Canceling Student Debt and Other Regressive Education Policies

The Democratic Party bills itself as the party that champions the working class. But, if you look underneath the surface, its actual agenda increasingly emphasizes policies that would largely benefit the well-off and well-educated.

From Representative Alexandria Ocasio-Cortez to Senator Elizabeth Warren, the party’s most prominent voices are pressuring President-elect Joe Biden to make student-debt “cancellation” one of his administration’s first priorities. Warren, for her part, wants Biden to take the legally dubious step of unilaterally canceling (i.e., making taxpayers pay off) $50,000 in debt per graduate via executive order. Almost all mainstream elected Democrats have coalesced around $10,000 as the baseline for debt cancellation via legislation, with more-progressive voices calling for its total elimination.

But wait: Isn’t such prioritization of support for struggling students exactly what progressive working-class solidarity should look like? Not exactly — though one can certainly be forgiven for thinking as much. In actuality, forcing the average taxpayer to pay college graduates’ debt is a regressive redistribution of wealth to a better-off segment of society.

How so? It’s simple: Most Americans don’t actually have college degrees.

According to the Census Bureau, just about one in three adults over age 25 have a bachelor’s degree. This slice of society, naturally, holds almost all student-loan debt. (Some is held by those who failed to graduate). Yet college graduates also typically make 85 percent more than those with only a high school diploma — and earn roughly $1 million more over their lifetime.

So, while many might think of student-debt cancellation as helping broke young people, it actually uses the government’s scarce resources to help a relatively well-off subset of society. Even (in a 2019 blog post) writers from the liberal-leaning Urban Institute took a look at data contained in the Survey of Consumer Finances for 2016 and found that the lowest 25 percent of income earners would only see 12 percent of the benefits from canceling student debt. In their view, “debt forgiveness plans would be regressive — providing the largest monetary benefits to those with the highest incomes.”

Similarly, a new working paper published by the University of Chicago found that canceling all student debt would give $192 billion in benefits to the top 20 percent of income earners, yet just $29 billion to the bottom 20 percent. In what universe is that “progressive”?

Yet student debt is not the only aspect of education where progressive-sounding Democratic rhetoric masks big-government policies that favor the well-off.

Consider also the shutdown of schools, public and private, for in-person education during the COVID-19 crisis. To be sure, it’s true that both Republican and Democratic elected officials embraced this unwise measure early on. But in the many months since, an undeniable trend has emerged. Democratic politicians, at the behest (it seems) of teachers’ unions, have fought to keep schools closed for in-person education despite clear evidence that keeping schools open is safe — while many Republican officials have fought to resume in-person education.

The distributional disparity here could not be starker.

Well-off parents are more likely to be able to help their children navigate “distance learning,” work from home, or even hire additional child care. But school closures put low-income families into crisis. They lose a vital source of child care that allows them to earn a living. And they often don’t have the resources to keep their kids caught up in school.

One survey found that low-income families are twice as likely to say that distance learning is going poorly for their child. Even worse, poor families are ten times more likely to say that, with schools closed, their child is receiving little or no distance learning at all. So safely reopening schools is, in a distributional sense, very much a progressive policy — yet Republicans are the ones, correctly, fighting for it.

Oh, and don’t forget that even in normal times, Democratic politicians overwhelmingly oppose school-choice policies that expand opportunities for low-income and minority students.

Wealthy families already have school choice. They can send their children to private school or relocate to areas with good public schools.

It’s low-income families that are left trapped in failing public schools with few or no alternatives, in the absence of the charter schools and voucher programs that provide them. School choice enjoys strong bipartisan support, even among Democratic and minority voters. But it is nonetheless often opposed or held back by elected Democrats cowed by the demands of teachers’ unions determined to preserve their control of public schools. That’s right: On school choice, the Democrats, not Republicans, put the desires of a big-spending constituency over the interests of low-income students and families.

Democrats may indeed be the left-wing party when it comes to social issues and many other policy areas. But their education agenda is rather less “progressive” than often claimed.