By Arjun Pathy ’25
At the beginning of October, President Biden announced a new $9 billion round of student loan forgiveness. This news accompanies the previous debt write-offs that have taken place during Biden’s administration, affecting 3.6 million borrowers and totaling $127 billion. These actions, on the surface, seem to be a part of a reasonable, populist agenda put forward to help relieve the financial burden of the middle class. While this is partially true, by authorizing student loan forgiveness, President Biden has set a dangerous ideological precedent.
Tuition at American colleges and universities has jumped over 169% since 1980, despite relatively stagnant wage growth of 19%. Such a jarring gap has resulted in U.S.’s education-related debt skyrocketing to $1.77 trillion. Burdened by sometimes lifelong debt, millions of U.S. borrowers have raised grievances about this growing issue, citing government inaction.
However, proponents of loan forgiveness often neglect to consider another culprit. Colleges, as the sole beneficiary of unaffordable tuition, bear much of the blame for this crisis. Many educational institutions in the U.S. boast endowments larger than some countries’ GDP and, in most cases, receive swaths of federal funding. Despite such a large inflow, new revenue is always seen being invested in a new football stadium or a flashy student center, not reducing growing tuition costs. This conundrum is caused by the U.S. government’s inadequate regulation of universities.
As long as a college degree is expected for most jobs and no cap on tuition persists, universities have no incentive to keep tuition affordable.
With an endowment of $40.7 billion, Yale University could fund its yearly operating expenses with millions left over, only using the interest on their investments. But without a real incentive to do so, they charge over $80,000 per year and generate tuition revenue exceeding $450 million in the process. Such a predicament isn’t specific to Yale, and it will only become more acute without effective legislative action. However, the current proposed loan forgiveness laws lack such regulations, and fail to address indebtedness.
Loan forgiveness, as proposed, would only encompass writing off current debts. With no provisions on limiting tuition or any mention of future loans, the legislation is, at best, an ineffective band-aid solution. As universities, undeterred by regulators, continue to raise their tuition, future students’ debts will only rise.
Furthermore, this entire forgiveness program comes at the expense of taxpayers. In the current system, citizens indirectly subsidize the excess of universities by footing the bill for past tuition payments. And unlike the progressive tax structures in the U.S., paying off student loans would disproportionately benefit the upper class. Statistically, as the level of education and accompanying debt rise, so does the average income of the borrower.
In addition, contrary to popular belief, wealthy students are more likely to take out debt to fund their education. Canceling these loans would, therefore, distribute tax revenue to a cause that benefits a highly educated and wealthy subset of the population.
However, the most pressing problem related to loan forgiveness has to do with setting an ethical precedent. Pursuing a college education is ultimately a personal choice, and the accompanying debt one might incur is an individual decision. By making the ramifications of one group’s choice the burden of all, the U.S. government crosses a dangerous ideological line. An inevitable question arises: if the government pays for the debts that one willingly takes on, what other responsibilities can they absolve one of?
This ideological misstep is the biggest slap in the face to taxpayers who made financially prudent decisions when going to college. Whether it is pursuing college in-state or earning scholarships, millions of students give up admission offers to save money and incur less debt. This sacrificial decision can be life-altering and close off valuable opportunities — all in the name of avoiding student loans. For these people, when the government clears the debts of those who decided to take out six-figure loans, a seemingly common-sense act becomes deeply inequitable.
This is not to say that we shouldn’t address the looming student debt crisis. Rather, I am suggesting that we take a nuanced, more long-term approach to a multilateral issue. Instead of only holding the government accountable, we must understand the incentives of universities and cap their tuition accordingly. Most importantly, we must not continue assuming that one person’s decision is the responsibility of all.
