This op-ed by State Policy Network’s Erin Norman was first published at The Hill.
President Biden announced Wednesday that he will use executive power to cancel up to $20,000 in higher-education student debt for millions of Americans. There is the obvious legal question of whether loan forgiveness counts as spending, and therefore would need direct congressional approval. There is significant skepticism from experts in the president’s own party. And while the idea generally tests well with the public, 59 percent of Americans worry that student loan forgiveness could make inflation worse.
Despite the federal government trying to swoop in as the savior in the student debt crisis, it is a large source of the problem. As federal grants and loans expand, the total amount students are charged for tuition and fees also skyrockets, increasing the burden of obtaining a college degree on those who don’t qualify for outright aid and obscuring the real opportunity cost of going to college over other post-secondary options. If this investment, by both the government and private individuals, was creating a more educated and work-ready population, it might be worthwhile. But graduation rates within six years of starting a bachelor’s degree stand at just 62 percent — and one-third of those students are underemployed after graduation.
While those numbers might suggest a sizable number of Americans have debt from underutilized education holding them back, only about 14 percent of Americans currently hold student debt. Furthermore, total amounts of debt are significantly higher among those studying for jobs in high-paying fields like law, medicine and business, which will likely leave those borrowers well-suited to pay back the loans that set up their long-term financial success. This distorts the $1.6 trillion student loan figure, knowing much of it is held by Americans well on track to “pay their fair share.”
Read the full piece at The Hill here.