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The Critique of Neoliberal Reason: for at least 30 years--a mere decade after we took the wrong turn into debt-financing of higher ed--"experts" have focused on making debt more affordable instead of making college more affordable https://thehill.com/opinion/education/535339-a-smarter-and-fairer-student-loan-fix#.YA7Xlx9Y42d.twitter
Early signs of trouble came fast, but policymakers chose to ignore them: by 1992--only a decade after Reaganomics of OBRA 1981 began pushing debt in lieu of public investments--Congress had to stretch out repayment terms to lessen the pain of burdensome repayment on borrowers
What followed since has been a progression of ineffective Band-Aid solutions, virtually all of them targeting the wrong problem: easing repayment of excessive borrowing that was fueling public disinvestment that led to a vicious cycle of even more borrowing
So we went from educational borrowing that was expected to be fully repayable in 10 years to 30-year repayment terms, ICR, IBR, and PSLF, all of them predicated on the premise that loans were the only financing method to fund higher ed
and stretching out the repayment terms wasn't the only gimmick either: policymakers did their best to tweak interest rates in pursuit of easing repayment as well . . .
They tried every trick in the book: variable pegged to 91-day T, variable pegged to a blended T-rate, variable tied to CP, then LIBOR, out-of-thin-air fixed rates, bifurcated fixed rates, locked tied to T-rates . . . every neoliberal scheme to financialize a social service
So, no: dropping the rate to the government borrowing rate, dropping it to zero, or even creating a negative rate for educational loans would not solve the real problem, which is the cost of higher ed vis-à-vis its labor-market returns in a changing macroeconomy
And therein lies the additional virtue of debt-cancellation. Beyond redressing the injustice of having tied the boat-anchor of debt around the necks of millions of borrowers (which the various means-testing ideas could never fully remedy), it forces policymakers to finally focus
on the real challenge we face: making college--not borrowing for college--affordable. This will involve actual public subsidies and structural (and painful) changes to higher education itself, but that's a conversation for another day
