Vote NO for Eliminating All Student Debt

So, let me get this right. I’ve ardently been against rescuing the college-going public against any government intervention to completely eliminate student debt. You can read my diatribes against Bernie Sanders and Elizabeth Warren in several Swail Letters (see at end of piece).

Now, apparently, Joe Biden, who is a capable leader with a history of working in a bipartisan manner on Capitol Hill, has made a deal with Bernie Sanders to take up a couple of the latter’s campaign promises in exchange for boosting Biden’s candidacy and bringing Sanders’ voters over in November.

The problem is that eliminating current student loan process is imprudent public policy that is unfair to millions of taxpayers, college graduates, future college graduates, and those whose families made tough decisions to get their child to and through college but will not be able to take advantage of such an invitation due to the income level.

The most painful thing about this policy is that it does absolutely nothing about the problem. The problem is the high prices that colleges charge for services. I’m not here to say whether those prices can be lower, but if there isn’t anything done about the cost, the burden issue will not ameliorate, ever, which begs the question: when would the next bailout be? If Congress can’t do anything about the cost, they sure can’t do much about the burden. This is a windfall for colleges and universities and lets them completely off the hook.

This policy is uniquely unfair to most college grads and families because it will only help current and recent college graduates. It won’t help those who have paid off their loans, those that have paid off most of their loans, or those who now make over $125,000. Those graduates people didn’t always make that money. In a different time or place, they would have had their debt covered, too. But because they do not have debt in this sliver of time, they won’t be able to take advantage of this free check paid for by taxpayers, many of whom didn’t go to college.

The policy sends a clear message to college students that their personal choices aren’t important. And for current students, they can rack up more loans because Biden is saying that their loans will be taken care of. So I’ll add on a better meal program and max out my loans and buy some stuff. What do I have to lose? Not a dime.

For most of us, we make difficult and conscious choices about if we go, where we go, or where we send our kids to go to college. One of the major issues is always price. I sent all my kids to Virginia colleges because I wasn’t going to pay private school prices for out-of-state public colleges. Nor was I going to pay for a private college. As it was, it cost me over $300,000 after tax, or about $450,000 before tax. Some of it was in savings, but those were gone pretty early on. Most of it financed in PLUS loans, which are on me and are not mentioned at all in this policy. And now, I make more than the minimum so I wouldn’t get advantage of it anyway. If I had known, I would have maxed my children’s student loans because they, individually, would be low-income and then available to have 100 percent of their debt cancelled. But I didn’t. I took out PLUS loans. So I have a “mortgage” payment every month that I am solely responsible for. That doesn’t seem fair to me.

There are so many issues that are simply bad about this policy. It produces bad choices and earns a bad taste in one’s mouth for those who don’t get the same discretion. I wrote last year about Robert F. Smith’s gift to pay for the debt of 400 graduates at Morehouse during his commencement speech. Great for him and great for them. Not so great for those from the previous years or even the following years. Not so great to the kid who was three credits short of graduation because he couldn’t schedule his class and graduated at Christmas instead of May. He missed the lottery that felt so good up at the podium that day. Some have. Some have not. These things sound great with a certain light on it but are uniquely unfair in any other color in the spectrum.

To all the people who remortgaged their house to make payments: you don’t get help. To all of those who borrowed from their 401ks: you don’t get help. To all of those who prudently and diligently paid off their loans and didn’t by the expensive car or purchase a house or go on nice vacations (or any vacations): you don’t get help. To all of those who went to the regional college that was cheaper and closer to whom: you could have gone to the college of your dreams, because the federal government, unbeknownst to you, was planning on picking up the tab! How foolish.

We can all agree that there is a college pricing and cost problem in the United States. We should also agree that we push the cost higher by creating a demand that doesn’t exist. But that’s a separate issue. One thing we do not all agree on is bailing out all of those earning under $125,000/year who have student debt. If Biden wins and is able to pass this legislation, then I want a redo for my own college degrees when I would have certainly been under the necessary income limit. I also want a redo for my three children that I will be paying for the next 10-20 years. But I won’t get a dime. I’ll still be burdened with the lost savings and PLUS loans I’ve taken on. And so will countless thousands if not millions of others. Shame on us for making difficult financial decisions.

People understand the price of college and make their choices accordingly. Can we have policy to perhaps increase Pell Grants and help those with significant financial need? That is a policy I can get behind. But to rescue everyone who made their own decision about debt isn’t fair. I’m not saying it isn’t difficult. Of course it is. Turning 22 years of age and having the equivalent of a mortgage payment for a decade or two isn’t a good thing. But we made the system. And that’s the second policy I can get behind: change the higher education system. We have too many colleges which cost too much and is largely inefficient. If you want most of our youth to go to college, we have to have more larger institutions and less smaller. Sorry, but that’s how the numbers crumble.

In the end, turning our backs on those who made tough decisions for years isn’t fair.

So Joe. Don’t do it. Work within the Pell Grant program. Put together funding policies for Title IV institutions that reduce tuition and fee charges to students and keep their cost in check. But don’t bailout such a small group of people that it won’t make a dent anyway.

Other related Swail Letter articles:

A Lot of Talk About a $40 Million Tuition Gift

There He Goes Again: Student Loan Forgiveness and Senator Sanders

An Open Letter to Senator Bernie Sanders: Your Free Tuition Policy is a Bad Idea

A New Plan for Student Debt?

The Broken Record of Student Debt