It’s a brazen act of class warfare by the affluent against everyone else.
It’s a brazen act of class warfare by the affluent against everyone else.
T he plan being mulled by the Biden administration to cancel and forgive up to $1.6 trillion of federal student-loan debt is a brazen act of class warfare by the affluent against everyone else. It is a politically, and cosmically, unjustifiable robbery that offers yet more rope for the decadent and totally indefensible American college system to become even more decadent and indefensible.
The overwhelming majority of student debt is held by the affluent; less than 10 percent of it is held by the bottom third of earners. Nearly 40 percent of it is held by students who earned advanced degrees — many of them now doctors and lawyers. Unemployment for the college-educated is less than 2 percent.
At every level, the American college system is deranged by the government guarantees and preferment extended to student debt. At the lowest end, schools take advantage of government-guaranteed student loans to prey on service-sector workers. They market a college education as a path of upward mobility, while knowing that most of their students never graduate, or simply return to the service industry after graduation. All that these colleges do is load five-figure-earning students with debt, which is transformed into six-figure salaries for third-rate professors and administrators.
In the great middle tier, the oceans of student debt have inspired colleges to become luxury resorts for the youth. They build endless recreational and athletic facilities, they install baroque food courts in an appalling race to offer something first-rate. These schools are increasingly trying to insert themselves as gatekeepers into fields such as turf management and catering, which never required college education before.
If you view the top-tier colleges from their balance sheets alone, they look like enormous tax-advantaged hedge funds with minuscule vestigial educational institutions named Yale or Harvard attached to them. The student-loan fix has allowed them to raise tuition above $50,000 a year annually. These exorbitant prices, driven by the ocean of loan money guaranteed by the government, help fund the expansion of the administrator class. There are more social managers and commissars than professors at many schools now.
Forgiving student loan debt would be an act of absolution pronounced over this corruption of higher education. Paired with no reform, it does nothing to reduce the profligacy, cost, and predatory nature of these institutions. It only encourages it, and implicitly promises amnesties in the future.
Some legislators, such as Alexandria Ocasio-Cortez, have suggested that student-loan forgiveness is a necessary part of jump-starting the post-Covid economy. Does this economy need another $1.6 trillion jump-start? Does it need to repair household balance sheets for the affluent? Of course not.
The program isn’t just a matter of grave executive overreach, but tears directly at the social fabric. It makes into suckers those people who either paid student debt early, or who — looking at the expense and value of a college education — instead chose a different path in life. The tradesman who took out a loan for an F-150, subject to underwriting, may get to count it as a business expense. But unless he goes through bankruptcy, it would still weigh on his monthly budget.
Executive loan forgiveness threatens to make student-loan debt not just the subject of financial advantage, but to turn the act of attending an expensive college into something like an act of political allegiance. One takes on the debt and then simply trusts that it will be forgiven. A professional middle-class protection racket, or conspiracy.
It reflects a progressive faith in what might be called “pro-social negligence.” Democrats create a zone of lawlessness, predation, and danger for illegal immigrants by setting up policy and enforcement of immigration law to encourage illegal crossings. They do so because they think immigration itself is good, that it changes the nature and composition of American society in ways that they approve. Likewise, with colleges, Democrats are encouraging all the worst and most irresponsible behavior in higher education because they believe education is good in itself. The expansion of an indebted email caste is a form of self-interested patronage. It would be like your great-grandfather’s Republican Party using the Treasury to suddenly forgive all back-due country-club fees in order to keep their sons in plus fours.
The sudden redesignation of existing debts of the most politically influential bloc of well-off voters amounts to an ugly bribe worthy of a banana republic. It’s not just a moral hazard, but a moral crime.