https://bongino.com/democrats-resurrect-calls-for-student-loan-forgiveness/

Seemingly overnight, calls for abolish student debt have become the left’s latest rallying cry. Many on the 2020 Democrat debate stage had their own version of a debt forgiveness proposal, and now many are pressuring Democrat presidential candidate Joe Biden to pass one should be set foot in the White House.

Much of the conversation over forgiving student debt online has been phrased in moral, not economic language. It’s evident to those who made sacrifices to minimize debt that such a scheme would punish the financially responsible. Additionally, debt forgiveness puts 2/3rds of taxpayers in the position of having some of their tax dollars paying off the debt of the remaining third of the population that statistically makes more money than they do.

Liberals desperate for the rest of us to pay off their loans have at least attempted to muster a response to this. As one viral post (and there’s many variants of this analogy) reads “being against student loan debt forgiveness because you paid off your debt is like being against a coronavirus vaccine because you already got coronavirus.” This analogy makes no sense whatsoever because accruing student debt is a choice, but at least they’re trying.

The #1 problem with debt forgiveness is that it’s not even a conversation we can have before addressing the root cause of the debt crisis: skyrocketing tuition. Forgiving all debt now simply wipes the slate clean, but debt will then immediately begin accruing at the same pace as before.

For Most of American History, College Costs Did Not Rise

In the 21st century, skyrocketing college costs have become the third thing certain in life – but it wasn’t always this way. In fact, for most of American history the inflation adjusted cost of college tuition was mostly constant. Paradoxically, it was government efforts to make college more affordable that have sent costs into the stratosphere.

As I noted elsewhere, in the 1971-72 academic year, it cost $10,742 to attend a private four-year school, and $2,510 to attend a public one. Community college cost $1,126. Nearly a decade later in the 1980-81 academic year, the costs were lower: $10,438, $2,320, and $1,128 respectively. (All figures adjusted in 2015 dollars)

What changed were subsidies. If the government subsidizes $1,000 of my tuition, a college can justify raising tuition by as much as $1,000 without me feeling any pain. And in the process, that higher sticker cost creates demand for more tuition subsidies, creating an endless feedback loop between increased aid and costs. A study from the New York Federal Reserve found tuition to increase 65 cents for every dollar in federal aid given, and other studies have estimated it even higher.

The federal government began subsidizing tuition as early as 1965, but it was the 1978 Middle Income Student Assistance Act (which expanded subsidies from the poor to the middle class) that marked a turning point in college costs. Since 1978 college costs have increased 1,225% while inflation has increased 279%.

The federal government has also made it so borrowers can’t discharge student loan debt in bankruptcy. If that weren’t the case, few banks would lend out to students perusing B.S. degrees, and loan standards would be stricter, which would force colleges to reduce prices as less students could afford to attend at their artificially high tuition rates.

Student Debt Forgiveness: An Upper Class Bailout

Like every other conceivable issue, leftists are already trying to pitch debt forgiveness as a “racial justice issue” (why not?).

Ironically, a report from the left-wing think tank Demos found “While eliminating student debt for all households regardless of income increases median net worth for young white and Black households, white families see a greater benefit likely due to a higher likelihood of completing college and graduate degree programs. Policies which eliminate all student debt for young households would expand the divide between median Black and white wealth by an additional 9 percent.”

Broken down by wealth, nearly 70% of all student loan debt is owned by the wealthiest 40% Americans, while the bottom fifth only hold 7.2% of student loan debt.

When measuring income instead of wealth, nearly 60% of student debt is held by the highest earning 40%.

If politicians were actually interested in a debt forgiveness scheme that would disproportionately help the poor they’d pursue credit card debt forgiveness (which I’m not suggesting).

One obvious objection to the claim that the poor barely have any student loan debt is that this is only the case because they can’t afford to go in the first place – and it is true that those from lower income backgrounds do attend college at lower rates than those from higher earning families. But this is also true in Scandinavia where college is available free of charge to everyone – and in America there are already a series of programs available that greatly reduce the cost of college to the poor.

The average Pell Grant a poor American student would be eligible for in 2017-2018 of $4,010 was higher than the average community college tuition that year ($3,347), and the maximum Pell Grant of $5,920 covered two-thirds of the average in-state college tuition that year ($9,970). None of this accounts for any low-income scholarships those students may also be eligible for.

While it’s hard to sympathize with someone who attended a $50,000 a year school now demanding we pay for it, it’s also the case that there are millions of Americans who attended college that were sold a false promise. It’s more than just slightly absurd that teenagers are allowed to borrow as much money as they are to attend college.

Many are stuck in a financial purgatory they can’t escape from – and there are hundreds of thousands of borrowers out there who have paid back more than they’ve borrowed over decades – and still aren’t close to paying off their loans because they couldn’t pay down the principal fast enough. A conversation over whether there’s a case for a means-tested relief for a small segment of borrowers is one worth having – but not across the board forgiveness.

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