"Who Pays for Student-Debt Forgiveness?": A Response

Link to the original article: https://www.wsj.com/articles/who-pays-for-student-debt-forgiveness-11561589227

Although only an opinion piece, this article, published in one of America’s leading newspapers, is troubling to say the least. Arguing against national student debt forgiveness, author Michael Solon contends that the vast majority of university-goers who graduate with little or no debt are somehow more “responsible” than their counterparts who take out larger loans. In the author’s words, “[d]ebt forgiveness punishes those who did the right thing.”

Yet, the fact that a select group of graduates has fully repaid loans of various sizes or avoided loans altogether through diligent work and smart financial decisions is no longer a strong argument against student debt forgiveness. The average cost of university tuition has increased tenfold since the early 1980s, during which time the American minimum wage has barely doubled, meaning that while an eight-week summer job could finance a year of study 40 years ago, a student would need to work five times as many hours to cover tuition today (CollegeBoard, 2019). No matter how "responsible" a student is, there are only so many hours it is possible to work in the midst of a degree.

It also does not follow that forgiving student debt "punishes" those who have paid it off themselves. It is undoubtedly economically beneficial to raise, rather than lower, the number of students from all backgrounds attending post-secondary institutions; almost two-thirds of jobs in the American economy currently require post-secondary education. It seems rash to impede economic growth by discouraging university attendance due to the belief it is unfair that the younger generation receive an advantage the older generation did not. Allocating tax dollars to student debt forgiveness is less a matter of handing out unwarranted benefits so much as attempting insofar as is possible to create a larger, more educated, and more socio-economically diverse workforce.

While it’s true, as Solon points out, that it’s an important skill to be able to gauge one’s ability to pay off debt by reference to future earnings, this argument likens paying for education with paying for luxuries. Post-secondary education should not and cannot be something which is made exclusive to those who have enough money in their (parents’) pockets to pay for it outright. If the author’s tenets were to be followed, the “responsible” decision for all but the richest students would be to avoid university altogether due to inability to pay the average $33,000 per year in tuition (Times Higher Education, 2016) plus potential room and board without the help of loans.

University enrolment has risen over the past several decades, both in raw number of students and in proportion of young adults (18-24) attending post-secondary institutions (National Centre for Educational Statistics, 2019). The sheer necessity of a degree to the majority of jobs would therefore seem to have superseded any fear of student debt. In 2018, 70% of American graduates reported having taken out student loans (FRB New York, 2018), a percentage which has been rising in recent years. Even from previous graduating classes (where, as discussed, minimum wage was far more proportionate to tuition) there are millions of senior (60+) Americans who have been unable to pay off debt and have had to put life plans on hold because of this. Thus, the choice now presents itself: allow American student debt, already at $1.5 trillion, to continue to pile up or take an active role in reducing it.

A university degree, even with loans with the current rate of interest, has (and will continue to) become unaffordable for a significant number of students. In many cases, extortionate tuition fees are the main culprit; however, if it isn’t action by a largely private sector, proactive steps by the government through loan forgiveness—on whatever scale is financially feasible—are a welcome move toward making university a viable option irrespective of personal wealth.