Anger At Student Loan Cancellation Is Justified
Progressive activists have secured a bribe at the expense of the commons.
Almost two years ago, when student loan cancellation was previously being tossed around as a policy proposal, I saw an unpopular message pop up on Twitter:
Predictably, it was followed by a wave of responses like this, shrugging off the anger and saying that it's selfish to not want student loan forgiveness because some people already suffered. As one who understands that anger personally, I felt a responsibility to explain it, and did so in a post that seemed to resonate in the quiet corners in which I shared it. Now, in the wake of news that Biden is writing off at least $10,000 of student loans for almost all borrowers, I’d like to revisit and update that post with an eye towards putting a voice to the frustration so many feel at this policy.
I have no ideological aversion to social welfare. I support a robust and universal safety net and enjoy universal public utilities. I recognize that the cost of higher education has become intolerable and demands a solution. But I have a deep-felt ideological aversion to student debt cancellation, a policy which acts as an arbitrary wealth transfer and solves nothing in higher education. Blanket student loan write-offs are both immoral and bad politics, and should be condemned.
The core issue I have with student loan cancellation is that a lot of people structure their lives and make very real sacrifices to reduce or avoid debt: going to cheap state schools instead of top-tier ones, joining the military, living frugally, skipping college altogether, so forth—things, in short, that can dramatically alter their life paths. Others—including plenty of people who are or will be very well off—throw caution and frugality to the winds, take on large debt loads, and have the university experiences of their dreams. These life paths look very, very different. People who choose the first can have later starts to their real careers, less prestigious schools attached to their names and fewer connections from their college experiences, a lot less fun and relaxation during their 20s, so on.
In other words, it's not that one already suffered and got theirs, while the other is suffering. It's that one got their reward (no debt) and the other got theirs (meaningful university experience), and now the second wants to get the first's reward too. It's a pure ant and grasshopper story. City Journal calls this the “chump effect”, policy that punishes those who follow prosocial norms while rewarding those who defect, ultimately degrading social trust and eroding those norms.
In the same way the write-off excuses the spiraling excesses of "grasshoppers", it excuses the spiraling excesses of universities. They can rest assured that they can let their costs go crazy because student loans will pay for it and then the government will diffuse their costs across everyone. In fact, as Matt Bruenig, Alex Tabarrok, and others have pointed out, the specifics of this write-off look likely to encourage universities and students alike to borrow more, not less. It’s not even a band-aid.
When I was younger, I dropped out of my traditional university rather than transfer to a more expensive one to avoid loans. Now, I’m finishing my last few classes at a cheap online university while working two jobs, paying my own way upfront. When I originally wrote much of this almost two years ago, I faced a dilemma: Should I take a student loan I’m eligible for but don’t need, in case the government would turn it into free money down the line? I refused the loan, because I think it’s unethical to borrow money you don’t intend to pay back and I am in a comfortable enough spot that I can afford to stand on principle, but a policy that invites those questions is bad policy.
In saying all this, I want to be clear: I have no quarrel with those who got a genuine raw deal from college, those who were deceived by predatory institutions or pressured into attending schools they did not belong at, those who suffered the costs of university while reaping none of the benefits. Nor do I object to people who took out loans, secured upward mobility, and work to pay those loans back taking the write-off that has been offered. The core of my ire is reserved for the Nathan J Robinsons and Briahna Joy Grays of the world, the champagne socialists who agreed to student loans to build influence and prestige before using that influence to change the agreement retroactively—and for the politicians who yielded to pressure and altered the deal for political expediency. People are not grasshoppers for taking loans out or accepting write-offs when offered, but for accepting a cost to gain an edge over others, then turning around to demand those others pay that cost.
Options like responsibly structured income-based repayment and making loans dischargeable in bankruptcy avoid these hazards. I want good policy answers to an unsustainable college environment. I don't want low-income people to struggle under crushing debt they can never pay off. I don't want the cost of college to spiral and become yet more outrageous. I don't want people to have to make the tradeoffs I've had to make. But I do want people who got real benefits I missed out on to pay the cost they agreed to pay for those benefits, and I do want universities to confront their spiraling costs directly instead of masking it forever. If the goal is to help poor, struggling people? Great. Give a direct handout to everyone under a certain wealth threshold. Don't select an arbitrary slice of them, along with a slice of much more privileged people, and help only them.
But that is what has been done.
The core message I'm going for is that "universal" debt forgiveness is not universal. It benefits people who took out student loans at the expense of everyone who didn't take out student loans, privileging a class who are disproportionately likely to be privileged and telling the rest to suck it up and be happy for them. An income cap of $125,000 per individual or $250,000 per couple is a fig-leaf that still permits a write-off for the debts of millions of upwardly mobile young professionals who can and should cover their own costs. The degree-less working class will pay for this policy—in taxes that must now make up for $500 billion of lost revenue, in inflation, in opportunity cost as every action this trades off against in time or resources gets bumped down the queue to make way.
As someone whose life has been directly, and drastically, altered by decisions around this issue, I feel frustrated and betrayed to watch the Democrats enact this student debt write-off. It stands as an immense betrayal of social trust, a power play that gives one class of people a direct, arbitrary material advantage at the expense of the rest.
The specific circumstances exacerbate this feeling. It is an explicitly political move with explicitly political timing, plundering the working poor to bribe Biden’s base just in time for midterms. It comes not via Congress, but by an executive order relying on emergency powers. Rather than acting with grace towards those with concerns, party insiders up to and including the official communications of the White House itself chose to play the most cynical sort of politics, amplifying their most detestable critics and responding with sneers and false equivalencies. Their approach is straight from Trump’s playbook, and I am no more impressed now that the left has joined in on it.
I vocally supported Biden in 2020 and have no regrets about that choice. Between almost any Democrat and Trump, I will pick the Democrat without hesitation, even with risks like this in mind. But my alliance with the left has always been an uneasy one, with no shortage of serious disputes. I am a politically unaffiliated centrist who recognizes that the value of my vote, inasmuch as it exists, lies in its willingness to flip. I have a small platform and a strong personal stake in this issue—while it’s certainly not the biggest issue in politics, it’s one that has a dramatically outsized role in my own life and where my own advocacy energy seems well-placed. I believe the Democrats should lose votes and political capital as a direct result of this cynically timed vote-buying to a larger extent than my own voice can influence, providing an impetus for them to change direction sharply before 2024.
Given all of this, I will not vote blue in 2022. I cannot support a party that does not even pretend to understand my concerns, one that helps its activists gleefully wrest a bribe from the commons as they cynically claim to speak for the poor, one that arbitrarily frees a relatively advantaged group from their freely entered obligations at the expense of those who avoided those debts—then acts as if all who object are hypocrites worthy of no attention or respect. If this is the direction “progressive” politics is going, I want no part of it.
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I’m with you Trace. I did a lot of pretty grueling jobs to pay for school (roofer, millwright, and deck hand on a drilling rig) and toward the end I kind of became grossed out by the institution itself. I felt like a cow everyone wanted to milk, no one really cared about anything practical, and dropped out my last year because at that time in my life I felt like I could just work low demand jobs and read books from the library until I died and that was all I wanted.
But I have had a more cynical change of mind after I paid off my wife’s student loans (I’m not rich but I know how to fix stuff so I flipped a house in my mid twenties which was enough to make me middle middle class). I admire your virtue but it’s annoying to get treated like a chump. I did all the stuff I needed to do to pay off stuff with my own money by doing things that were actually valuable for people, but with this as soon as I heard the announcement I read all the rules and asked them to refund all the payments on my wife’s loan that we made during the Covid relief period until it totaled just under $10,000. That’s a thing they allow. I don’t know if that will make me ineligible for relief but my guess is they won’t notice that kind of gaming and I’m expecting to get my free $10,000 to pay for a new furnace instead of having to finance it.
I want them to fix the whole architecture for how this mess works so people stop getting degrees that don’t help them in fields that are barely even real but barring that I feel like I have an obligation to not voluntarily let them hurt me if I can avoid it.
I felt the same way about the mortgage bailouts of the 2000’s. I lost 30,000$ on my house when we sold it in part because many “neighbors” just stopped paying their mortgages when they realized they were underwater on the value of their homes. It was very frustrating to keep paying and paying and paying while the arseholes next door lived rent free for two years until the bank was finally able to throw them out. Then we had to sell our house with foreclosures on both sides. Fast forward to THIS new slap in the face, our “neighbors” are just thrilled about this newest don’t live with your bad decisions handout because BOTH of them will benefit. They spend money like water, have about 150,000$ worth of cars for two people, let us take care of their ill cat because they are too cheap to take her to the vet, and hinted to borrow money from us during covid. These are not people who’ve experienced some tragic accident or illness, they’re just spendy and like to buy the newest phones/cars/houses etc. My husband and I live very frugally, paid as we went through college, have two over ten year old cars, and bought a cheap enough house that we could pay half up front and pay the rest off in ten years. We’re really starting to feel like f***ing suckers. But hey, we get to look forward to being millionaires in retirement because we’ve been so responsible and then getting “means tested” out of social security and medicare so we and our various horrible irresponsible friends and neighbors over the years can all wind up in exactly the same place. Yay.
I can’t even discuss it without blowing a discount gasket ;) I’d love to vote for anybody but the Trumpies who I find frankly appalling and equally thrilled to give away money during Covid- but I’m sure as he** not voting for this sh**! Thank you for writing about it so calmly and articulately. All I can do at this point is cuss and spit.