There’s a good reason why Joe Biden is being coy over student loan relief over in the US. That reason being that it’s a particularly silly policy. For it’s entirely regressive. It’s a subsidy from the general tax pot to those who, on average, will make higher earnings over their lifetimes.
Why should anyone support such a policy?
The promise of what higher education can offer is broken. Even if you personally have paid off your loans, or your child or friend didn’t have to take them out, that does not change the fundamental truth. You cannot look at the statistic that nearly 45 million Americans now have student debt — with an average debt of $36,214 — and think otherwise.
The only solution is student loan forgiveness, which could theoretically be achieved through executive action or legislative resolution.
The average graduate makes more than the average non-graduate. So, why should all be subsidising the graduates?
At which point we need a political theory to explain this journalistic – and it is near every journalist everywhere that supports it – support for the idea. That theory would be based in the idea of averages.
Sure, the average graduate earns more than the average person. The average graduate easily comes out ahead on the deal too. Here’s the cost of college, the extra earnings from the degree are more than that – it’s a profit.
But averages can conceal. The people who really make out on the deal are those doing STEM subjects. As we all know there’s not one single graduate in any STEM subject working for the newspapers. Cannot be given the reporting we get. What we get are the arts and grievance studies graduates doing the journalism. And arts and grievance studies degrees aren’t worth the cost.
To add injury in the US it’s usually necessary to do a Masters in journalism before you get hired by a newspaper. So that’s another two years of – higher – student loan to pay off in a shrinking profession with falling wage levels.
Which is why the journalistic class is so desperate to have student loan forgiveness – they’ll benefit.
OK, so that might be thought a tad cynical but I do insist that it explains all the observable evidence. But let’s put that aside and consider the base point here.
The argument in favour of a degree paid for by someone else is that it makes society richer that the degree gets done, the person is so educated. The only way to measure this is that the amount paid for the now degreed labour is greater than the cost of gaining the degree. This is true for STEM subjects, largely so at least, so there is an argument for public subsidy to STEM degrees.
This is not so for arts, grievance or journalism degrees. Therefore there should be no public subsidy for arts, grievance or journalism degrees. Actually, the cost disparity is such that there should be no arts, grievance or journalism degrees.
So, we can now see what a fair deal would be. Close down 80% of the academy – at least – and have public subsidy to those degree courses that remain. Can’t say fairer than that now, can we?
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Starting with a quibble, Joe Biden doesn't shy away from any policy initiative, provided it's ostentatiously anti-Trump.
Now, I was with you until "public subsidy" with its moral hazard, esp. for non-STEM study. We have 100% public subsidy for grade schools, which is so ruinous it keeps most parents from paying a second time for schools that are actually open.
There's another reason why - he doesn't have the authority from what I've been reading and hearing.
Back in the day many people who took student loans which weren't secured by any asset graduated from the institution he or she attended and filed for bankruptcy shortly thereafter. To address this issue, Congress made student loans extremely difficult to discharge. Many students have been funding education which has not sufficiently increased their income making potential to cover the cost of the loans. We have a problem now because there are many students with incomes where paying the cost of the loans is imposing a financial hardship and there is no recourse to bankruptcy. The answer of course is not to unilaterally cancel the loans, nor is it to permit all loans to be discharged at any time. However, a student loan isn't too far removed from a business loan and after a sufficient amount of time, the loan should be dischargeable. That's what we have bankruptcy for, to clean up the mess once people do make bad business decisions. Going forward the loans should be capable of being discharged in bankruptcy after a period of 10 years and the loans should be guaranteed by the education institutions themselves.
"Funding education which has not sufficiently increased their income" usually means pursuing coursework to gain expertise no one needs; borrowing because you want something (scholarly confirmation of your prior biases), not because you have any plan to repay it. Putting the college on the hook might eliminate some moral hazard. (Might eliminate entire depts. too!)
Yes, sensible solution.
$36,000 is the price of a new automobile. So pay it off. As to bankruptcy how does the taxpayer, the one footing this foolishness, take the degree. The assets in bankruptcy get handed to the creditors.
Ha. You shoulda done stand up.
Here in Oz we are starting to see the government moving subsidies away from Arts to the more employable degrees. Lots of squeeling as snouts are being booted out of the trough.
As a left-handed graduate in International Relations, I take umbrage at this move by the government!
A move in the right direction, but problematic, as gov't is again opining on the right price of various things, picking winners and losers. Your local Bidenoids will marshal the squealers and campaign on reversing this move, and all disciplines will leave the laboratory and flock to the capital to beg.
I did an MA in Intelligence and International Relations. But I paid my own fees because it was interesting and useful, and it turned out to be well worth while.
I have a degree in underwater basket weaving and I can't get a job anywhere.
Yup, so how much do we owe you?
First rule of underwater basket-weaving club: we do not talk about the underwater basket-weaving club.