By Owen Daugherty, NASFAA Staff Reporter
The conversation around what should be done with the more than $1.6 trillion in student loan debt that tens of millions of borrowers are saddled with has evolved in recent months, crescendoing in the last week with thousands of posts on Twitter accompanied by the hashtag #CancelStudentDebt.
What went from a progressive pipe dream has made its way to the mainstream, garnering support from several prominent Democrats and pushback from Republicans, making it a politically divisive issue — between both parties and among Democrats — as the country looks for solutions to the economic crisis caused by the coronavirus.
The discussion around forgiving some amount of federal student loan debt raises larger questions about who benefits most from such a proposal, who gets left out, and higher education's role in social and class mobility.
President-elect Joe Biden campaigned on eliminating $10,000 from all borrowers’ student loan debt, and advocates of the idea say he should do so in the early days of his tenure in the White House, framing loan forgiveness as a targeted response to the economic downturn brought by the ongoing pandemic.
Some Democrats, most notably Sens. Chuck Schumer (D-N.Y.) and Elizabeth Warren (D-Mass.), have pushed for as much as $50,000 in student debt forgiveness. Perhaps more important than the figure, though, is a debate over how to go about wiping out the debt — and who has the authority to do so — hence why we’re seeing it play out on Twitter.
Student loan debt is holding back a whole generation from buying homes, starting small businesses, and saving for retirement – all things we rely on to grow our economy. Executive action to #CancelStudentDebt would be a huge economic stimulus during and after this crisis.— Elizabeth Warren (@SenWarren) November 16, 2020
Democrats’ chances of controlling the Senate — and enacting some of Biden’s priorities through legislation — hinge on two Georgia runoff elections to be held in January. Should Republicans maintain a majority in the Senate, it is unlikely Biden and Democrats would be able to secure enough votes for a piece of legislation containing any form of loan forgiveness.
Warren and Schumer have argued Biden could wipe away borrower’s debt through executive action, utilizing the same authority President Donald Trump did to put a payment and interest accrual pause in place through the end of the year to provide relief to borrowers during the pandemic.
Eleven Democratic senators have signed on to Warren and Schumer’s resolution, and more than 235 groups and organizations have come out in support.
In the letter addressed to Biden stating their support, the groups wrote that forgiving some amount of student loan debt through executive action would help “deliver real progress on your racial equity, economic recovery, and COVID-19 relief campaign priorities.”
Biden’s decision on both how much debt to forgive and how to go about doing it could serve as a precursor for what’s to come in his administration, as he campaigned on a sweeping economic and domestic policy platform that would be difficult to achieve without Democratic control in both chambers of Congress.
The groundswell of support in recent days shows that the influence needed to push Biden toward widespread debt forgiveness could play out in public as opposed to the halls of Congress.
A large portion of the debate has centered on a concern that debt forgiveness is unfair to those who have managed to pay off their loan debt.
“Canceling” student debt forces blue collar workers to subsidize overpriced liberal arts degrees for upper-income kids. Insanely unfair to those who chose not to go to college because they couldn’t afford it, & to those who responsibly paid off their debt fast #CancelStudentDebt— Kristin B. Tate (@KristinBTate) November 16, 2020
In response to that argument, there was an outpouring of messages with borrowers detailing their burdensome loan payments or experience fully paying off their loans yet still supporting debt forgiveness flooded Twitter.
As somebody who has been paying $1,000 a month since 2008 to pay off my student loans (I only have 36 payments left) I would not be angry at all. I'd be ecstatic that young people will not be burdened with the same struggle I had. #CancelStudentDebt #studentloans https://t.co/pmmlohsjms— Patrick wears a mask (@PatJD) November 16, 2020
Beyond the Twitter discourse on the topic, prominent media outlets including Inside Higher Ed, The New York Times, and The Washington Post all in the last week published pieces on the issue, with Adam Looney, a non-resident senior fellow at the Brookings Institution, writing in The Post that Biden should not listen to Warren and Schumer’s proposal. He argued that a large portion of the nation’s student loan debt is held by those with graduate and professional degrees, as well as those with higher income levels.
“Many student-borrowers need relief, but well-off borrowers who are thriving — thanks, no doubt, to their college degrees — do not,” he wrote.
Looney argued that the $10,000 in debt forgiveness Biden supported throughout his campaign and included in House Democrats’ Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act constitutes a more measured approach and provides relief to those who need it most.
“That could eliminate debt for the 15 million borrowers with smaller balances who, paradoxically, tend to struggle most, accounting for about 60% of all defaults,” he argued, adding that beyond that proposal, Biden should also consider a more targeted approach based on borrowers’ income and economic circumstances.
Should Biden forgive $10,000 in student loan debt for each borrower, it’s unclear if that would be taxed. Jason Furman, a former chief economist to President Barack Obama, tweeted that any debt relief would be subject to taxation, noting that it could subvert the potential benefit to borrowers.
Others, including Georgetown University Law Professor John Brooks, who specializes in tax policy, insist that if the forgiveness is due to the coronavirus, the tax code would exclude it from being taxed since it would be categorized as a qualified disaster relief payment.
Another key point in the debate is the argument that student loan forgiveness is simply not the best method to stimulate the economy or provide relief to millions of Americans still reeling from the impact caused by the coronavirus.
Beth Akers, a senior fellow at the Manhattan Institute, said in a Twitter post that “giving money to the poor works better.”
“Cut another [means-tested] stimulus check if you want to help people and the economy,” she wrote.
Regardless of whether debt forgiveness comes for borrowers in the near future, Kevin Carey, vice president for education policy at New America, writes in The New York Times that it’s important to take a look at how we got to this point in the first place by examining the causes of the massive amounts of student loan debt. Without a plan in place following forgiveness, debt would again begin being accumulated.
“Debt forgiveness alone would be like treating a contaminated river without stopping the source of the pollution,” Carey argued. “Truly resolving the student debt problem will require tackling many other parts of the machinery of higher education.
Publication Date: 11/23/2020
Ben R | 11/27/2020 9:15:36 AM
As several economists have noted, cancelling a portion of a loan that was not being repaid in the first place does not boost the economy, as it puts no more cash into anyone's hands, and simply dumps the cost on taxpayers for those who in theory should already have a leg up (Isn't that the main points of higher education?).. If the rationale is to address over lending in general or some sort of socioeconomic injustice despite (in italics) the degree for the entire class of borrowers, that is a separate issue that has nothing to do with the pandemic. When we start cancelling loans "just because we should" it calls into question the integrity of the loan programs in the first place. A loan program cannot survive as-is if loan cancellation is the answer to years of over lending.
Robert W | 11/24/2020 8:3:55 AM
These students and or their parents borrowed this money and they should pay it back. Going forward, colleges should start downsizing, cutting administrative expenses and consolidating or eliminating degree programs.
David S | 11/23/2020 12:52:41 PM
Kevin Carey is a good writer and I've had some exchanges with him, but whatever you think about cancelling loans or some portion thereof, I don't think "this won't solve the whole problem" is reason not to do it. The only real solution to student loan debt being overwhelming to so many Americans, short of far fewer people pursuing an education, is to drastically reduce the cost of tuition, or at the very least make public college universally free (free as in tuition = $0, not some last dollar program with 101 strings attached and 102 pages of fine print). If that happens on a national scale, great, but I'm not holding my breath.
Don't let perfect get in the way of good.
Heidi G | 11/23/2020 10:32:24 AM
Private student loan debt should be included in some way...During her campaign, Hillary Clinton proposed rolling private student loan debt into federal student loan consolidation. For students who were targeted by loan sharks like Sallie Mae/Navient with their private loan products I believe this is one of the best solutions.
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