by Dr. Watson Scott Swail, President & Senior Research Scientist
In August 2022, the Biden Administration dropped a student loan cancellation program on the country. At a cost of over $400 million, the program was to cancel $10,000 of student loan debt from anyone with an income of under $125,000/year ($250k if married filing jointly). Another $10,000 for those who received a Pell Grant, which is an appropriate proxy for low-income. As of this writing, the program is in policy purgatory due to six current lawsuits against the President, the Administration, or the US Department of Education.
I recently railed against this policy on an issue of fairness rather than need. There is no doubt that the $1.6 trillion in student loan debt is too much of a burden for too many people. But my argument is simple: it isn’t fair that some people will get relief and others will not. Those who worked to pay off their loans don’t get a refundable credit, thus are not rewarded for their personal and economic due diligence to pay off their student loan. Second, the policy doesn’t help loan borrowers who took out their first loan in fall 2022, let alone in 2023, 2024, or any year after unless they enact another law (which they won’t be able to do, politically speaking). And finally, the policy doesn’t help anyone who didn’t have the fortune to go to college. It reminds me of a piece that Larry Gladieux and I wrote for The College Board back in 1998, where we called programs like “I Have a Dream” and “GEAR UP” programs like a “wheel of fortune. A youngster must be lucky enough to be in the right city, the right school, and the right classroom at the right time” (1998, p. 8). The loan forgiveness program is similar but different. Similar in that it rewards a special sect of people from a certain time period, which no conditions for those who fall on either side of it.
This morning, however, my ears tweaked when NPR reported on the Administration’s $36 billion bailout of the Teamsters’ pension fund. This is, in part, related to the rail strike averted last week, offering the Administration a chance to show its support for and commitment to labor unions.
Now, let’s be clear: the $36 billion pension bailout is not a $400 or $500 billion loan policy. But what tweaked me is that there have been no arrows aimed or levied towards the pension bailout compared to the lawsuits being thrown at the US Department of Education for enacting the loan cancellation program. And at a paltry $36 billion, there likely won’t be, especially for a policy primarily aimed at blue collar workers.
I’m not saying that either policy is right or wrong (well, one is a little wrong, as suggested above), but it is interesting that some people are triggered by using public funds to help people who are in debt due to education, but seemingly turn their cheek the other way when public money is used for private retirement funds. If that is the case, I guess my retirement fund could use a boost, too. “Thanks to today’s announcement, hundreds of thousands of Americans can feel that sense of dignity again knowing that they’ve provided for their families and their future, and it’s secure,” said the President yesterday about the pension investment. I’m sure he’s right. But for those who have argued, let alone sued, the government over the loan cancellation policy, where are you now? If there is a quid pro quo, this could be it. Provide debt relief to the millions of recent borrowers and also provide pension support for those who did not have the opportunity to go to college. Seems like a fair shake to me.
In the meantime, Mr. President, I would appreciate if you remove some of my PLUS Loan debt for my three kids who prudently attended in-state, public colleges and also ensure that my retirement funds will serve me if and when I am ever able to retire.
It’s what taxpayer money is for, right?
Now who’s triggered?