It’s hard to imagine how we could screw up higher education any more than we already have, but we’re about to if we make sweeping student loan forgiveness a reality.
How? To answer this question, we must start by asking this question: Cui Bono? (Who benefits?)
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It’s hard to imagine how we could screw up higher education any more than we already have, but we’re about to—if we make student loan forgiveness a reality.
There’s a Latin phrase that helps explain why. The phrase is “Cui Bono?”—who benefits?
In the case of student loan forgiveness, it’s first and foremost the colleges and universities who can charge outrageous tuition largely paid for by student loans; second, politicians who make cheap promises of debt forgiveness to win votes; and third, students from upper-middle-class families who would get taxpayers to pay off their student debt.
Who doesn’t benefit? Everyone else. That includes those who didn’t go to college and a new class of “suckers”—people who went to college and paid off their student loans. Student loan forgiveness is a reverse Robin Hood—it takes from the poor and gives to the rich.
The most obvious argument against forgiving student debt is that no one forced anybody to borrow money for college. Why, then, should others be forced to pay it off? Before you think I’m going to go all tough love on you, let me say that I have a lot of sympathy for young people who have dug themselves into the student debt hole. I am one of them.
For decades, our society has claimed that you need a college degree to get ahead in life and that the smart bet was to take out any amount of loans to ensure a bright future.
And if you need help with the tuition? Uncle Sam—the US government—stands at the ready with his generous student loan programs. Fill out a few forms, and presto, there’s a check in your mailbox. You’re off to college.
But here’s the dirty secret: for every dollar of student loan money the government makes available, university tuition goes up by 60 cents!
Colleges and universities don’t see college loans as a problem; they see a gravy train.
Most college administrators may be cowards ready to cave before every politically correct fad, but they’re not dumb. If the government is going to loan you money to go to college, they can raise tuition virtually at will. You can afford it; just borrow more.
And what do the universities do with all that tuition money? Build more buildings. Hire more administrators. Hey, somebody has to pay for all those Diversity, Equity, and Inclusion officers, right?
Meanwhile, you stagger out of college with a degree and a boatload of debt to pay off, to get the same job and salary that a decade ago didn’t require a bachelor’s. What a great way to start your adult life!
If you fit that profile, you’re very likely to favor student loan forgiveness. Who can blame you? With a simple stroke of a pen, some or all your debt goes away like it was never there. And, the least you can do, in return, is vote for the politicians who made it possible. At least that’s how the politicians see it.
But who’s going to pay for your good fortune? The taxpayers, of course.
The most modest debt relief proposal out there now—$10,000 per borrower—would cost $300 billion. To wipe it all out? $1.8 trillion.
And a lot of those taxpayers will be working-class people who didn’t go to college—in many cases because they didn’t want to take on all the debt. That’s why despite easy student loan access from the government, people in the lower and middle classes make up a smaller percentage of college students than they did 50 years ago.
The reality is that loan forgiveness would overwhelmingly benefit the already well-off.
It’s projected that for every dollar of debt cancellation that would go to the lower middle class and impoverished student loan holders, seven times that would go to the top 20% of earners—the lawyers, accountants, and doctors who borrowed heavily for their degrees.
This group also includes the people who staff government bureaucracies, corporate HR departments, and school administrations—the people chiefly responsible for the woke mini-revolutions upending institution after institution. For this managerial class, student loan forgiveness would be great.
But is it fair?
Student debt is a real problem, and it requires some real solutions. But blanket loan forgiveness makes everything worse, and rewards exactly those actors who have had such a large hand in creating the crisis—especially the opportunistic universities and politicians.
Instead, we should focus on three common-sense reforms.
One. Reduce college tuition and availability of student loan funds going forward. We have to break the vicious cycle of ever-increasing tuition and ever-increasing government loans to pay for it.
Two. We should target limited relief to lower and middle-class Americans who have been sold a bill of goods about the value of an expensive university degree—not the lawyers, accountants, and bureaucrats who have already benefited from the system.
Three. Relief should come from rich universities, not middle-class taxpayers. Yale, for example, has a forty-two-billion-dollar endowment. Universities have taken advantage of the problem, and it’s time for them to contribute to the solution.
I’m Inez Stepman, senior policy analyst at Independent Women’s Forum, for Prager University.