College Debt Cancellation Is A Start, Real Discussion Should Be On Lowering Cost of Higher Education

President Joe Biden’s federal student loan cancellation of up to $20,000 ($10,000 for those making under $125,000 and an additional $10,000 for Pell Grants loan holders) is much needed and welcomed for many college students-graduates and their parents.

Loan forgiveness of any amount is a step in the right direction, but realistically for a vast majority of college loan debtors, $10,000 will only be a partial wiping away of their loan(s) total. The average loan of a college graduate is $30,000 with some incurring as high as $200,000-plus.

Remember, in the first two years of the Biden administration, Democrats in Congress were in favor of canceling $50,000. But whether it was $10,000 or $50,000 proposed, either way, Republicans in Congress were not supportive of loan debt cancellation, period.

For this reason, Biden should be commended for acting boldly using executive power to get something done, and while he’s on a winning streak soon after his Inflation Reduction Act passed.

As instructed by Biden, in the past two years the Department of Education (DOE) and Justice Department were looking into the legal merits of debt cancellation by executive order.

Clearly Congress passing a sweeping bill would have made debt cancellation set on a more solid legal footing; and now some experts believe there could be possible legal challenges to Biden’s executive action.

Biden’s legal justification
Biden explained the legal authority to cancel debt by executive order was by way of the Heroes Act, enacted during the Iraq and Afghanistan wars.  That law gives the Secretary of Education the power to “waive or modify any statutory or regulatory provision applicable to the student financial assistance programs” during a national emergency if, among other reasons, the secretary believes that doing so is necessary to ensure that borrowers are “not placed in a worse position financially” because of that emergency.

The Secretary of Education acted on Biden’s behalf and the “national emergency” required in the Heroes Act is the pandemic. The Secretary’s choice of words was specific in the context of the Heroes Act.

U.S. Secretary of Education Miguel Cardona said in a statement, “Today, we’re delivering targeted relief that will help ensure borrowers are not placed in a worse position financially because of the pandemic, and restore trust in a system that should be creating opportunity, not a debt trap.”

If Republicans will choose to challenge Biden’s popular (approved by a majority in the general public, surveys show) college loan cancellation, it certainly will come at a heavy political price. Remember these are college graduates who’ve worked hard to become outstanding contributors in society, did all the right moves expected of them, but happened to be paying too heavy a financial burden.

Attempts at blocking Biden’s college loan cancellation would just look too anti-middle American and against the values of fairness and hard work. On top of this, as siding with debt collectors.

Analysts say the potential threat could be at the right-wing Supreme Court which could decide to hear the case and the issue of debt cancellation be greeted with legal skepticism.

Whether the Biden administration is moving full speed ahead has something to do with potential challenges is unknown. Debt cancellation was announced late August. Processing of applications could be expected to begin in October. That is light speed as far as implementing new policy.

Doesn’t solve high cost of higher education
One fair criticism that could be made is that a one-time debt cancellation does nothing in the way of curbing higher education costs or incentivizing college tuition to be affordable.

In fact some experts have warned the plan might nudge up tuition prices at colleges. The argument is that debt cancellation could encourage higher tuition in the future, encouraging more borrowing, creating expectations of future debt forgiveness. It could also lead students and parents to be less sensitive to the cost of tuition, which could encourage colleges and universities to further hike tuition and fees.

Free college tuition at public universities and colleges
Perhaps the true issue being skirted is college has become too unaffordable and should we be considering offering free or very affordable tuition at our public colleges and universities, much as it used to be in the 1970s through 80s in the U.S.  Even today there are exceptionally successful models to refer to as in most of Western and Northern Europe where any citizen of the European Union can actually attend any public college or university for free. Western and Northern Europe also happen to have among the highest standards of living in the world.

Why entertain this idea in the U.S.? Among the most credible reasons: 1) Equal opportunity for all in an increasingly income inequality society; 2) More students would attend college which creates a better educated workforce and enlightened society; 3) A more educated, more skilled society is better for the country’s competitiveness internationally and makes for a stronger economy; 4) Government could save on reduced reliance of public assistance programs; 5) As crime has been found to be correlated to poverty and unemployment, a more educated society helps to reduce crime; 6) Higher educational attainment is also found to be related to higher levels of civic engagement and voting.

In the mix of arguing for college debt cancelation now or in the future, there should also be included ways to get public colleges and universities to be more affordable and accessible. Otherwise, what are we ultimately doing with debt cancelation, just enriching the “business” of higher education at the expense of both students and taxpayers.