On President Biden’s Student Debt Relief Program MAKING COLLEGE ATTENDANCE MORE EQUITABLE

by NIKULAS SOSKA STAFF WRITER

President Joe Biden’s student debt relief program, which provides up to $20,000 in student loan forgiveness, has many skeptics and rightly so. Is this program a political ploy, that simply transfers the burden of one to another? Will it have long term adverse effects on the affordability of college? Are there other more effective methods of solving the student debt crisis? There are all valid questions and concernts. Yet, despite them, it should be said that every piece of legislation has deficiencies in some way or another.

There is no such thing as a ‘perfect bill,’ and so while there may be shortcomings to President Biden’s student debt relief program, folks shouldn’t let these shortcomings—–which are inherent to any piece of legislation—– blind them from the several benefits of such a program.

The main benefit of Biden’s student loan forgiveness is that it’s structured so that those who don’t need debt relief, won’t receive it. Historically, relief bills have erroneously benefited the wealthy, instead of benefiting the middle and lower classes. In recent times, the CARES Act is an example of this. A bill that was meant to be a sort-of economic rescue package for the middle and lower classes during the Covid-19 pandemic, the CARES ACT was riddled with tax exemptions which mostly benefited the wealthy. Biden’s debt relief program doesn’t face these same challenges. It contains language that establishes strict income criteria such that only those who make less than $125,000 per year, or married couples or heads of households who make less than $250,000 per year, will receive loan forgiveness. According to University of Pennsylvania eEconomists, “about two-thirds of the benefit falls to households making $88,000 or less per year.”.

Low-income borrowers, despite having low amounts of debt, are most likely to default on loans. The impact of defaults is wide ranging; – having a low credit score (which is a side effect of loan nonpayment) makes it harder to borrow, whether that be a mortgage, a credit card

It would be prudent, and indeed in keeping with the intent behind the law and the provisions of the U.S. Constitution, to instead let Congress legislate a solution to the student debt crisis.

If the Biden Administration’s arguments were to be affirmed by the courts, then given that we seem to be living in a perpetual state of emergency all manner of legislation meant to be reserved for true emergencies may be invoked to carry out the President’s wishes without Congressional approval. This seems to be quite a dangerous precedent to set. Luckily, the courts have not affirmed Biden’s right to invoke the Heroes Act in such a manner, with a district court judge striking it down, and the 5th Circuit Court of Appeals refusing to allow the Biden administration to resume it.

Biden’s student debt relief is also simply bad policy. By in effect promising a $20,000 federal rebate to college students, Biden’s student debt relief plan will only contribute to further incentivizing colleges to raise prices, given the increased power of students to now pay a higher price. Furthermore, there would presumably be a rise in students applying for college. While this may seem like a good idea, it in fact does have negative consequences. It encourages students to take degrees which either do not have the highest return on investment, or it encourages students who do not necessarily need a college degree to pursue one. Thus, it is not conducive to an efficient allocation of university seats towards those who are truly in need of it.

This student debt relief plan also puts a band-aid on a gaping wound, providing a superficial solution without solving the deeper problem. For as long as colleges progressively increase their prices,, students will face ever increasing student debt burdens. By placing a band-aid over the wound, student debt relief in effect disincentivizes the U.S. government from working constructively towards solving the crisis, and instead allows them to escape their responsibilities here by offering what are essentially “giveaways.” account, or a car loan, etc. Having a low credit score also raises interest rates, because of a higher risk of defaulting. Biden’s loan forgiveness, because it targets low-income individuals/households, will inevitably decrease the number of low-income borrowers. Thus, the many challenges faced by these folks, specifically defaulting on loans which cultivates a plethora of borrowing inconveniences, are addressed by Biden’s loan forgiveness.

Another important benefit of this student loan forgiveness program is its impact on the country’s vast racial wealth gap. The Department of Education found that Bblack college graduates have, on average, $25,000 more college debt than white graduates. Similarly, Black Americans are two times more likely to be Ppell-Ggrant eligible. Because of these reasons, Black Americans would, at a disproportionately higher rate, benefit from this debt relief, narrowing the wealth gap. Specifically, Black wWomen who owe, on average, the highest amount of student debt in the cCountry would benefit tremendously. Historically Black uUniversities and colleges (HBCUs), which have been underfunded and overlooked for decades, receive much needed relief from Biden’s plan. According to US News, more than 70% of all HBCU students are Ppell-Ggrant eligible, and so these universities would, relative to non-HBCU colleges, disproportionately benefit. In other words, those who should receive loan forgiveness, will receive it. ClearlyOveCrall, Biden’s student debt relief is a step in the right direction to address the country’s persisting racial wealth gap..

The student debt crisis is complicated. Yet, the considerations posed, and the issues raised are important to our society. With college attendance rates increasing, students are saddled with immense student debt, more so now than ever before in our nation’s history. While President Joe Biden’s Student Debt Forgiveness initiative is imperfect, it certainly is an important step to addressing this crisis. We should live in a society that fosters the pursuit of higher education, not one that makes such a pursuit extremely burdensome.