The unilateral decision by President Joe Biden’s administration to forgive student loan debt may help win the presidential election come November, but it’s at a steep cost to the rest of us. The half-baked loan forgiveness program is driving a culture of student borrower irresponsibility in which debt repayment is considered optional.
Our students are worse off for it.
Forgiving student loan debt was one of Biden’s biggest 2020 campaign promises. The practicalities of the program weren’t needed. The promise of free money was enough. Young people, in turn, voted for Biden in droves; he decisively won the demographic of voters younger than 44.
Over the course of his presidency, Biden tried a number of times — and through a number of different pathways — to make good on his promise. Initially, the White House released a plan that granted roughly 43 million people the ability to get up to $20,000 of student debt forgiven. Ensuing legal challenges in the Supreme Court quashed that program, but the White House continued to wheedle its way toward its objectives.
Thus far, the Biden administration has erased more than $144 billion in student loan debt, leveraging various programs and systems to end-run Congress and the courts — both of whom have signaled their disapproval of the forgiveness programs.
For the borrowers, the prospect of free money has been welcome. However, the reality of student loan forgiveness is much more nuanced, complicated and detrimental to American meritocracy, a core tenet upon which the nation was built. The White House’s piecemeal plan to wipe out student loan debt is creating a dynamic that sends the wrong message about personal accountability and fiscal responsibility — setting students up for failures that will be more painful than writing a monthly loan repayment check.
It is a dynamic I have seen up close and personally: Some students coming through the upskilling programs I have run for eight years struggle to connect their consumption of educational services with an obligation to actually pay for them. Student loans aren’t looked upon as an educational funding tool, but rather as a blank check that students can use to fund their lifestyles.
For taxpayers, as well as business owners like me, student loan forgiveness hasn’t been the panacea it has been for students — in fact, it’s been quite the opposite. In addition to vaporizing taxpayer money, the debt forgiveness jubilee is making it harder to collect money still owed for educational services. Students that take on the most debt no longer believe they need to pay for curriculum-based programs, regardless of their quality.
There can be a place for circumstances and programs that offer debt forgiveness or tuition guarantees. The U.S. military has successfully used programs such as the GI Bill to offer veterans a pathway to career success that may not otherwise be available to them. This is earned through service to our country — the operative word being “earned.”
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Unlike the GI Bill or ROTC scholarships, the current student loan forgiveness program rewards without discretion. It is creating a system of misaligned incentives — one that in no way ties academic success to the promise of loan forgiveness.
The messaging is dire for taxpayers and those who paid their loans: Borrow whatever you would like, and the government and taxpayers will pick up the tab.
Wouldn’t it be a better idea if the government was, in some way, making sure that those receiving loan forgiveness were those who put the loan to its best use? Imagine if each loan forgiveness case was evaluated by criteria such as: How did the student perform in class? Did the student attend classes regularly? Did this student make a sincere attempt to pay back even part of the loan? Did this student graduate and genuinely seek employment? Did the student secure a job in their field of study?
An accountability rubric would set clear expectations for the student and school alike. It would also establish a sense of urgency and fiscal responsibility among borrowers, not to mention drive employment outcomes.
This algorithm shouldn’t just be for students, either. Colleges and universities that are charging egregious tuition fees and costs should face the same music. Requiring greater transparency from higher education institutions would not only give students a better understanding of what they’re paying for, but would also push the schools to delineate funds to educational services that have the highest impact for the students — services that prepare them for the 21st century workforce.
Before the federal government categorically waives student debt, taxpayers should demand an accountability rubric on a per-student basis that justifies having their debt canceled.
The current system is not financially sustainable, nor does it send the right message about pursuing the American dream. We need a standardized rubric that gauges whether students qualify for student loan forgiveness — and, if so, how much. This system would drive bidirectional accountability, both for the student and the education provider. It would also help taxpayers sleep better at night while Biden is writing checks on their behalf.
Jennifer Schwab is founder and CEO of ENTITY Academy, an upskilling and workforce development platform.
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