New student loan proposal is regressive, politicized, and won’t stop rising prices

Photo Credit: Getty

President Biden this week unveiled a new student debt relief proposal. It would cancel student debt for up to 153,000 people who incurred $12,000 or less of debt and have been paying it off for at least 10 years.

There are three problems with this proposal. The first problem is moral: student debt forgiveness is regressive. If government is going to give out aid, it should go to the poor. People who make it to college have either already made it to the middle class, or are well on their way.

Not only that but, this round of money would go to students who have already paid off most of their debt, or who accumulated only a small amount to start with. Needier students, let alone needier people with more serious problems than college debt, are left out of this proposal.

This may be because low-income people are less likely to vote. As for the mostly-middle class beneficiaries, Politico reports that Biden will be “sending [them] emails to make sure they know whom to thank for it.”

The second problem is procedural. Congress has the power of the purse. The president does not. Yet Biden is prepared to spend $1.2 billion dollars without Congress having a say. Courts already shot down a $400 billion student debt proposal from Biden. The difference with this $1 billion proposal, and others like it, is only a matter of degree.

The third problem is that student debt relief does not treat the root problem of rising college costs. It treats only a symptom, and makes the underlying causes worse. Families already save and sacrifice all they can to send their kids to college. Student debt forgiveness does not change this, and universities know this.

Universities respond to proposals like Biden’s by accepting the subsidies, raising their prices by the amount of the subsidies, and charging families the same out-of-pocket prices they were charging before. They do this because they know that families will pay it.

Student debt relief is great for funding new aquatics centers and more administrators. It is less great for students, who pay more, over a longer period of time, for the same college education, just with nicer buildings and more paperwork.