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Student Debt ‘Forgiveness’: Universities, Not Taxpayers, Should Pay for It

PRESIDENT JOE BIDEN announced that his administration will “forgive” around $300 billion of student loan debt. The plan faces important legal hurdles, as the president’s authority to unilaterally implement the policy is murky. However, the most important criticism is that the plan would unavoidably burden the American working class, who will have to foot the bill for student debt forgiveness. While hard-working Americans will have to pay the bill, the true culprits for the broken American college system, big universities, are marching scot-free. 

Economically speaking, Biden’s massive plan will probably add fuel to the fire of inflation. As explained by liberal economist and former Obama advisor Jason Furman, the plan could increase monthly expenditure by $150-$200 in the typical household (a significant amount in times when inflation has already decreased the purchasing power of thousands of households). However, morally speaking the plan is even worse, as it punishes the average citizen and rewards the culprits of the current unsustainability of the American college industry. 

Students pay more in tuition and receive less in education.

Despite the unsoundness of the plan, Biden is right in one thing: American universities have become unaffordable. The average cost of attendance at American colleges has increased by almost 169% since 1980, going from $10,231 annually that year to more than $28,775 in 2019.  One would expect that the quality of universities would have risen 169% over that time, but American colleges are now facing stiff competition with China and there is evidence that it is falling behind its adversaries. 

Big non-profit private universities have greatly expanded, building more physical infrastructure and providing more services in order to lure students. Universities now are more concerned with providing a college “experience” (spending more on infrastructure or student sports) than enhancing their academic credentials, additionally, the cost of the administrative staff in colleges has ballooned. In many cases, universities are spending more than double on administrative services than on education. 

student-debt-forgiveness

Big universities have risen their tuition costs to fund vanity infrastructure and expand its administrative staff, putting instruction in the backseat (EFE)

As a result, many colleges have acquired enormous amounts of debt in order to fund their rising costs and depend on students going and living on campus to remain financially viable and explain their rising tuition fees. The effects of the COVID pandemic showed the fragile grounds of the college industry, with students not living on-campus, it was very hard for universities around the country to justify their astronomical tuition if students were not going to be part of the “college experience.” 

In a nutshell, while 2022 college students are paying more money, they are getting less instruction for each buck than students in 1980. They will be able to get more soggy pizza slices in a college cafeteria, however. 

This unstoppable rise in costs has partly triggered the student debt problem that Biden is trying to solve. Since going to college has become a necessary requirement for many jobs, young Americans are feeling more pressured than ever to get indebted in order to go to a university, even if they even don’t finish their degree. 

While it is true that acquiring that debt was a decision students must be responsible for, it is easy to understand how 18-year-olds felt it necessary to get indebted to go to college, even if it wasn’t the best choice for them.  In this sense, it is understandable that college students (especially undergraduates) want to get that debt pardoned, even if it doesn’t make economic sense.

Big universities, not regular Americans should pay student debt forgiveness

However, in order to help students who made a terrible economic decision when they were young, Biden is rewarding the very institutions that created the crisis in the first place. As commentator Inez Stepman noted, instead of school debt forgiveness will be funded with the billions of dollars ($691 billion to be exact) stored in college endowments, regular Americans will have to pay the tap in either more taxes or more debt. 

Forgiving billions of dollars in student debt while doing absolutely nothing to stamp out the root causes that are inflating the prices of colleges across America will not solve the issue, it will only give incentives for bloated universities to keep up their unsound and unstable practices as they know more people will get indebted to go to school as the government will forgive new rounds of debt. 

Instead of forcing regular Americans to pay for the recklessness of college administrators, Biden should have “forgive student debt and make Harvard pay for it” as former hill staffer and commentator Boris Ryvkin noted.

Daniel is a Political Science and Economics student from the University of South Florida. He worked as a congressional intern to Rep. Gus Bilirakis (FL-12) from January to May 2020. He also is the head of international analysis at Politiks // Daniel es un estudiante de Cs Políticas y Economía en la Universidad del Sur de la Florida. Trabajo como pasante legislativo para el Representate Gus Bilirakis (FL-12) desde enero hasta mayo del 2020. Daniel también es el jefe de análisis internacional de Politiks.

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