Is Schumer right urging Biden to cancel student loan debt in first 100 days?
- As of Saturday, November 7, media channels like CNN, PBS, Fox News, and Facebook broadcasted that Biden won the election with 290 electoral votes against Trump’s 214 votes.
- In the first 100 days, the prospective President-elect Biden plans to create a coronavirus task force, work on a vaccine distribution plan, raise corporate income taxes to 28%, re-enter the Paris accords, increase police reform, and many other policy changes.
- Charles Schumer is the senior minority senator of New York. Since 1998, he has made a tradition of visiting 62 counties each year, worked to restore and rebuild NY after 9-11, supported worker’s rights, and made the economy his top priority.
- Schumer has urged President-elect Biden to cancel “billions of dollars in student loan debt” in his first 100 days. At one point. Biden mentioned forgiving $10,000 student debt in a combination with the coronavirus relief package.
- According to Forbes, there are 45 million Americans who owe a combined total of $1.6 trillion in student loan debt.
Schumer is wrong to urge Biden to cancel student loan debt. The US coronavirus response has already added nearly $6 trillion to the national debt ($3.8 trillion this year and an additional $1.8 trillion in 2021) – and that amount could increase. To propose spending an additional $1.6 trillion to cancel student debt is merely irresponsible.
Canceling student loan debt is a bad idea because it would constitute a white-collar bailout. Only one in seven Americans have student loan debt, and graduate students hold 40% of the total outstanding student loan debt. On average, college graduates earn nearly twice as much as those with only a high school diploma or a GED (earning $68k vs. $35k, respectively). Current graduate students stand to earn, on average, over 60% more than their colleagues with bachelor's degrees.
Two-thirds of American adults do not have college degrees. As noted above, debt cancellation for a bachelor's degree and graduate degree holders is misplaced. If Democrats want to redistribute wealth by targeting it for educational purposes, they would be better off investing in school-to-work programs with high schools. Collaborating with local employers to identify skills needed to fill current job vacancies is much more likely to impact economic growth while alleviating local problems of poverty and crime.
Schumer's pitch for student loan debt cancelation seems to be a cynical political stunt designed to fool the public into thinking the Democratic party is benevolent. This makes a public spectacle out of pushing the government to spend money it doesn't have, plunging the country deeper into debt to do so.
Most of the jobs created since the last recession require some kind of higher education. Student loan debt places a particularly hard burden on lower-income families and exacerbates existing racial inequities in our higher education system. It also affects levels of college completion and disincentivizes people from seeking more advanced degrees. Although the COVID pandemic didn't cause this situation, it has impacted most of those who have lower incomes. The National Consumer Law Center suggests that student loan cancellation is needed in order to make sure that 'borrowers can make ends meet now and then recover along with the economy.'
A recent study from the National Bureau of Economic Research shows the 'benefits of intervening in the student loan market.' It found that those who received relief from student debt were less likely to default on other financial obligations and were more able to participate in the job market and the overall economy. The result was that they were 'more likely to increase consumption overall.' Though it may seem obvious to anyone currently living with a large debt burden, the study also found these better results were true even for those who were in default on their student debt. Their not making payments implied 'some sort of psychological benefit to this relief that goes beyond the household balance sheet.' Overall, canceling student loan debt wouldn't only be good for individuals; it would also be the best thing for society and the economy as a whole.