Loan Forgiveness Won’t Solve Student Debt
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Posted: Aug 17, 2022 12:01 AM
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Editor’s note: This piece was authored by Flavia Nunez.As the Biden administration inches closer to a decision on blanket student loan forgiveness, lawmakers on both sides of the aisle should take a moment to consider more plausible solutions to the student debt crisis. President Biden has said he will have a decision on blanket student loan forgiveness by the end of the month. While it’s unclear if that will actually happen, leaked documents that have reached the desk of Education Secretary Miguel Cardona show that the administration has been formulating a plan for canceling debts should the president make the call. The plan involves expanding borrower defense to repayment.Blanket loan cancellation as supported by the Biden administration and the Education Department’s leadership will not reverse the historic growth of the Student Debt Crisis. As it stands, forgiveness is a shortsighted policy that will provide temporary relief at the cost of long-term practical action. As codified by the Higher Education Act, borrower defense to repayment allows borrowers to seek loan forgiveness if a college or university misled them or violated certain state laws. Since its inception, borrower defense to repayment has sought to protect borrowers against aggressive for-profit colleges. But when new proposed regulations could expand the policy to include borrowers from non-profit and elite colleges, it loses its purpose. To date, the Education Department has granted $25 billion in loan forgiveness, $7.9 billion under borrower defense to repayment alone. The Biden administration itself broadly canceled over $5.8 billion for 560,000 borrowers. With expansion, the Education Department will be given the green light to cancel more. These billions in debt won’t just disappear. They’ll be covered by other taxpayers, and so the question arises: How sustainable is this? How many billions can the government forgive before the loan repayment system begins to spiral, creating a precedent where future borrowers expect their loans to be canceled? How long before borrowers refuse to repay loans at all?The obvious argument against forgiving student loans is its unfairness. The only people who’d benefit are those who have …