Student Loan Cancellation: The Pressure Is On

Is it hot in here or is it just me?

Hello friends, 

The past two weeks have brought a continued onslaught of higher education finance news. First we saw the Department of Education grant additional loan forgiveness to borrowers who were victims of fraudulent colleges, then it was announced that the Trump-initiated pause on student loan repayment would be extended to some borrowers who had previously been left out. Meanwhile, Senate Democrats, namely Senators Menendez, Schumer and Warren, have continued their pressure campaign on the White House to enact student loan cancellation through executive action. 

Things are getting hot.

Here’s what I’ve had to say lately:

I had the pleasure of participating in an Intelligence Squared debate on the motion “Forgive Student Debt.”  I argued against the motion, with my teammate, Nick Gillespie. My argument centered around the unfair (i.e. regressive) distribution of benefits of widespread loan cancellation and the unintended consequence of encouraging more borrowing and further tuition inflation. Nick made the case that college is a good investment and that student loan debt is generally affordable. Our opponents centered their argument on racial issues; including racial wealth disparities and discrimination in the labor market. 

As is usually the case with these sorts of ideologically-laden subjects, I felt that our arguments largely flew past one another, with an unsatisfying level of engagement. It seemed to me like they were making an argument for reparations rather than loan cancellation and it probably seemed to them like I’m a heartless jerk. That said, I’m glad I had the chance to really sit with the arguments presented by other side and think more deeply about how they relate to my own. 

It was fun and also flattering to be included in the debate. I became a fan of Intelligence Squared debates about 15 years ago when I first started graduate school. At the time I was working to familiarize myself with the hot political debates du jour, which I had come to realize were absent from my prior public school education (#MathMajorProblems) but were frequent topics of casual conversation amongst my more opulently educated peers. Oh, how things have changed.

I also argued, in a new CBS documentary, that student loan cancellation overlooks an existing solution, income driven repayment. Since I knew that the audience for this film would be broad, I really wanted to make sure that viewers, who have undoubtedly been witness to the very public debate about loan cancellation, understood what safety nets already exist for borrowers. That seems central to the debate but often missing from the discourse. 

What I’ve been thinking about:

I think that if you want free community college, you should do it with a Pell Grant expansion. President Biden’s proposed infrastructure bill, which includes $12 billion for community colleges, got me thinking about his campaign promise to make community college free. I’ve argued on many occasions that we shouldn’t make college free. But it seems that the party in power largely doesn’t agree with me. (C'est la vie.)

So if I concede that this is going to happen, I have ideas about how it should happen. Namely, I’d like to see community college made free through an expansion of Pell Grant generosity, rather than through direct subsidies to community colleges. This would allow us to maintain the advantageous “voucher style” subsidy program that is already in place. (If you’re curious to hear more on this, check out my opinion piece that will go live on The Hill  this afternoon.)

Something else that’s been keeping me busy is my new podcast, An Economist Goes to College. I've been wanting to start a podcast for a few years now and was excited to have the opportunity to make it a reality when I moved over to AEI. I’m still learning how to be a host, rather than a guest, but I’m having a blast choosing fantastic and knowledgeable guests and having conversations with those in the field who have something valuable to share with my audience. My goal is to make their expertise available to aspiring students and their families to help support them in making more strategic decisions about college. The first episode, which is a conversation with NYT columnist Ron Lieber about his new book, will be out on Tuesday. You can find An Economist Goes To College on Apple Podcasts, Spotify, Stitcher, and wherever else you get your podcasts.

That's all for today. Thanks for reading and please do let me know if you have comments, suggestions or recommendations for future podcast topics or guests.

Take care and be nice to each other!

Beth

beth.akers@aei.org

Author of Making College Pay (May 2021)