President Biden and Education Secretary Miguel A. Cardona announcing the student loan forgiveness plan this week. Mr. Biden agonized for months over the decision. - Credit: Al Drago for The New York Times
President Biden’s recent announcement that he would be canceling $10,000 of student debt per borrower provided they make under $125,000 annually – with up to $20,000 forgiven for Pell Grant recipients – is certainly welcome news for millions of student debtors. Additional benefits for borrowers, like capping payments at 5 percent of a borrower’s monthly income, covering all unpaid interest provided a borrower makes on-time payments, and offering refunds for borrowers who made payments during the Covid-19 pause on student loan payments are also fairly transformational. But the actual dollar amount is still a far cry from the full cancellation that activists like The Debt Collective have been pushing for.
Achieving the goals of both full student debt forgiveness and free public higher education will continue to be a steep uphill climb, particularly because the systems that dictate American public policy – primarily militarism and capitalism – require student debt for their continued existence.
Earlier this summer, it was reported that every branch of the US military is expected to fall far short of its 2022 recruiting goals due to factors like criminal records and obesity among the younger population. Defense Secretary Lloyd Austin called the recruiting shortfall a “serious issue,” and recruiters are reportedly “scrambling” to find ways to bring in new recruits.
One of the primary incentives of military service is the GI Bill, which, among other things, pays for 100 percent of college tuition for eligible service members. If all student debt were canceled and public higher education was tuition-free, that would give military recruiters one less arrow in their quiver. The world’s most well-funded military by far requires fresh recruits, and as long as the draft is not on the table, recruiters will be invested in higher education remaining cost-prohibitive. Congressman Jim Banks (R-Indiana), who chairs the Republican Study Committee, said as much when he tweeted “student loan forgiveness undermines one of our military’s greatest recruitment tools at a time of dangerously low enlistments.”
The cost of obtaining a college degree costs, on average, $9,200 per year in tuition and fees, and that’s just for students attending public universities within their home state (costs go up significantly for out-of-state students at public universities, and even more for private universities). According to the Federal Reserve, the average student debtor owes $32,731. So while Biden’s promise to cancel between $10,000 and $20,000 in debt for each borrower is unprecedented, it still leaves a significant amount of debt for tens of millions of borrowers – particularly those who are “underwater,” meaning they owe more than the initial amount they borrowed.
In July 2021, a joint study by the Center for Responsible Lending and the National Consumer Law Center found that roughly two-thirds of the more than 400,000 student debtors who made payments on their loans even during the payment moratorium implemented at the beginning of the covid-19 pandemic are still underwater. The remaining third ended up owing more than 125 percent of the original loan principal despite making payments. To his credit, President Biden has said his plan would ensure “no borrower’s loan balance will grow as long as they make their monthly payments,” and that borrowers who made payments during the payment moratorium can apply for refunds, which is a significant improvement to the current system.
While Biden has improved conditions for millions of borrowers, it could be argued that the higher education finance complex remains punitive by design in accordance with capitalism: When predominantly young people have to shackle themselves with tens of thousands of dollars in debt in order to obtain the education that makes them employable in today’s job market, they’re naturally inclined to seek employment immediately upon graduation so they can pay down their debt. And once employed, borrowers will be further inclined to climb the career ladder as quickly as possible, in order to both lessen their debt load while affording a decent lifestyle for themselves.
The student debt system thus serves the dual purpose of both making higher education available only for those who come from wealthy families or for those willing to take on a lifetime of debt, along with crushing younger generations’ will to rebel. When challenging oppressive systems is economically inconvenient, many young people will naturally opt for a quieter life of passive acceptance of working long hours in jobs that may not be in their chosen field. The penalty of not paying debts on time is an imperfect credit score, which can impact a borrower’s ability to obtain basic necessities like housing and transportation.
If student borrowers were suddenly freed from their debts, that would undoubtedly add significant numbers to social justice movements. An end to student debt means tens of millions of college-educated Americans would be free to dedicate their time to challenging deeply entrenched, unjust systems like white supremacy, patriarchy, and capitalism without fear of suffering economic consequences (this could be why, as governor of California, Ronald Reagan fought to institute tuition for the first time within the University of California system following the historic protests at UC-Berkeley in 1969).
A conventional president like Joe Biden – who represented the home state of notorious student debt servicers like Sallie Mae and Navient for decades in the US Senate – is unlikely to make a move as bold as full student debt cancellation. Biden himself even said he would “not make that happen” when a town hall participant asked him about forgiving $50,000 in student debt per borrower. The fact that he’s done as much as he has so far is significant, but activists have to remember the importance of viewing this announcement as a beginning, not an end point.
Carl Gibson is an independent journalist and columnist. His work has appeared in CNN, The Guardian, The Washington Post, Barron’s, Business Insider, the Independent, and NPR, among others. Follow him on Twitter @crgibs.
