It’s not that President Biden cares much about students stuck deep in debt, it’s more that he cares about helping his friends in the collegiate circuit maintain their stranglehold on tuition prices.
College costs, especially at the most prestigious Ivy League schools, have been exceeding inflation for decades now. The average tuition rate has risen faster than just about anything else in the economy leading to more students taking on more debt.
With no incentive to reduce tuition or reduce the financial burden of higher education, colleges and universities will continue to raise prices knowing full well that federally-backed student loans will continue to cover it and the government will eventually eat the cost with loan forgiveness:
Progressives and conservatives alike are sounding off about President Joe Biden’s plan to erase billions of dollars in student debt — that it’s either a half-a-loaf gesture to an overburdened middle class or a massive socialist handout to rich people, depending on your politics.
But whatever your opinion is on Biden’s motives, a couple of things seem clear. First: Relieving up to $20,000 in student debt per borrower is a financial tourniquet that will help 43 million people who’ve been swept into a complex and undeniably broken system. Second: It doesn’t even begin to solve the problem.
Once the debt is wiped away, what we’re left with is the gnarly reality that tuition costs are out of control, with no magic bullet to rein them in.
Did anyone in the Biden administration stop and consider the consequences of wiping billions in student debt and what message that would send to colleges?
The federal student loan program has been the primary driver of increased tuition. Everyone is approved for student loans regardless of creditworthiness or ability to repay. Thus, colleges can jack tuition up knowing that loans will cover it all even if the degree program isn’t worth a fraction of what a student pays for it.
Kevin Carey, vice president of education policy at the think tank New America, says the entire system is built to keep costs high and Biden’s student loan forgiveness plan will pour gasoline on the fire:
Put simply: “There’s nothing about the system that pushes prices down,” Carey says. “Everything pushes them up.”
That’s why some critics of the Biden administration’s student debt relief worry about the precedent it sets. If the government creates an expectation that debts are likely to be forgiven, universities won’t hesitate to raise tuition. Students may take on more debt, expecting some of it will eventually be wiped clean.
Bottom line, canceling debt certainly doesn’t push tuition costs down.
College is already unaffordable for most families without the help of federally-backed student loans. The colleges themselves don’t care since they’re getting their money and letting students leave school with tens of thousands or hundreds of thousands in debt to pay off for the rest of their lives.
The entire higher education system is broken in terms of affordability and the federal government is the primary offender.
Biden’s plan to forgive student loan debt, which itself is an admission that prices are unaffordable and the product is overpriced, doesn’t do anything to address the root problems, it only makes them worse.
