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KNOWLES: Student Loan Forgiveness Is Welfare For The Rich

The rich get richer, and the poor get poorer

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Just one-third of Americans graduate from college. According to the College Board, the average price of tuition and fees per year comes out to $9,970 for state residents and $25,620 for out-of-state residents at public colleges and $34,740 at private colleges. At the nation’s top universities, tuition and fees can exceed $55,000 per year. None of those prices take into account additional expenses such as room, board, and books.

 

The rising cost of college has led many students to take out tens of thousands, if not hundreds of thousands, of dollars worth of loans. Today, roughly 41 million college graduates and an additional four million dropouts owe more than $1.5 trillion dollars in student debt. But the exorbitant cost tends to pay off. According to the Census Bureau, the median college graduate earns 74.5% more than the median high school graduate with no college degree. Beyond income, jobs that require a college degree often come with additional benefits such as health care, retirement investment, and greater job security.

On Monday, Bernie Sanders proposed total forgiveness of all student loans in the United States. The proposal expanded upon his prior pledge to make community colleges and four-year public universities free for families earning less than $125,000 per year, and it exceeded alternative proposals from his rivals in the 2020 Democratic presidential primary. Sens. Cory Booker, Kirsten Gillibrand, and Kamala Harris had previously endorsed the “Debt-Free College Act” for free public college education, and Sen. Elizabeth Warren endorsed up to $50,000 in loan forgiveness for graduates even of private colleges. Now Bernie wants a taxpayer-funded bailout for every student debtor in the country.

 

Sanders pitches his plan as aid for the working poor. In reality, student loan forgiveness is welfare for the rich: a federal mandate that people who will make less money on average over the course of their lives bail out people who will make more money on average over the course of their lives. Beyond the injustice of robbing the poor to enrich the rich, what of the college graduates who have already paid off their loans? Will Bernie offer reparations to those responsible suckers who already paid their debts? Will he offer any handouts to the majority of Americans, who weighed the costs and benefits of higher education and decided not to saddle themselves with student debt in the first place?

If the federal government intends to start paying off people’s debts, why start with student loans? Over 107 million Americans owe money on their cars — more than double the 45 million who owe on their education — and the average monthly car loan payment costs 22% more than the average monthly student loan payment. Americans also need somewhere to live. As of 2018, Americans had racked up more than $8.8 trillion in mortgage debt. Do Bernie and all those who would prioritize a taxpayer bailout of college loans really believe it is more important to possess a degree in Lesbian Dance Theory than a car or home?

Bernie’s benighted followers misunderstand debt. People go into debt when they judge it beneficial to borrow money against their future earnings. Few can afford to buy a house outright, but many consider it worthwhile to take out a loan, which they will service and pay off over time, for the immediate privilege of living and investing in a house. Modern economies rely on debt, which encourages productivity and growth. But that system of credit requires consequences for debtors who default. If debtors can reasonably expect that the government will swoop in from time to time to bail them out, no one has any incentive to pay his debts. Everyone awaits federal favor.

Bernie understands this point better than his supporters: nothing comes without a cost. He who pays the piper calls the tune, and government control over education funding means government control over education itself. Handouts are merely the means to an end: control.

 

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