Student Loan Debt Cancellation: Is $ 10,000 Too Much or Not Enough?

0


Editor’s Note: This week’s Future View assesses President Biden’s proposal to write off $ 10,000 in student loan debt per person. For next week, we’ll be asking students why movements like the one that targeted Dr. Seuss for “cancellation” are successful on and off campus. Click here to submit opinions under 250 words by March 9. The best answers will be published that evening.

President Biden’s proposal to cancel student debt is a regressive document that ignores the real perpetrators of the debt crisis: the universities.

In 1979, annual undergraduate tuition at Cornell was $ 3,368, or about $ 13,000 after adjusting for inflation. Today it is north of $ 50,000. Universities charge these exorbitant fees, including for majors with little financial return, as they can get away with it. The government gives an easy line of credit to anyone who raises their hand. It’s like Oprah is in charge of the policy: “You get a loan! And you get a loan! And so on.

The government should not only regulate predatory increases in tuition fees, but also require universities to publish statistics on the financial performance generated by each major. Students should know before taking out tens or hundreds of thousands of dollars in loans.

If we write off some of the student debt, universities will raise tuition fees even further, possibly dragging the next generation of students even deeper into the debt spiral. Oh, and how will the majority of Americans who have never gone to college but have other debt feel about all of this?

—Rahul Srivastava, Cornell University, Law (JD)

The right balance

President Biden’s proposal to write off $ 10,000 in student debt per borrower strikes an effective balance. Student loans represent a major economic burden, reducing spending and savings for young adults and earning-age adults. Some remission will allay concerns about potentially debilitating debt and help stimulate the economy.

A study by the National Center for Education Statistics found that about 64% of people who default on their student loans owe less than $ 10,000. Many of them have never graduated from university and come from underserved communities. They could use the help.

However, too many debt cancellations would offer relief to those who do not need it and raise serious equity issues for those who have paid off their debts. Debt cancellation becomes more and more regressive as the amount of relief increases, helping those with the highest earning potential. As Mr. Biden indicated, any additional forgiveness could be better used in other ways. His proposal could change the lives of millions of Americans for the better.

—Sunay Bhat, University of California, Los Angeles, Electrical and Computer Engineering

Put a name and a face on a check

I attend college that does not accept government funded loans. Instead, students receive support through generous donor-funded scholarships and school-run loan programs that personalize financial support. The great success of this system is that it preserves accountability and responsibility. Student loans, at its core, become a relationship in which a successful person looks at someone who has the potential to be successful and says, “I believe in you.” Having a relationship with my loan manager motivates me to work harder in school to prove that the investment in me was worth it.

When I repay my loans, the money will go directly to supporting other students in my alma mater, making it more of a philanthropic exercise than a forced payment. This is how loans should work. When the government intervenes, it destroys the lender-borrower relationship and, therefore, the aspect of personal responsibility. Now, lenders are preying on naive young adults knowing that federal law protects their loans from bankruptcy, and student borrowers have come to blame the institutions that fund their education.

Does this evil system mean that we should write off the debt and give up, in part or in whole, holding people to account for their decisions? No. Rather, we should go back to a localized system in which students understand the seriousness of borrowing money rather than seeing it as a right.

—Callahan Stoub, Hillsdale College, history

Aim higher

President Biden’s debt cancellation proposal may sound generous, but it is a temporary solution to a much deeper problem. The president arrived at the figure of $ 10,000 only after rejecting $ 50,000 and feigning a lack of power to act. Then, by arguing that additional funds could be better spent on early childhood education, he implied a false choice. More recently, Mr Biden has suggested that those with larger debts must have attended elite private colleges, but that is not true.

The country can do more for its students. Mr Biden’s unengaged stance stems from his broader agenda of promoting unity. While it is laudable to try to heal political divisions, by trying to appease both sides, it often ends up pleasing neither.

—Riya Kale, University of Texas at Austin, Political Science and Business

A good investment

I am no stranger to economic precariousness. As a first generation Mexican immigrant who grew up in San Francisco, America’s most expensive city, I understand. But let’s be clear: student loans are not financial hindrances. These are investments in economic mobility.

I was the first in my family to go to college. I must have been more financially sober than many of my prep school mates, where I was one of the “scholarship students” among the elite kids in San Francisco. While my friends went to small liberal arts colleges for $ 70,000 a year, I enrolled at nearby Berkeley City College. I saved tens of thousands of dollars in student loans by going to community college for my first two years and then transferring to the University of California. I still have loans, but I know it’s a worthwhile investment, not a burden.

At nearly 14%, the average return on investment on student loans is about twice the long-term average return on stocks and four times the return on bonds. The average college graduate earns $ 30,000 more each year than the average worker with only a high school diploma, which will likely end up paying for President Biden’s proposal.

Progressives are generally against subsidizing already profitable investments. Why should student loans be any different?

—Ivan Varela, University of California, Berkeley, Economics and Theology

Cut a little slack in Gen Z

The fairly common logic that “I should pay all of my tuition, so they should pay too” is short-sighted. I have no problem offering help, although I was fortunate enough to be able to pay my tuition in full. Students stranded with outsized debt will stifle the ability of the next generation to take economic risks, such as starting a business and applying for loans.

—Ross Wheeless, University of Arizona, History (MA)

Who subsidizes whom?

Those who argue that the government should pay our tuition fees often say that education is a good investment in America’s future. While it is true that going to university is good for a lot of people, it is categorically not good. It may be worth it for a person to get a PhD, but someone else may be better off with just an undergraduate degree or without a degree. The value of education is not universal; it’s different for everyone. The best we can do is present the real costs of education so that people can decide for themselves what is worth paying now and in the future.

President Biden’s proposal to write off certain student loan debts is a classic example of what the late economist Walter E. Williams has described as Congress “forcing one American to serve another’s goals.” Since college education usually translates into better future earnings, debt cancellation means all taxpayers, including low-income Americans, would subsidize the disproportionately rich and soon-to-be-rich student body.

It is ironic that Elizabeth Warren, Bernie Sanders and many academics claim to be advocates for the oppressed while supporting this program of reverse income redistribution. This plan won’t make tuition cheaper, but as long as Americans want to live at the expense of other Americans, politicians will continue to come up with such proposals.

—Adam Stein, University of Washington at St. Louis, chemical engineering

Click here to submit a response to next week’s Future View.

Newspaper Editorial Report: Chuck Schumer signs with free lunch left. Image: Drew Angerer / Getty Images

Copyright © 2020 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8



Source link

Share.

About Author

Comments are closed.