Not a Band-Aid
I was going to call this commentary on President Biden’s plan to forgive student debt the World’s Biggest Band-Aid, but on a bit of reflection I realized that the War on Poverty was much, much bigger. But on further reflection, I realized that neither of these programs really qualify as band-aids. The purpose of a band-aid is to protect a wound while it heals. The War on Poverty certainly didn’t help cure poverty in America, the poverty rate is much the same after fifty years despite trillions of dollars spent. And student debt forgiveness doesn’t even attempt to address the real problem, the skyrocketing cost of a college education.
No one thinks this debt forgiveness is a good idea, except for far-left progressives and some zany analyses by leftist Nobel laureates such as Joseph Stiglitz and Paul Krugman. They point out that the debt cancellations won’t have a significant impact on inflation because most of the impact goes far into the future (sort of like the impact from the recently passed Inflation Reduction Act.) And they point out that the payment deferrals on student loan debt will stop at the end of the year so restarting payments will take money out of the economy (although why the deferrals shouldn’t be stopped immediately is not mentioned – deferrals that might have been rational during lockdowns -which in themselves were irrational- but which make no sense now that students are back in school and part-time jobs are going begging).
But the one big thing that President Biden’s debt forgiveness (and the bizarre analyses of leftist economists) fails to mention is the reason why young adults have problems paying off their student loans. It is not because of the pandemic, student loan debt has been increasing for years. The reason is that the cost of going to college has risen meteorically while incomes for young adults have risen modestly. College costs adjusted for inflation have increased by 169% since 1980—but pay for young workers is up by just 19% according to a study by Georgetown University. Loans are granted equally to students studying undergraduate business, engineering and science courses and to students studying courses such as the history of surfing (UC-Santa Barbara), Lady Gaga and the Sociology of Fame (University of South Carolina) or the Taylor Swift Songbook (University of Texas). I am not overly surprised by kids with worthless degrees having difficulty paying off their student loans but making loans without considering future revenues needed to repay the loan violates every rule of bank lending I ever learned (unless, of course, you expect the government to forgive the debt).
And universities can keep increasing costs as long as students have easy access to soft loans. They don’t care if their former students default on their loans, the universities already have their new faculty lounges along with prestigious and highly paid tenured professors while classes are taught by graduate students and adjunct professors (and I know how poorly adjunct professors are paid from experience). And let us not forget the rapid growth in college administration expenses. All those diversity, equity and inclusion administrators don’t come cheap (and their graduates with degrees in ethnic and gender studies really need the jobs). Salary.com estimates that the average salary for a DEI administrator is $130,000. And universities freely disburse funds to further the woke agenda as indicated by the University of Virginia paying Ibram X. Kendi $32,500 for a speech(he also charged the notorious Fairfax County school board $20,000 for a one-hour chat on Zoom).
A study by the American Council of Trustees and Alumni showed that from 2010 to 2018, “non-instructional spending—including student services (29%) and administration (19%)—grew faster than instructional spending (17%)” while CPI grew only 15.2% in the same period. And while international students made up only 4.6% of all undergraduate students, they made up 8 percent of STEM graduates. More than that, while US students get degrees in gender or ethnic studies international students made up 40% to STEM Master’s degrees and 43% of STEM PhDs. Those are students I wouldn’t hesitate to lend money to (as long as they stayed in the US).
Financial guru Dave Ramsey has noted that if student loan debt is unpayable, and nothing is being done to change the reasons why student loan debt is unpayable, then why is the government still granting soft loans to students. The answer is, of course, politics. President Biden is essentially buying votes. And he is buying votes with money he is not authorized to spend, since, as Nancy Pelosi has pointed out, only Congress can authorize such expenditures. And when Congress does not go along with his deceptive scheme, President Biden will use the failure of debt forgiveness to rally young voters to the polls along with all the abortion activists.
I imagine that there are some young people out there saying, “Damn, I should have borrowed more money while in school.” Worse, there are undoubtedly some young people saying, “Damn, why did I pay off that loan. I could have used that money to buy a Tesla.” What kind of lessons are we teaching our young people. How to mooch off of the productive workers in society? How the government is the source of a person’s well-being. That people have no need to have agency over their own lives, no need to be productive, no need to save and work for a better future. Government will give them all they need.
President Biden’s plan to forgive billions and billions of dollars of student loan debt, along with handouts and entitlements included in Build Back Better and its smaller clone, the laughably named Inflation Reduction Act, all are not just sending the wrong message to America’s youth. These entitlements are conditioning them to become leeches on society instead of productive citizens. It is teaching them the futility of the middle class values that made America great. It is demeaning to the values of hard work, saving, and delayed gratification, just as the programs of the War on Poverty made a joke of two-parent families. Wait a minute, those are the same values disparaged by the Smithsonian’s American Museum of African American Culture and History as part of “white” culture. But I have always thought of those values as part of American culture. The same culture that clearly states that “all men are created equal.” We were not just the first to say that self-evident truth, even now it is only us and those countries that espouse American led Western culture that truly believe those words and try to implement those values, however flawed our attempts may be.
President Biden has been convinced that debt forgiveness is a good idea. I doubt that he has thought very deeply about the long term impact that this idea and many of the other progressive ideas he has been promoting imply. I don’t think he is evil. I believe that he thinks he will be making America better. But the country he and his progressive supporters would create, would be nothing like America.