Loan forgiveness is a mixed bag

Loan forgiveness is a mixed bag

By Steven A. Smith

My daughter’s message was exciting.

“It’s life changing,” she said.

She had just read President Biden’s executive order providing relief to millions of Americans drowning in school loan debt.

My daughter, Liss, is 32 years old. She is a graduate of the University of Montana who left school with a degree and tens of thousands in debt.

The president’s program will apparently reduce his total remaining debt to around $5,000 and reduce his monthly payments to a fraction of the previous amount. His wife will experience similar relief.

A life changer.

But my daughter’s life-changing loan forgiveness comes at a cost. And when I look at the president’s program through a lens other than the father’s, I have to recognize that cost.

There is nothing particularly unusual about my daughter’s situation.

She graduated from high school in Colorado Springs and could have attended school there. She considered Colorado State University where she would have paid in-state tuition. But ultimately, she decided to attend the University of Montana, which was a great choice but cost a lot more. She had great scholarships, but not enough to cover tuition, books, and housing. She carried her weight, working at a number of part-time jobs throughout school.

But in modern America, it’s impossible for most students to go to college without a loan. That was my experience at the University of Idaho, where nearly all of my students — except for a few athletes and the occasional silver spoon student — struggled to pay their way.

This was also true nationally. More importantly, the amount of student debt has exploded in recent years. This is largely because taxpayer support for higher education has declined, forcing public schools to shift the cost burden onto students through regular, sometimes outrageous, tuition fee increases. tuition and fees.

This was certainly the case in Idaho where, a few years ago, the legislature decided that higher education was not worth supporting, that it was a tool for leftist indoctrination. and not education.

Thus, students bear a disproportionate share of the costs. And the debt burden is often so heavy that a graduate must continue living as a student even after graduating and finding a job. That means roommates, ramen meals, and continued help from parents. Married college students are often so in debt that they can’t buy a decent car or afford to buy a house.

It is a national disgrace and progressives have been asking for some form of relief for years. It was a key issue in the 2020 presidential campaign. But even with the president’s support and Democrats controlling both houses of Congress, there was no legislative action.

That’s why the president last week took executive action.

The relief program has several provisions. But basically, students who have been awarded federal Pell grants can receive up to $20,000 in forgiveness. Those with other federally funded student loans can get up to $10,000 in assistance. Students like my daughter, who have both types of loans, can take advantage of both provisions.

The pardon will only apply to graduates earning less than $125,000 per year or families earning $250,000. Requests for relief will be taken until the end of the year and the relief will take effect in 2023.

Not all progressives happy with relief package Some think it doesn’t go far enough. Students of color generally accumulate more debt and this program offers them little relief. Others believe the income limits are too high, that only the poorest students should qualify.

And of course, that doesn’t apply to loans from private lenders who often shackle graduates with onerous interest and ruthless payment schedules.

But too many conservatives are attacking the plan as if it were some sort of communist plot, arguing, in part, that too many students don’t belong in college in the first place, and we should discourage them from pursue higher education.

Of course, conservatives usually forget that the government subsidizes all sorts of favored programs such as farm assistance, FHA subsidized housing, and veterans loans, as well as huge tax subsidies and rebates for businesses and the super-rich. Try helping out a few cash-strapped graduates and that’s blatant socialism, damn it!

But there are also legitimate and disturbing criticisms. The Washington Post, in a thoughtful editorial, criticizes the program for tax reasons.

The relief package imposes an unfair burden on taxpayers, will contribute to inflation, curb deficit-cutting efforts and fail to help the neediest students, according to The Post, which is generally a supporter of the president’s initiatives.

And the plan isn’t just for those who have already paid off their debts, working hard to do so.

I appreciate all these arguments. And like the Post’s columnists, I’m concerned about the overall fiscal impact.

But my daughter called. It’s life-changing, she says. And as his father, I can’t argue with that.

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