Unalienable: Reflections on Independence and Belonging
Saddling college students with enormous debt has parallels in the Mahabharata story about Eklavya who cut off his thumb as guru-dakshina and lost his livelihood as an archer.
Recognizing that college debt cripples students way beyond their early career years. President Biden recently announced loan forgiveness up to $20,000, for people who earn up to $125,000 per year.
Despite my sympathy for the plight of the indebted college graduates, I don’t agree with this solution. It sets a bad precedent that will lead to calls for additional bailouts in the coming years.
Student Debt Forgiveness Is Unfair
Cancelling the college debt of current borrowers is unfair to families who have lived frugally and made countless compromises to fund their children’s college education.
Mine is one such family. My husband and I paid fully for our children’s college educations and mindfully adjusted our lifestyle to ensure we would be able to do so.
I am not alone in feeling this unrest. Indeed, many South Asian immigrants have views similar to mine. In a recent India Currents article Vidhya Pradhan wrote that,
“One of the biggest criticisms of student debt forgiveness, especially among the South Asian immigrant community, is that it is “unfair.” After all, goes the argument, we scrimp and save and put in long hours at our workplaces to be able to afford college for our children. Why should our taxes subsidize the poor choices made by others?”
Some Families Don’t Choose Student Debt
The proposed plan is unfair to many students and families who have made the difficult decision to not take on hundreds of thousands of dollars of student debt. Maybe they chose trade school or community college and ended up on a more limiting life track. The individuals who made prudent and frugal choices may feel cheated watching peers who made risky choices get free money.
Also, the income cut-off for eligibility ($125,000 for a single taxpayer and $250,000 for a couple filing jointly) is so high that those who work in the trades or in blue-collar jobs and make far less than those thresholds effectively end up subsidizing those who are much wealthier than them.
Immigrant Students & Student Debt
When it comes to immigrant youngsters, this is a double whammy. In general, they have fewer resources than the native-born population and many more hurdles to overcome.
According to a Pew report, income inequality is rising most rapidly among Asians. So, the fact that the burden of debt cancellation will fall squarely on this hard-working and vulnerable subpopulation should not be ignored.
Student Debt Forgiveness Poses A Moral Hazard
President Biden’s plan does not require colleges to shoulder any of the burden of the cancelled debt. Nor have they been asked to rein in the cost of college. A new class of freshmen will start their college education this month. Since costs remain high, these students are sure to take on debt on the same scale as the debt that is being forgiven. Further, who can blame them for expecting that their debts too will be forgiven in due course?
So, college loan cancellation as currently designed sets a bad precedent for borrowers and also does not hold colleges accountable.
Student Debt Forgiveness Could Cost The Democrats
It is worth noting that this is not a right or left issue. Even New York Times stories show opposition from even the Times’ liberal readers.
Browsing the most recommended comments on two New York Times stories shows how much opposition there is even from the Times’ reliably liberal readers. Democratic strategist Paul Begala sounded the alarm about how this new policy is likely to harm the prospects of Democrats in the upcoming election.
So, even though President Biden is keeping his 2020 campaign promise, it may end up costing far more than the dollars expended. And, since Asian immigrants overwhelmingly lean Democratic, a setback for Democrats in the upcoming midterms would be far from good news for Asians.
Ro Khanna Says Cancel Up to$50,000 Of Student Debt
“Biden Didn’t Go Nearly Far Enough,” proclaimed Ro Khanna, Silicon Valley’s Democratic Congressional Representative. Indeed, according to him, in order to truly help working- and middle-class Americans, we need to cancel up to $50,000 in student loans. This would help 95 percent of borrowers and do more to improve the lives of those struggling the most.
I made a good faith effort to understand his argument. I was not persuaded. Neither were most of the over 600 readers who posted comments.
Is he right? What do you think?