Richard Kyte is director of the D.B. Reinhart Institute for Ethics in Leadership at Viterbo University in La Crosse, Wis., and co-host of “The Ethical Life” podcast.
A couple years ago, when the topic of forgiving student loans began to be a major talking point among prominent Democrats, I asked my students what they thought. I assumed they would be overwhelmingly in favor of it. I was wrong.
I talked to faculty at other universities — both private and public — and heard similar stories from them. They also were surprised by what they heard.
My students come largely from the upper Midwest, many from rural communities, and most work at least part-time jobs while earning their degrees. Like most young, college-educated Americans, they tend to be fairly progressive when it comes to social issues. I expected that nearly all of them would like the prospect of getting some of their loans repaid by the federal government.
What I did not expect was that so many students would regard it as unfair.
They gave many reasons for their objection. Several pointed out that they had been working through high school and during college to keep their loan burden to a minimum. They knew other students who were not working and were accumulating massive debt. Why should those who were partying their way through college get the same benefit as those who had been working?
Other students noted that they had younger brothers and sisters who would be going to college in a few years. Who was going to help them with their loans?
Finally, many students had family members who were struggling to make ends meet because of stagnant wages, high mortgages, car payments or medical bills. Why should students get a government handout when others who were struggling financially did not?
What they said, in short, was: “I would like to get my loans forgiven, but it would not be fair.”
The idea of fairness is an underappreciated concept in our current political debates. The term is used frequently, of course, but rarely with the thoughtful attention it deserves. People generally talk about fairness only to complain about something they don’t like.
One way to think about fairness is to consider whether a certain law or policy gives an undue advantage or preference. And that’s a good question to ask regarding student debt relief because, after all, it represents a huge wealth transfer. In general, wealth transfer programs are justified because they take from those with the most money and give to those with the least.
But student debt relief is not like other wealth transfer programs. The median household income of those holding student debt is $76,000 per year compared to $44,000 for the average household. Even with the proposed income caps on eligibility, much of the wealth transfer will go up, not down.
In addition, 56% of student debt today is held by the 17% of adults who have graduate or professional degrees. And they have even higher earnings — about $106,000 in median household income. In general, those who hold the most student debt have the greatest ability to pay it back.
Debt relief will of course be good for college graduates who are struggling financially. As supporters of the measure note, it will help many young people get off to a better start. It will increase geographic mobility, improve credit scores and may make it easier to start a family. Moreover, the benefit to those at the lower end of the income spectrum could be transformative. These are undoubtedly good things.
But there is a major problem. By adding an estimated $500 billion to the federal debt while doing nothing to address structural problems in higher education funding, the overall effect will be to bolster a flawed system that is largely responsible for economic and racial inequities in this country.
Since 1980, the cost of college has risen 1,200%, while inflation has gone up 236%. If anything, the debt-relief program might make the problem worse by incentivizing higher tuition rates and a greater willingness among future students to accumulate debt.
Every student I talk to is angry about the high cost of college education. They are angry at university administrators, angry at government officials, angry at society in general. They resent the fact that the cost of access to many of the better paying jobs in our society is so high. When they learn that the Biden administration’s student debt relief program is a one-time deal, that it won’t do anything to reduce education costs for future students, they are angry about that as well. They will take loan forgiveness if that’s what’s being offered, but they want a better solution.
Democrats are hoping this issue will help them win over more college-educated voters during the elections this fall. Republicans are betting their opposition to it will boost support among working-class voters.
I think both parties are wrong. We have a real problem with how the rising cost of college education is contributing to economic inequality in this country. Neither party is even talking about meaningful reforms.
I predict that after the controversy over the current program dies down, the high cost of college education will become yet one more issue about which politicians of both parties are seen to lack moral seriousness.
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? The hosts debate what it means about fairness and the structural funding problems in higher education.
Richard Kyte is director of the D.B. Reinhart Institute for Ethics in Leadership at Viterbo University in La Crosse, Wis., and co-host of “The Ethical Life” podcast.
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