Cancel Debt and Send Students Back to School

Originally posted in The Messenger.

There are many ways that an anticipated Supreme Court rejection of student debt cancellation will affect students, especially those who have had to leave school. Many of these students aspire to complete their studies but are unable to do so due to the high cost involved. For many, cancellation would eliminate their financial burden and enable them to resume their studies with a clean slate. Those in the business community should recognize that this outcome is necessary and most efficient.

There is nothing wrong with their desire to attend college. A recent Gallup-Lumina survey found that 61% of those who dropped out of a postsecondary program report they have recently considered re-enrolling. The issue is financial, particularly since these students are already burdened with debt. In order to return to their studies, they require debt relief.

Countries and companies get debt relief all the time. Their creditors make a decision that a living debtor is better than a dead one. Forgiveness hurts in the short run but makes sense in the longer term as the debtors get back on their feet. For creditors, it is a commonsense act of faith. 

As a nation, we should have the same faith in our students. We have put a fire hose of debt in their mouths only to act surprised when they gag. Let’s turn down the tap and see if the students can make good in repaying a reasonable amount of debt, something that could fit into their budgets.

Biden's student debt plan is designed to forgive $10,000 for many borrowers and up to $20,000 for those who qualified for Pell Grants. The plan to provide relief for as many as 43 million borrowers is estimated to cost $400 billion over 30 years. If the Supreme Court rejects the cancellation of student debt, it could potentially cripple the entire higher education system. Students would be unable to repay the $1.75 trillion in existing debt, which would, in turn, hinder the government's capacity to provide new debt. This would halt the government's funding altogether. Without access to student loans, colleges would struggle to attract new students and compensate their faculty. This could lead to rapid closures as colleges reliant on government subsidies would no longer be able to pay their bills. The government would likely have to bail out colleges as they are doing for banks. Doomsday? Yes, but sadly plausible at a time when so much is working against colleges, including a serious decline in student enrollment.

Student debt has even slithered its way into the Supreme Court, with several justices being borrowers. The court must see that such debt threatens to drown millions of families — as well as the overall economy. It is now the court’s job to let Americans come up for air when it issues its ruling next month.