President Biden’s announcement last month that the Department of Education would cancel up to $10,000 in student loan debt (and up to $20,000 for Pell Grant recipients) for each borrower earning less than $125,000 has stirred mixed reactions.
Some worry that such massive debt forgiveness — estimated to be as high as $24 billion per year for the next 10 years — would further enflame still-raging inflation and force the raising of taxes. Others argue that the debt forgiveness just isn’t fair — particularly to those who paid off their loans or arranged alternative financing for their education other than through a federal program. Similar “fairness” questions were raised regarding people who didn’t attend college at all — either because they couldn’t afford it or because they chose not to. And, most basically, critics ask why should Uncle Sam favor college-educated elites and force hard working men and women to pay off other people’s higher education debts?
While we recognize the legitimacy of many of the questions raised regarding Biden’s student debt plan, we applaud it. We do so because we believe the plan can help transform the lives of millions of young Americans who are burdened with college debt by giving them a chance to pay down their loans, buy homes for their families and one day send their own children to college.
Critics harp on the image of the struggling American worker being forced to subsidize the college debt of a household making six figures. While there will be some wealthier beneficiaries of the program, the overwhelming majority are not. More importantly, that’s what being part of an orderly society is all about. Some people pay more in taxes, others pay less. But we all get our mail delivered the same way, every neighborhood gets its trash collected on the same schedule, and myriad other government programs and services are made available to all, irrespective of how much each person pays in taxes. And we pay for those services even if we don’t use them. Thus, for example, revenue from your federal gas taxes may go to improve an interstate highway in a distant state, and you are obligated to pay property taxes even if you don’t have children in the public schools and have no occasion to use other tax-funded government services.
The point here is that neither tax payments nor government programs are a zero-sum game. We support a “social compact” designed to achieve a greater good. Orderly society needs effective police and fire protection, well-maintained roads and quality public schools. And we also need efforts to remedy elements of wealth inequality that are particularly burdensome on lower income and minority families.
The president’s student debt forgiveness plan will alleviate some student debt, but not all of it. The plan strikes a good balance, even as critics on the left argue that far greater amounts should be forgiven. Unfortunately, the plan does not address the ongoing, crushing cost of higher education and its lasting impact. That is a serious problem that needs to be addressed.