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Smith: Some animals are more equal than others

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Contrary to what one might expect, a high percentage of middle-class Americans do not think that the government should forgive student loans, even though said loans disproportionately affect them. They, along with a substantial number of working-class Americans, often act in ways that work to the detriment of their economic self-interest. (Student debt relief will benefit millions of low- and moderate-income Americans.)

Overall, most polls indicate that slightly more than half of all Americans support President Joe Biden’s plan to relieve student loan debt of $10,000 to $20,000 per person. (People of color, who tend to be saddled with higher student loan debt, are more supportive of this move than are white Americans.)

One could argue it’s good that a plurality of Americans believes in “personal responsibility” as regards to repaying such debts.

However, to be clear, it’s exceedingly rare to find those who argue that people should knowingly accrue a large amount of debt — for a college education or otherwise — and then intentionally shirk their responsibility to repay it.

Obviously, it is honorable to repay one’s debts. But is it inherently dishonorable to accept loan forgiveness? This non-rhetorical question is especially relevant given today’s hyper-political environment. The overwhelming majority of Republican politicians argue that it’s wrong to excuse student loans, though they are perfectly fine with forgiving Paycheck Protection Plan loans — from which many of them benefitted. (Incidentally, former President Donald Trump spoke in favor of student debt relief.)

The Pandemic Response Accountability Committee, which was created to track how pandemic funds are used posted an update on PPP loans, stating that more than 10 million loans (out of 11.5 million issued) had been fully or partially forgiven as of July 4. Further, the average amount of loan forgiveness was $72,500, which is $50,000 more than the maximum amount of student loan forgiveness. Also, the Committee for a Responsible Federal Budget estimates that changes established by President Biden’s plan will cost roughly $500 billion over the next 10 years, with $360 billion earmarked for student debt cancellation. The PPP has given $793 billion to small businesses as of July 4, forgiving all but $50 billion or so.

Admittedly, the key difference between student loan debt relief and PPP debt relief is that the latter were intended to be forgiven assuming that they were used for legitimate business purposes (e.g., payroll costs, business mortgage interest payments, utilities, rent, etc.) within eight to 24 weeks after the loan was received. On the contrary, student loans were designed to be repaid.

The bottom line is that student loans are disproportionately borne by people who have low to moderate incomes, whereas PPP loans tended to be taken out by people whose incomes were well above those of the average worker. Without any apparent self-awareness, hypocrites blithely advance the “good for me but not for thee” argument, offering bland excuses in the process. How many angels can electric slide on the head of a pin?

While I understand the ire of those who never attended college (and thus didn’t incur student loan debt), student loan forgiveness is not a handout. Most people pursue postsecondary education to improve their earning potential. The result is that, on average, they will pay more in income taxes (and other taxes) than those who do not earn a college degree. As is the case with all government debt, the middle class will disproportionately bear the cost regardless of whether they attended college. This is why it is in their economic self-interest to vote for politicians who shun regressive tax policies that overwhelmingly favor wealthy individuals and wealthier corporations.

Further, there are at least two other incredibly important issues to consider. One is that for-profit colleges are often guilty of predatory recruiting and lending practices, especially regarding students of color. I have yet to see those who are raging against President Biden’s ungodly debt cancellation plan express any concern about that issue. Secondly, as outgoing Purdue President (and former Indiana governor) Mitch Daniels points out, college tuition rates far outpace inflation — even more than health care costs do. Thus, college debt leads millions of Americans to file for bankruptcy.

While it’s true that not everyone needs to pursue a four-year degree, the fact is that most jobs for the foreseeable future will require some level of postsecondary education. As the saying goes, if you think that education is expensive, try the alternative.

Larry Smith is a community leader. Contact him at larry@leaf-llc.com.

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