Biden’s bailout will cost taxpayers $500 billion. The only way American taxpayers should accept a forgiveness pact is if it comes directly out of the coffers of the universities that have benefited so spectacularly from our perverse system. University endowments hold nearly $700 billion, with the largest, like Yale or University of Texas, containing so many billions they could fairly be described as hedge funds with dorms and libraries attached.
Perhaps we can work out a deal after all.