Who the Hell Is Advising Biden On This Student Loan Mess?

Illustration for article titled Who the Hell Is Advising Biden On This Student Loan Mess?
Image: Saul Loeb (Getty Images)

More than one in four American adults have student loan debt, a $1.71 trillion crisis that outpaces credit card debt and has left the average student borrower with $33,000 in loans. College costs are rising eight times faster than both wages and inflation, and this burden is especially heavy for Black students, with 86.6 percent of Black students taking out federal loans (compared to 59.9 percent of white students) and landing in higher debt than their white peers. Couple that with the millions of borrowers who don’t even have a college degree, and you’ve got swaths of Americans who could use a break.

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A majority of that debt can be erased overnight with a stroke of a pen, eliminating the entirety of student loan debt for millions of Americans, closing the racial wealth gap, and freeing up money that can help stimulate the economy. There’s just one problem: President Biden isn’t too keen on the idea.

During a CNN Town Hall event Tuesday, a woman suffering from student loan debt asked President Biden what he will do to make the cancelation of $50,000 of student loans per borrower a reality, as opposed to the $10,000 cancelation Biden has championed.

“I will not make that happen,” Biden said. “It depends on whether or not you go to a private university or a public university. It depends on the idea that I say to a community I’m going to forgive the debt—the billions of dollars of debt—for people who have gone to Harvard and Yale and Penn... rather than use that money to provide for early education and for young children who come from disadvantaged circumstances.”

He added that everyone should be able to go to community college for free.

The $50,000 proposal has been pushed by Senate Majority Leader Chuck Schumer and Senator Elizabeth Warren. On Wednesday morning, they released a joint statement regarding Biden’s opposition, emphasizing Biden’s “broad authority to immediately deliver much-needed relief to millions of Americans.”

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Biden’s rationale falls flat. Using Ivy League universities to depict millions of borrowers as part of the moneyed elite is as craven as it is nonsensical. It’s not the rich who are feeling the brunt of student loan debt; they don’t need to borrow money to attend universities, and even if they do, they’re not taking 25 years to pay off their debt. Additionally, state schools are not necessarily the bargain they might have been when Biden was attending college.

According to College Board the average tuition price for a student attending a four-year public university for the 2020-2021 academic year is $10,560 for in-state students and $27,020 for out-of-state students; the average sticker price for a private university $37,650. Throw estimated budgets into the mix, including room and board, the cost of books, food, transportation fees, etc, the cost of public university jumps to $26,820 for in-state students and $43,280 for out-of-state; for students attending a private university, the cost is approximately $54,840.

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Again, these are the total costs for a single, solitary school year. Multiply that times four, and you’ve got a shitton of students in debt, whether they went to Arizona State or Tufts.

Biden’s $10,000 cancelation plan is quaint. Helpful, sure, but largely quaint. There are Americans who will certainly see $50,000 loan forgiveness as a freebee to spoiled former co-eds whose debt is nobody’s fault but their own, but that doesn’t mean Biden should kowtow to this reductive portrait.

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Besides, what “community” was Biden referring to in that town hall, the one to whom he couldn’t imagine explaining a $50,000 loan cancelation? Does he mean working class people without college degrees? Because there are millions of borrowers who only have a year or two of college under their belt and no degree. In 2019, NPR aired a report on this incredibly common phenomenon, kicking off with an anecdote about a 25-year-old woman who had a one-year stint at the University of Mississippi and borrowed $20,000 to attend:

Between short-term office jobs in the Washington, D.C., area, [Chavonne] drives for Uber. But once in awhile, a debt collector will get hold of her cellphone number — the one she keeps changing to avoid them — and it all comes back fresh. “I’ll be like, ‘Oh no!’ “ she says. “It’s a sad reminder that I owe somebody money!”

In April, she got another reminder when the government seized her tax refund.

All this for a degree she never finished.

[...]

The one thing that could help Chavonne earn more money, of course, is earning a degree. But because she’s in default, she doesn’t have access to federal student aid that could help her go back and finish. It’s a vicious cycle for Chavonne and millions of other students who leave college with debt and without a degree.

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Where do Chavonne and her community fall into Biden’s simplified depiction of student loan debt?

The covid-19 pandemic has prompted a halt in federal student loan payments until the end of September. It’s needed reprieve, but it’s still temporary. Americans require a real solution and real relief, not $10,000 and a cynical social justice veneer on policies that will harm those most in need.

Staff writer, mint chocolate hater.

DISCUSSION

dp4m
dp4m

So, at the risk of “libsplaining” this is... incredibly consistent with what Biden’s been saying since he’s been campaigning. Further, average debt isn’t quite as useful as median debt — since the people with significant ($200K+) debt throws the average out of whack.

According to Lending Tree as of January of this year, $10,000 cancellation will wipe out 35% of all current student debt and knock off at least 40% of another 27% — which accounts for 62% of all debt. Further, he’s still onboard with making all public college tuition-free for any family making $125K or less, and other comunity-college based plans.  Clearly this doesn’t address issues with tuition vastly outstripping inflation, but this should make a significant dent.

Here’s the list of current student debt from Value Penguin: