Thesis Sentence: I don’t support the student loan debt cancellation. Let me preface this by saying that I have student loans. Tons of it in fact. So a student loan debt cancellation would benefit me greatly.
As of December 24, 2020, I have a little over $200,000 in student loans. All of which originated from the pursuit of my Double Masters degrees (Master of Finance and MBA).
But like all arguments that I participate in, I don’t argue a specific point because it benefits me. I argue for specific points because it’s what I believe benefits the general populace as a whole.
And while some may say that I’m trying to impose my idea of right and wrong on other people, let me support my thesis sentence with supporting data.
Not Everyone Went to College
If we look at the Census data (https://www.census.gov/content/census/en/data/tables/2019/demo/educational-attainment/cps-detailed-tables.html)
Out of the 250 million who are age 18 and over, only 53 million have attained a bachelor’s degree.
According to a study done by Brookings.edu, about 30% of undergraduates have graduated with no debt. Which means out of the 53 million, we can extrapolate that only 37 million actually hold some sort of student loan debt.
37 million out of the 250 million is approximately 15% of the 18+ population. If only 15% have student loan debt, is it fair to force the rest of the population’s tax dollars go to towards paying something that only benefits 15%?
Additionally, if we add up all post-high school students who enrolled in a degree program, that total would be approximately 122 million, which represents 48.9% of the 18+ population. A little less than half.
Again I ask: Is it fair to force the majority to pay for the minority over something they have no direct benefits in?
Sure one can argue “well these students will become doctors, healthcare workers, and lawyers that the majority will use”. Yes, and which they will pay for at ridiculously high costs in the United States.
Attachment: Student Loan Excel Calculations and Formulas I used, taken from Census.gov
My Proposed Alternative Solutions to Student Loan Debt Cancellation
I hate the amount of bitching that people do without proposing a solution to said bitching.
So here are my proposed solutions, a three-pronged approach.
Prong #1: Increase Tuition Reimbursement
Many workplaces employ a tuition reimbursement program. Under the IRS Publication 15-B (2020), Employers can provide up to $5,250 in education assistance. I propose that this amount be increased to $10,000 (since Biden wants to cancel $10,000 of student debt already). Additionally, this $10,000 can be applied retroactively to already graduated students. In order for students to not abuse this system, employers can implement the caveat that whoever uses this $10,000 educational assistance will have to remain employed at their company for 1-2 years.
What if my employer doesn’t have Educational Assistance?
Ah yes, this is where prong #2 comes in.
Prong #2: National Educational Assistance
Extend the $10,000 education assistance nationally to all students, but only retroactively after they have completed their program.
This will not only include university students, but also professions completing trade schools. Trade skills are vital in our society. Jobs like plumbing, electrician, building contractors, repairmen, all may not necessarily require a university degree. But damnit we all need them and we all use them.
They also deserve to have their education reimbursed. So create a University Educational Assistance program to reimburse all of these hardworking citizens up to $10,000.
So instead of having student loan debt cancellation, create a program that benefits all Americans for pursuing education. This combined system will affect a greater majority of our US population.
Prong #3: Ban or enforce strict regulations on for-profit colleges.
In 2019, a major for-profit college chain declared bankruptcy. And all the students attending were scammed out of their time and money. A majority of them on student loans. This left them high and dry with tons of debt and no degrees.
According to Brookings, almost half of student loan borrowers who use money at for-profit colleges, borrow $40,000 or more. This, in contrast to traditional not-for-profit colleges, is shockingly overwhelming.
The amount of for-profit universities that prey on students advertising over-inflated graduation and job rates needs to be controlled and regulated.
"[Education Corporation of America]'s shut down is the latest in a string of collapses of major for-profit college chains. In 2015, Corinthian Colleges filed for bankruptcy amid claims the company lured students with inflated job placement and graduation rates. In 2016, ITT Technical Institutes shuttered under similar circumstances. Merrill, who works with student-loan borrowers who say they’ve been scammed by their for-profit colleges."
This is why Obama’s Gainful Employment rule needs to be revisited and established so that this does not happen again.
But student loan debt cancellation will free up money to circulate and stimulate the economy.
If the goal is to free up money and stimulate the economy, then why not cancel mortgage debt? Student loan debt only totals $1.68 trillion (source: Education Data) while household debt is much larger at $14.15 trillion (Source; St. Louis Fed)
But student loan debt cancellation will finally allow millennials to buy houses.
This sounds really whiny with a sense of entitlement to me. “But I want to buy a house!”
If we consider millennials to be someone who was born between 1980 to 1995, then that makes up the 25 to 40 year old range.
According to the U.S. Census data of 2010, the portion of millennials that make up the U.S. Population is only around 27%.
If we use Statista’s data, which is more recent, then millennials only make up 21% of the population.
Is it fair and morally just to enforce the other 79% of the population to pay for the decisions of the 21%?
Thoughts on Public Service Loan Forgiveness (PSLF)
I whole-heartedly support PSLF. Dedicating yourself for 10 years in the service to the public in order to have your student loans forgiven is a very reasonable and fair trade in my opinion. With the program having just started in 2008 and the first student loans being forgiven in 2018 was a miracle to see. I fully believe this should be the norm henceforth and no laws should ever change this unless it’s to better benefit the student borrowers.