Student Debt Cancellation: It’s Actually Good

Luke Herrine-

Whenever talk of student debt cancellation, or even of a “student debt crisis,” gets too loud, there is a bevy of pundits ready to tut-tut. Don’t you so-called progressives know that most student debt is held by young professionals? That the young professionals with the biggest debt loads are unlikely to default on their debt because they have leveraged their education into high-paying jobs (or at least have well-off family who can pitch in)? And so don’t you see that cancelling student debt would mostly just be a subsidy to already comfortable people? And you call yourself progressive? Shame! Go think about what you’ve done. Let the professionals take care of the policymaking.

Now that the Levy Institute has published a report on the likely macroeconomic effects of student debt cancellation and some left politicians have taken up the idea, David Leonhardt at the New York Times saw fit to rehearse the arguments he and others have made multiple times before (apparently not having read the arguments against his position in that selfsame report). Here’s why he’s wrong again.

Leonhardt describes student debt cancellation as a “giant welfare program for the upper middle class”. That’s way overstated. No question: those who are relatively well off—i.e. those who have graduate and professional degrees—will have the most debt canceled per person. But—surprise!—the burdens of student debt are felt most acutely by those from disadvantaged backgrounds, and canceling student debt would lift those burdens. Students with little family wealth to rely on (a racialized category, given the enduring racial wealth gap) are much more likely to take out debt to fund their educations. And those with low incomes even with a college degree (also a racialized category) experience the burden of even relatively small debts more acutely. Moreover, the impact of student debt cancellation would not just be the immediate effect on balance sheets: it would enable former student debtors to direct their resources elsewhere, to quit jobs they hate but help them pay the bills, to start businesses, etc.—all good in themselves, but also beneficial to others at the least through their effect on aggregate demand.

Still, with these and other correctives, it’s hard to disagree that student debt cancellation on its own is a lousy welfare program. And means testing it would not resolve its shortcomings in this regard. Most people in the U.S., including the worst off, don’t have, never had, and never will have any student debt at all, because most people in the U.S. still don’t go to college. (Means testing could even be perverse: splitting the coalition, making relief dependent on legal/bureaucratic competence, etc.)

But progressivism isn’t just welfare programs. And the “progressiveness” of a public policy is not a matter of mere marksmanship: how well it, considered alone, aims its benefits at the least well off. What makes across-the-board student debt cancellation progressive is that it fits with a progressive vision of society: one in which education is not treated as an individuals’ investment in future earning power but as a necessary precondition to a republic of equals. In the words of Truman’s Commission on Higher Education, “the social role of education in a democratic society is at once to insure equal liberty and equal opportunity to differing individuals and groups, and to enable the citizens to understand, appraise, and redirect forces, men, and events as these tend to strengthen or to weaken their liberties.”

Student debt cancellation is progressive insofar as it is part of a reconstructive project to make people more free, to make society more democratic (and to bankrupt vultures like loan servicers and for-profit colleges while we’re at it). The direct benefits of canceling debt would be real, but they would not be the best way to accomplish wealth redistribution or fiscal stimulus or increased entrepreneurship, etc. should the rest of the system remains as it is. And it would make little sense to provide these benefits to current student debtors without eliminating the possibility of future student debtors. The real benefit would be wiping the slate clean as part of a more egalitarian approach to higher education, which would make most sense as part of a bevy of system-shaking reforms.

It is no coincidence that those who favor student debt cancellation favor making higher education debt and tuition free, making healthcare free and accessible to all, implementing a “Green New Deal”, developing a true right to work (i.e. a job guarantee), strengthening unions, breaking up, nationalizing, or public utility-izing dominant companies, expanding and strengthening voting rights, etc. These policies work together to form a progressive vision of a democratic society. Student debt, as a tax on education, is anathema to this vision.

 

Luke Herrine is a Ph.D Candidate at Yale Law School.

 

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