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Sprinkles from the Left

⏰🚀 Ready, Set, Go: These opinions take 1.84 minutes to read.

“Graduate school enrollment accounts for a disproportionate share of federal student loans. Borrowers for post-bachelor’s degree programs make up a quarter of those with federal student loans, but owe half of the $1.5 trillion outstanding, according to a 2020 Brookings Institution report…

A widely held — and still largely accurate — view is that borrowers for graduate school are inappropriate candidates for public sympathy, much less wholesale debt relief, because law, business and medical degrees are tickets to high earnings later in life.

However, certain programs do not confer above-average future earnings, or even enough extra money to enable debt repayment, condemning their graduates to a lifetime of economic insecurity. To make matters worse, the universities that market these high-priced credentials are responding rationally to incentives that federal law creates.

Specifically, the Grad Plus loan program, created by Congress in 2005, essentially made it possible for prospective graduate students to borrow whatever schools charge for tuition, fees, room and board, and other expenses. By contrast, undergraduates face borrowing caps of up to $12,500 per year and $57,500 total, depending on individual circumstances…

What to do?… Canceling $50,000 in debt for almost all borrowers… would make taxpayers shoulder the entire cost of fixing this screw-up — from which many well-endowed universities profited. That hardly seems fair, especially since most taxpayers do not have a bachelor’s degree, let alone a master’s or higher…

Policy must reflect the lessons of the United States’ various student loan debacles. First, beware of unintended consequences; second, incentives influence behavior. Or maybe: Beware of unintended consequences because incentives influence behavior.”

–Charles Lane, Washington Post Opinion

“What’s the case for canceling student debt?

There are two overlapping ways proponents tend to answer this question: the economic injustice argument and the enlightened society argument.

The economic injustice argument frames education as an investment that has increasingly become faulty or even fraudulent: Generations of Americans were told that a higher degree was the path to financial security and upward mobility… But for millions of Americans, that promise proved hollow…

The enlightened society argument frames higher education as a public good… It should be free or cheap for all, financed by taxes that can be raised on the rich, and no one should have to go into debt to get it…

Skeptics of all these plans argue that there are better ways for the government to spend its money. First, debt cancellation of any kind is arguably unfair to borrowers who have already paid off their loans, raising the question of whether they would be owed reparations.

Second, mass cancellation “boosts the balance sheets of people who attended college while doing nothing for people who did not attend college, even though the latter is, on average, worse off in many respects,” as Mr. Bruenig writes

Virtually everyone in this debate agrees that cancellation would only treat the symptoms of the student debt crisis, not cure its causes… Opponents of mass cancellation argue for longer-term solutions… Proponents of mass cancellation argue that these aren’t mutually exclusive policies.”

–Spencer Bokat-Lindell, New York Times Opinion ($)

Sprinkles from the Right

⏰🚀 Ready, Set, Go: These opinions take 1.84 minutes to read.

“Experts have said the president does not have the legal authority to unilaterally cancel billions of dollars in student debt. Even Speaker Nancy Pelosi agrees that Biden “does not have that power.” Of course, we know this administration does not care about what is lawful, so long as they achieve their desired outcome…

Loan cancellation would mean hundreds of billions of dollars shelled out without congressional authorization. That money would come from 200 million American taxpayers, including those who already repaid their loans and those who decided not to pursue a college degree, who would subsidize some of our nation’s wealthiest Americans. Not only is it wrong, but it would do nothing for our nation’s future student borrowers…

My LOAN Act provides the right answer.

The legislation would reform our federal direct student loan system by eliminating interest and replacing it with a one-time, non-compounding financing fee paid out over the life of the loan. No more inflated, compounding interest rates that obscure the true cost of college loans.

The LOAN Act would help borrowers by taking the unique financial circumstances of the borrower into consideration. With an income-based repayment (IBR) plan as the default option, new graduates would not suddenly be swamped with monthly repayments they cannot afford…

Student debt is not going away, and simply wiping the slate clean for Americans currently grappling with it is not an enduring solution. But we can have a more transparent system that does not trap Americans looking to pursue an education with exploding interest payments and unmanageable burden. The system needs real reform, and my LOAN Act offers the right way forward.”

–Sen. Marco Rubio (R-FL)

“Congress in March 2020 relieved borrowers from making payments on federal student loans and waived interest accumulation through last September. Like other “temporary” pandemic programs, the student loan reprieve has been repeatedly extended, first by President Trump and then Mr. Biden, even as the labor market has strengthened.

Forbearance was supposed to expire at the end of September, but Education Secretary Miguel Cardona says a four-month extension is necessary to give borrowers “the time they need to plan for a restart.” Pardon? They have the next two months to plan…

Colleges and the government have saddled some borrowers with debt they can’t repay. Yet borrowers can enroll in repayment plans that cap payments at 10% of their income and forgive their remaining balance after 20 years (10 if they work in “public service”). Ms. Warren wants Mr. Biden to cancel $50,000 per borrower, which would mainly help higher earners with graduate degrees. Progressives want debt relief for the affluent.

A Brookings Institution study estimates that cancelling $10,000 in debt per borrower would cost $373 billion and $50,000 a cool $1 trillion. Republicans are looking like even bigger chumps for scrounging to “pay for” their infrastructure deal as Democrats demand Mr. Biden spend money Congress hasn’t appropriated…

If Democrats in Congress think cancelling debt is a political winner, why don’t they want to vote on it?”

–WSJ Editorial Board