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A little late to the party but wanted to weigh in quickly with my perspective on the student debt cancellation conversation we’ve seen emerge the last few days. 1/11
I’ve written many times @thirdwayedu (and I’ve seen many examples over the last few days) of how universal debt cancellation can be highly regressive. Nearly half of student loan debt is held by students with graduate degrees. https://medium.com/@ThirdWayTweet/when-should-taxpayers-forgive-student-loans-b6ab84f47b4 2/11
And as @UrbanInstitute highlighted, “more than one-third of all outstanding education debt is actually held by the top 25% of households with the highest earnings, with households making more than $173,000 or higher holding 11% of that debt.” https://www.urban.org/urban-wire/which-households-hold-most-student-debt 3/11
What’s more often lost in the convo is that only around 20% of Americans have student loan debt of any kind. Proposals to cancel all, or even a large portion of, the debt portfolio would spend a HUGE amount of taxpayer dollars that leave out the vast majority of adults. 4/11
If the purpose of a debt cancellation plan is to provide relief to those who need it most and/or stimulate the economy, we most broaden the target audience so that a greater number of Americans can benefit , including those who haven’t gone to college. 5/11
Lastly—and as many others have already mentioned—student loan cancellation is entirely retroactive, doing nothing for current or future students asked to take on debt, and does nothing to hold accountable institutions that failed to provide ROI in the first place. 6/11
None of this is to say that debt cancellation may not benefit borrowers genuinely struggling to pay back their loans—including borrowers of color who are disproportionately impacted by student debt. BUT why limit the solution & much needed investment to cancellation alone? 7/11
Another option? A policy proposal we dubbed “Pay down, Upskill” that would give every eligible American a $5,000 credit that could be used to EITHER pay down student loan debts or apply to future postsecondary training or other higher ed needs. https://www.thirdway.org/memo/pay-down-upskill 8/11
Americans with student debt could see a big chunk of their loans paid off. Americans without student debt could still see the benefits of a federal investment designed to make sure higher education provides opportunity to those it serves. 9/11
There are way more details laid out in this initial proposal: https://www.thirdway.org/memo/pay-down-upskill. 10/11
TL:DR. Debt cancellation alone can be regressive, is limited to a small share of Americans, and is not forward-looking. If we’re going to make a MASSIVE fed investment re: higher ed, do it so more ppl can benefit. Offer a credit to use for forgiveness OR future training. 11/11
