Don’t Cancel $10,000 of Student Debt. Cancel Every Penny.

The Biden administration has been floating the possibility of a means-tested cancellation of $10,000 of student debt. There’s no reason not to cancel every penny instead.

College students put up a sign in front of the White House calling on President Joe Biden to sign an executive order to cancel student debt. (Paul Morigi / Getty Images for We the 45 Million)

Reports have been circulating claiming that the Biden administration is planning to announce the cancellation of $10,000 in student debt for borrowers earning less than $150,000. This has brought out the usual chorus of nonsense claiming that student loan forgiveness is “regressive,” that it’s unfair to those who have already paid back their loans, and so on.

A better objection is that loan forgiveness shouldn’t be either means-tested or capped at $10,000. We should stop shaking people down for the right to get an education, whether they’re enrolled in college now or they graduated (or dropped out) decades in the past. All student debt should be canceled — every penny — because “student debt” is a grotesque concept. From preschool to graduate school, education should be free.

Cancel Student Debt, Abolish Tuition

When Mitch Daniels was invited on CNBC to discuss the reports that Biden was considering a $10,000 cancellation, Daniels attacked it as a “very regressive suggestion” because “71 percent of the money goes to the top half of the income distribution.” It’s a “giveaway,” he claimed, “to people who don’t need it and freely took these obligations on” as well as an “unfairness to all those millions of people who paid their debts back.”

A ”giveaway” suggests that the government would be cutting a $10,000 check to qualifying borrowers. In reality, debt cancellation — whether partial, miserly and means-tested like the possible Biden plan, or the kind of across-the-board forgiveness everyone here at Jacobin would advocate — does not consist of handing over money. It’s just a matter of no longer hounding borrowers. Many borrowers have no idea if or when they’ll ever be able to pay their loans back, which means that the Department of Education has no idea if or when they’ll ever get that money. Thus canceling student debt doesn’t mean transferring existing resources; it means simply dropping the matter.

It’s also a little rich to hear Mitch Daniels of all people raising the “regressiveness” concern. As George W. Bush’s director of the Office of Management and Budget, he helped craft tax cuts in 2001 and 2003 that were a massive boon to the very rich. A full 38 percent of the savings went to the top 1 percent of earners. It would have been nice if that had come up in the CNBC interview.

Putting aside obvious hypocrites like Daniels, though, how can we answer anyone who really does worry about student debt forgiveness disproportionately benefiting higher earners because they want a fairer society and as such they don’t want to support any policy that would even very slightly increase income inequality? The obvious answer would be to pair complete forgiveness of every penny of student debt with abolishing tuition at public colleges and universities, and paying for that by taxing the rich.

Any such tax would extract far more money from the upper end of the income distribution than the government would get from simply continuing to shake college graduates (and college dropouts) down for student loan payments. Better yet, it would guarantee that everyone from the upper end of that distribution was paying more and no one from the lower end was sinking even lower in the process. As such, it would be a far better way of achieving the goal of greater fairness — assuming, of course, that anyone who wrinkles their brow with concern that student debt forgiveness would be “regressive” actually cares about that goal.

No, Student Debt Forgiveness Isn’t “Unfair” to Past Borrowers

Would instituting Medicare for All in 2022 and thus eliminating premiums, co-pays, and deductibles going forward be unfair to everyone who had to worry about how to pay those premiums, co-pays, and deductibles in the past? Was withdrawing from Afghanistan in 2021 unfair to all the soldiers who died in Afghanistan over the course of the past twenty years? This sort of reasoning could be used to be object to any baby step in the direction of a more just society.

Here’s a more direct analogy to the case of student loans:

A gang of criminals demand that every shopkeeper in some town pay them a lifetime “protection” fee of $100,000. Corrupt local authorities are bribed to look the other way. Some shopkeepers manage to pay off the whole $100,000. Others make their payments some months and miss the deadline other months, and the gangsters add more money to the debt to punish them for the payments they missed. This goes on for decades.

A less corrupt municipal government is elected and they’re finally ready to crack down on the gang and put an end to the protection racket. Would it be reasonable to object on the grounds that no longer extracting the protection payments from shopkeepers whose store just opened up would be “unfair” to the older people who paid off the whole thing years ago?

Of course not. It also doesn’t matter that anyone who knew about the protection racket and opened up a new store anyway was “freely taking on” the obligation. Or that some of the shopkeepers were making good money and would have paid off the full $100,000 sooner or later.

The reason none of that is relevant is that the debt is illegitimate, full stop, because the gangster’s demand for “protection” fees was illegitimate in the first place. The same principle applies in the case of student loans.

People who think student loan forgiveness is “unfair” often point out that a great many people never go to college in the first place precisely because they don’t want to go into debt. That’s true. Equally obscene is the fact that a great many people who would qualify for means-tested assistance are deterred by the prospect of having to deal with often labyrinthine financial aid bureaucracy. We should not only forgive student debt, but also eliminate college tuition in order to put an end to this injustice, the burden of which falls on the working class.

The ability to pursue one’s own education is a basic right — and that’s no less true for a freshman in college than for a senior in high school. As a human being who only gets to be alive once, you should have the option of spending the first few years of your adulthood nurturing your mind and exploring different interests with an eye to how you want to spend the rest of your life. Wealthy political hacks who pretend to worry that forgiving student debt is “regressive” or “unfair” take it for granted that their children will have that option, and won’t be financially punished for life if they choose it. A minimally decent society would guarantee the same to absolutely everyone as a matter of course.