Winners and Losers of the Student Loan Debt Forgiveness Program

Is the Government Sending the Wrong Messages about Paying for College, Career Choices, and Unemployment?

One of the big political footballs these days is in the category of student loan debt. $1.6 trillion is the total amount of money that people owe. And we're talking 43 million people are in debt to student loans. Repayments were suspended way back in March of 2020 due to the pandemic. The government had the attitude - your home is in a lockdown, you lost your job or you can't go to work, you don't have a paycheck. Let's make life easier for you. We're going to stop the requirement that you make your monthly student loan payments.

That moratorium has been extended time after time after time and now is extended all the way to August 31st. I'm not so sure people are still in lockdown anymore. I'm still not sure if people are out of work anymore, but they still don't have to pay their student loan payments. 8% of all the people (43 million of them), 8% owe 40% of all the student loan debt. So there's a huge concentration. How could that be? Well, they're mostly grad students, people who got MBAs or a medical degree, law degree, engineering degree. That's where the big student debt comes into place. 60% of all the people who have student loans owe less than $20,000.

So we need to recognize that this issue of letting people not make their student loan payments or President Joe Biden's proposal of let's forgive $10,000 of it, or Bernie Sanders and Elizabeth Warren, who want us to forgive $50,000 of it, they're simply saying if you're a doctor or a lawyer or an engineer, you don't have to pay for college.

An Astonishingly Unfair State of Affairs

Again, this is like an incredibly unfair situation, but it gets really, really deeper than this because in addition to student loan debt, 70% of those people have other debt as well, like a credit card or an auto loan. So when the president comes along with a proposal to forgive $10,000 or these other Democrats encouraging him to cancel $50,000 of student loan debt, it's astonishingly unfair. What if you didn't go to college because you couldn't afford it? You're not getting $10,000 from the government. What if you chose to go to a cheaper college so that you could avoid having to get into debt? Other people went to the more expensive college and incurred the debt. You're not going to get any money back, but they will. So they're getting rewarded for their bad economic choice. What if you paid cash to go to college? You were fortunate enough to be well off enough that you were able to do that or your parents were able to do it for you. You're not getting any money back because you didn't incur a federal student debt.

What if you did incur debt but you've paid it off? Too bad, you're a sucker. You're not getting any money back. What if you got into debt elsewhere? You don’t have student loan debt, but you got a mortgage debt. Too bad you still owe the money on your mortgage. You're not going to get any money back from the government. What if you got an extra job to pay for college and you really scrimped and sacrificed in order to manage to come up with the money you needed for tuition? Too bad, you did all that hard work for nothing. You could have just sat back and let the government ultimately write you a check. This is why it is so controversial and quite frankly astonishing that the government would be sending the very wrong message to Americans everywhere.

Oh, and by the way, this whole idea of debt cancellation, it might be illegal. The president might not have the executive authority to just wipe away the student loans. These loans are being managed by loan servicing companies. The money was provided, in many cases, by investors. If you wipe out the debt, you eliminate the business of these student loan servicing companies. You wipe out the ability for the investors to ever get their money back. Guess who's going to sue the federal government? If the president tries to waive the $10,000 he says he's going to forgive. We're going to have to wait and see.

The Real Issue Is Not Student Debt

But when you have even The New York Times publishing an editorial saying that canceling student debt is bad policy, if even The New York Times says that, you know, that really this is a bad policy. You see, the real issue here isn't the student loan debt. The real issue, if we get right down to it, is the cost of going to college in the first place. That's the problem we need to fix. And by the way, college enrollment is down 5% over the past three years. It's down 40% since 2010. People are saying college is too expensive, the debt isn't worth obtaining. And I'm going to figure out how to make money, get a job, build a career without the burden of wasting six years and a couple of hundred thousand dollars on a degree that isn't serving my best interests.

This whole situation has gotten so bizarre, so crazy, that it's even affecting the absurdity levels of being a professor at college. UCLA, one of the most famous colleges in the country, is looking for an assistant adjunct professor. The requirements are that you have a PhD in chemistry or biochemistry, a strong teaching record at the college level, and three letters of recommendation. But the job posting also says there is no salary. Yeah, it says, "Applicants must understand there will be no compensation for this position". UCLA has 26 faculty positions where they make no money. These folks are literally teaching for free.

My Experience Teaching at Georgetown University

Every college seemingly around this country has faculty that aren't getting paid. I remember when I was teaching at Georgetown University, I was paid $600 per semester. That's pretty much virtually free. $600 for four months’ worth of work. Why would I do that? Why would anybody be willing to work for free? A) In the hopes of building the resume and credibility and being able to say, Hey, look, I was a faculty member over there. I brag about that. I was on the faculty at Georgetown University for nine years. Number two, hope that one day I will get a tenured position with pay and benefits and pension benefits with a great university. So people are willing to work for free?

It looks to me like the university system is exploiting these individuals, tricking them, manipulating them into work for free, while at the same time charging higher tuition rates than ever to the students, forcing the students into debt that the government now says, don't worry about it. We're not going to make you pay it off. We have a problem with our higher education system. Forgiving student loan debt is not the problem we need to be solving.