Classroom Debt
The concept of cancelling student debt remains popular among some of the more so-called progressives within the Democrat caucus. But while that sounds like a great talking point, they might want to watch what they wish for.
As Sarah Westwood of the Washington Examiner reported last week, cancelling student debt could have unintended consequences. For example, half of all student debt is held by people who went to graduate school. That’s hardly the poor struggling first-generation college student we’ve been led to believe racked up this debt.
In fact, although only a quarter of those with loans attended graduate school…those who did go past the standard four years have roughly half the overall student debt…because graduate and professional schools have higher tuition. Then again, there’s the theory that those with advanced degrees have higher earning capacity.
Flat out cancelling student debt also disproportionately benefits middle- and high-income families…but if the cancellation is tied to income, while it would be less regressive it would also lead to fights about where the income line should be set.
Obviously, doing this now would be a grab for votes in the midterms…but it could very easily backfire. The plans only cancel current debt…so if you went to school, incurred debt, and paid it off…you get nothing. Well, except a sense of resentment that you played the game by the rules, and not only were you not rewarded for it…those who took a different path, namely non-payment, did get the reward.
Plus let’s say debt is cancelled. That would lead to more money in some people’s pockets…but the supply chain already cannot meet present demand for goods, so there’s further frustration, even by those whose debt has been forgiven.
Easy talking points, sure…but easy to administer, not so much. And all of that discounts whether it’s even good public policy to adopt in any form.
