Credit forgiveness is a mixed bag
Credit forgiveness is a mixed bag
By Steven A Smith
My daughter’s news was exciting.
“It’s a life-changer,” she said.
She had just read about President Biden’s executive order relieving millions of Americans drowning in school loan debt.
My daughter Liss is 32 years old. She is a University of Montana graduate who left school with a degree and tens of thousands in loan debt.
The President’s program will appear to reduce her total outstanding debt to about $5,000 and her monthly payments to a fraction of the previous amount. Your wife will experience a similar relief.
A life changer.
But the loan forgiveness that will change my daughter’s life comes at a price. And when I look at the President’s program through a different lens than Father’s, I have to recognize that award.
There is nothing special about my daughter’s situation.
She graduated from high school in Colorado Springs and could have attended school in that state. She considered Colorado State University, where she would have paid state tuition. But eventually she decided to attend the University of Montana, a great choice but one that cost significantly more. She had some great scholarships, but not nearly enough to pay for tuition, books, and housing. She carried her weight and worked any number of part-time jobs throughout high school.
But in modern America it is impossible for most students to attend college without credit. That was my experience at the University of Idaho, where almost all of my students – with the exception of a few athletes and the occasional silver spoon student – struggled to pay for a living.
This also applies nationally. More importantly, the amount of debt borne by students has exploded in recent years. This is in large part because taxpayer support for higher education has declined, forcing public schools to shift the burden of the cost onto students through regular, sometimes outrageous, tuition and fee increases.
That was certainly the case in Idaho, where the Legislature ruled a few years ago that higher education was unsupportable, that it was a vehicle for left-wing indoctrination, not education.
The students therefore bear a disproportionate share of the costs. And the burden of debt is often so great that a graduate has to continue living like a student even after graduating and looking for a job. That means roommates, ramen meals, and ongoing help from parents. Married students are often so indebted that they can neither afford a decent car nor a house.
It’s a national disgrace, and progressives have been demanding some form of relief for years. It was a key issue in the 2020 presidential campaign. But even with the support of the President and Democrats, who control both houses of Congress, there was no legislative action.
That’s why the President took executive action last week.
The relief package contains several provisions. Basically, students who have received federal Pell grants can receive up to $20,000 in forgiveness. People with other federally funded student loans can get up to $10,000 in relief. Students like my daughter can take advantage of both offerings with both types of loans.
The forgiveness only applies to graduates earning less than $125,000 per year or families earning $250,000. Requests for relief will be accepted until the end of the year and the relief will take effect in 2023.
Not all progressives are happy with the bailout Some don’t go far enough. Colored students typically incur more debt, and this program offers them little relief. Others believe that the income limits are too high, that only the poorest students should qualify.
And, of course, it doesn’t apply to loans taken out by private lenders, who often captivate graduates with onerous interest rates and unforgiving payment schedules.
But too many conservatives are attacking the plan as if it were some kind of communist plot, arguing in part that too many students don’t belong in college at all and we should discourage them from pursuing higher education.
Of course, conservatives tend to forget that the government subsidizes all sorts of favored programs, such as B. Farm Relief, subsidized housing through FHA and veteran loans, and huge tax subsidies and forgiveness for corporations and the super-rich. Try helping out some cash-strapped graduate students, and that’s blatant socialism, by God!
But there are valid and worrying criticisms. The Washington Post slams the program in a thoughtful editorial on tax grounds.
The bailout puts an unfair burden on taxpayers, will add to inflation, retard efforts to reduce the deficit and fail to help the neediest students, according to The Post, which generally supports the president’s initiatives.
And the plan isn’t fair to those who have already paid off their debts and are working their ass off to do so.
I appreciate all of these arguments. And like The Post’s editorial writers, I’m concerned about the overall tax implications.
But then my daughter called. This is a life changer, she said. And as her father, I cannot disagree.
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