Politics rewards a heroin fix more than a heroine fix
If you follow Chuck Schumer, Elizabeth Warren, Pramila Jayapal, or other Democratic Party thought leaders on Twitter, you cannot miss the barrage of posts about #CancelStudentDebt.
As with many proposals, there are two questions that must be asked: is this good policy, and is this good politics?
Is this good politics?
The short answer is "no". To a first approximation, it is pure class warfare — on behalf of a class that doesn't have the votes.
Cancelling student debt is extremely popular with a class of twenty-somethings with lots of student debt. It is less popular among people who did not go to college, or who went to college and paid off their student debt.
Furthermore, this is supposedly something that can be done unilaterally by Joe Biden. Why a trillion-dollar economic transfer should be done by executive fiat, rather than according to laws passed by Congress, is a question best left unanswered2. Still, there will doubtlessly be legal action against any Biden action here.
And a half-measure — either the $10000 maximum Biden supported in March 2020 as part of the stimulus relief package, or a $50000 maximum as supported by Chuck Schumer — is likely to only embolden Biden's critics in the Democratic Party for failing to eliminate all the debt.
Is this good policy?
The short answer is "no". The slightly longer answer is "if there isn't a concurrent plan to fix the cost structure of tertiary education, this is a backdoor way to try to spend unlimited amounts of money on college-age students and to encourage wasteful spending at universities".
Because if there is one jubilee without any structural changes, we can be sure there will be another. And as only the federal government will be stupid enough to issue student loans in that situation, the government (and, eventually, the taxpaying public) will be paying for it.
The arguments in support of this policy are not particularly serious. The agents of Carthage will inform you that the student loan burden falls disproportionately on Black people. We are told it will "stimulate the economy", although we are not told whether it will do so in a better way than any other government stimulus check.
And we are told that education is "a right" and that nobody should have to pay for higher education (or, apparently, their living expenses while in higher education). This is pure insanity. At some point "more education" must carry a responsibility - the responsibility to pay back society.
So why are they trying to do it?
First of all, while it is bad politics nationally, it might be good politics in a few urban House districts. While it is still mysterious why Biden would support this, it is less difficult to imagine why the representative from Seattle or Somerville3 would support it.
Second, politics rewards a heroin fix more than a heroine fix; a quick injection of cash is more popular than trying to do the work to actually solve a problem.
Third, a portion of the Democratic Party is reacting to 30 years where Democrats try to balance the budget, but Republicans immediately un-balance the budget when they are in power. This time they want to be the ones to push the budget to the fiscal limits. If the choice is presented as between forgiving student loans and handouts to billionaires, the politics looks quite different.
And we cannot forget that, at least on Twitter, many of the loudest voices are simply stupid people saying stupid things for stupid reasons.
What should be done?
First, the societal meme that "more education is always better" will need to break. I'm not sure how to do that. One theory is that since Griggs v. Duke Power banned the use of IQ tests in hiring, companies have used educational achievement as a proxy; if hiring tests were more widely allowed there would be less requirement for college. I don't entirely believe that, but it's also not completely wrong.
A better approach is to try to decouple "education" from "attending a university". For many areas, apprenticeships (or their close cousins, internships) are better educational tools than universities - and are much cheaper as well. Also, a motivated student can learn almost as much from free instructional videos online as they can by attending a university. In the age of COVID, that distinction blurred even further.
Second, there should be a way to provide "the college experience" without students wasting $100,000 on a degree that apparently does not provide them value. I have two ideas on that (residential secondary schools, and improved public housing), but I do not have specific proposals that are concrete enough to discuss.
Third, certain student debt should be dischargeable in bankruptcy. A current legislative proposal would allow this after 10 years, which feels about right. A system where students would be incentivized to declare bankruptcy immediately after graduation is obviously unworkable. And there is still some risk that it will encourage graduates to spend aggressively, accumulate debt, and wait until a midlife bankruptcy to start saving money. But those problems should be fixable.
And finally: broad student-loan cancellation is an admission that many of those people should never have gone to college in the first place. That means the requirement to get a student loan must be more than "have financial need and enrolled in an educational program". As a result, many students will be unable to attend expensive private liberal-arts colleges because of a lack of financial resources. To a certain extent, this would drive the price of college down; colleges have very limited price sensitivity today, and increasing that price sensitivity should decrease costs.
There will hopefully be a blog post defining “grues” soon. As a working definition, a grue is a blockchain oracle that promotes one value system before time T, and a different value system after time T.
Of course, that answer is that Congress can barely pass anything, and when it does it makes sure to give wide authority to the executive, as the members are fully aware they will likely be unable to pass even non-controversial amendments to any program.
Somerville is located in the Boston metropolitan area.