At a CNN’s city hall was held earlier this week, President Joe Biden once again stood out against student debt cancellation. Senators Chuck Schumer and Elizabeth Warren have pressured Biden to forgive up to $ 50,000 in student debt from all borrowers by the executive, but when asked at town hall, Biden said, “I’m not going to let that happen.” Instead, he suggested canceling $ 10,000 in debt.
Policy wise, there is no credible reason to be in favor of canceling $ 10,000, but not $ 50,000. Biden seemed to suggest that he may not have the “authority” to cancel $ 50,000, but it is exactly the same authority under which he is proposing to cancel $ 10,000.
The difference between $ 10,000 and $ 50,000 isn’t about law or policy, it’s about politics. Biden and his team don’t like the optic of canceling a digit they’ve randomly determined to be “ a lot. ” At town hall, Biden explained it this way: He didn’t want to cancel debts from people who went to “Harvard, Yale, and Penn.”
I know it sounds good. Beating Ivy League schools is always a cheap way to generate anti-elite energy, but here the laugh line is devoid of intellectual rigor.
As a Harvard graduate, Biden can bite me. The man apparently has no idea what he is talking about when it comes to student debt. The reality is, schools like Harvard, Yale, and Penn have graduate students with one of the fewest federal debt in the country. The last US News ranking of the lightest debt burdens saw Princeton University come in third place. Stanford was fifth. MIT was 11th. Yale and Harvard were 14th and 16th respectively. The average federal debt of a Harvard graduate is just under $ 14,000, and only 2 percent of Harvard students take out federal loans. Counterintuitively, $ 10,000 in federal loan forgiveness would be a windfall for Harvard graduates and other elite institution graduates, and not bode well for many other people. Biden must keep the Harvard name out of his mouth.
The reason why elite universities generally do better with debt is diverse and complicated. One obvious reason is that many of the students admitted to these schools come from paying families. But it is not the only reason. At Harvard, for example, that is one in five students of families earning less than $ 65,000Harvard has made college free for those kids. Elite private universities have massive endowments (Harvard’s is $ 40 billion) and can provide generous financial aid packages that go far beyond a clumsy Pell Grant from the government.
Additionally, to the extent that debt forgiveness helps the Ivy League graduates, who Biden apparently doesn’t think they deserve, that help will go disproportionately to the graduates of color. That’s because student debt, like everything else in this country, hits black and brown people harder. A 2016 Brookings Institute study found that at graduation, black students owe $ 7,400 more in debt than their white counterparts, but that figure balloons to black graduates who owe $ 25,000 more debt than white graduates, tripling the gap between them just four years after graduation .
It’s called interest. Nearly half of black graduates owe more money on their federal loans four years after graduation than they do when they graduate. Only 17 percent of white graduates are in that situation.
When Biden fools Harvard and Yale and Penn, he tries to conjure up the image of privileged kids with wealthy fathers getting a payout that they’ll use to buy more Gamestop stock. But his argument is based either on ignorance or on extreme bad faith. Biden could have just looked at the list of colleges with the most indebted graduates, which US News updated this weekNumber one is Drexel University (which is in the heart of Philadelphia for a reason, a city Biden might want to remember Pennsylvania turned over to him in the last elections). Maine Maritime Academy, Detroit Mercy, and Alabama State University round out the top four.
Does Biden have any awkward comments he would like to make about canceling student debt for merchant marine marines, who have only one of the most dangerous and difficult jobs in the country and are graduates of Maine Academy with an average debt of $ 56,897? Is there a principled reason why students graduating from an HBCU like the state of Alabama with $ 54,177 in debt don’t earn $ 50,000 in student loan forgiveness?
Or maybe Biden has some shade for graduates from his alma mater, the University of Delaware? The typical debt burden for those graduates is about $ 24,000, not one of the biggest offenders, but still far more than a Harvard or Yale graduate. Doesn’t Biden want to risk forgiving federal debt graduates like the first lady, Dr. Jill Biden, who also earned a BA and PhD from that school? How is it possible for Biden to think that any person who owes more than $ 10,000 is Winklevoss twins?
The astute reader will find that I keep using the word “graduates.” That in itself is a bit of a fantasy centering. In fact, nearly 40 percent of student loans do not get their diploma. That means many people have the increased debt without the increased earning potential. And don’t even get me started on the folks who borrowed heavily and got a functionally crappy degree from a diploma mill pretending to be an institution of higher education.
Does Biden even know who to exclude if he comes up with these proposals?
The answer may be ‘no’. The cost of university education has skyrocketed in recent decades. Student debt is very different now from when Biden was in school (he graduated from the University of Delaware in 1965) or even when he was in the Senate. National student debt in 2004 was approximately $ 250 billion; now it is $ 1.5 trillionAdd to that the fact that the Department of Education doesn’t track debts by race, and chances are Biden doesn’t understand the magnitude of the problem or has an outdated picture of who bears student debt in this country.
Schumer (Harvard ’71) and Warren (professor at Harvard Law, 1995–2011) know. Rather than a false dichotomy between elites and whatever hardscrabble Scrantonites Biden thinks to talk to, Schumer and Warren understand that debt relief helps everyone … helps everyoneDebt relief, even for Ivy students, is an economic incentive: People with less student debt can, you know, buy things on credit. Just like houses. Debt relief also closes the racial wealth gap and is a boon for small business generation.
If Biden and his team have a principal reason why it’s better to cancel $ 10,000 than $ 50,000, I’d love to hear that. But as of now, his argument is not principled – it is nonsense. It is based on a fundamental mis-characterization of the problem, intended to actively mislead the people who will be helped most by making more money available. Appealing to Harvard (2020-21 Tuition: $ 53,475), as a way of justifying not giving money to people crushed by Boston University debt (2020-21 Tuition: $ 57,906) is just bad faith on stilts.
Student debt relief is a win that will help the people Biden cares about. Perhaps, instead of talking about this with his board of crusty economic advisers – who probably give their grandchildren a ten dollar check to go to a movie – he should simply conduct a survey of the interns who work in the White House. If he does, he might think of the young people drowning in debt all around him, before hastily rejecting a proposal to help them.
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