Student Loan Forgiveness Is a Bribe for Young Voters | Opinion

After much anticipation, President Biden has finally unveiled his plan for partial student debt "cancelation." On Wednesday, the White House announced that the Department of Education will unilaterally waive $10,000 in student debt per borrower, with only those earning less than $125,000/year qualifying. The plan also includes $20,000 in debt relief for those who received Pell grants.

Impressively, this plan may well manage to piss off everybody, Left and Right.

Right-of-center Americans will point out that this executive action is legally and constitutionally suspect; even Speaker of the House Nancy Pelosi has previously admitted that the executive branch doesn't have the authority to "cancel" (a.k.a. transfer to taxpayers) student debt without authorization from Congress, which Biden hasn't received. An internal review conducted by the Department of Education in 2021 reached the same conclusion.

So, too, do the same concerns about full-scale student debt cancelation, which would disproportionately benefit the affluent, still apply to this new plan, albeit in a reduced way, given the income caps. The plan would still, according to the Wharton School of Business, offer up to 73 percent of its benefits to the top 60 percent of income earners; the vast majority of the benefits would not go to the bottom 40 percent—the actual poor and working class people progressives say student cancelation is for.

Meanwhile, many activists on the Left want full student debt cancelation and the socialization of higher education altogether. They argue that canceling $10K in debt while leaving in place the status quo system, where tuition rates have skyrocketed to objectively obscene levels, doesn't address the core problem at all.

Whether one agrees with their ultimate policy demands or not, they're right: The nonpartisan Committee for a Responsible Federal Budget ran the numbers and found that under a plan very similar to Biden's, we would return to $1.6 trillion in student loan debt—the current sum hanging over people's heads—in just four years. That's right: We'd very quickly be right back where we are today.

Even if you "canceled" the entire $1.6 trillion in student debt currently owed to federal taxpayers, without broader systemic changes, it would immediately start accruing again and we'd be back at $1.6 trillion in just 20 years, the committee found.

The inescapable reality is that Biden's plan doesn't fix the mess we're in at all. It simply puts a bandaid on a bullet hole and hopes that'll stop the bleeding.

Newsflash, Mr. President: It won't.

Real reform would have to address the actual causes behind surging tuition rates, which have more than doubled at public four-year colleges since 1981 even after adjusting for inflation. But that's not so politically expedient or ideologically acceptable for Democrats because it would require acknowledging that the federal government got us into this mess in the first place.

One of the main reasons tuition prices have surged is the federal student loan program, which has vastly subsidized and inflated demand, a textbook way to increase prices. You don't have to take my word for it: A New York Federal Reserve study found that every dollar in subsidized federal loans led to a 60 cent increase in tuition rates. Similarly, a Harvard analysis found that tuition prices have risen much more at schools that accepted federal aid than those that don't accept it. Many other studies have confirmed these results.

student loan forgiveness
WASHINGTON, DC - JULY 27: Rep. Rashida Tlaib (R-MI) (2nd from L) attends a rally outside of the White House to call on U.S. President Joe Biden to cancel student debt on July 27, 2022 in Washington, DC. Student loan borrowers are awaiting a decision on whether the Biden administration will extend a pause on student loan payments. Anna Moneymaker/Getty Images

Scaling back the federal student loan program probably wouldn't be politically popular. But until it happens, prices will continue to surge.

Another big reason tuition rates have risen so heavily is the growth of bloated campus bureaucracies. According to the Wall Street Journal, from 1975 to 2005, the costs of a university degree tripled. Faculty-to-student ratios stayed the same, but administrator-to-student ratios skyrocketed. The number of administrators increased by 85 percent, while the number of staffers rose by a whopping 240 percent.

Any solution to the student loan issue that doesn't impose serious fiscal constraints on colleges' runaway budgets and exploding bureaucracies isn't a "solution" at all.

Which means that President Biden's attempt at student debt cancelation isn't even really intended to be a solution, all his rhetoric aside. It'll probably be struck down by the courts anyway. But with the midterms months away and Democrats cratering in the polls, Biden seems to be making the cynical political calculation that his bandaid "solution" can buy his party a few votes.

That's shrewd politicking. But it's no way to run a country.

It's time to admit it: Student loan cancelation is a political bribe for young voters.

Brad Polumbo (@Brad_Polumbo) is the co-founder of BASEDPolitics and Policy Correspondent at the Foundation for Economic Education.

The views expressed in this article are the writer's own.