There seems to be no limits that a politician will go to in order to ensure success at the ballot box. Such is the case with Joe Biden’s recent student debt relief proposal. The proposal offers ten thousand dollars (going as high as twenty thousand for some) of debt forgiveness on student loans for individuals who earn less than one hundred and twenty five thousand annually.
On the surface this seems commendable. A little bit of digging reveals otherwise. For starters it introduces a further 300 billion dollars to the economy when inflation is running upwards of 8%. Moving money into the economy at a time when demand exceeds supply is economically irresponsible. Inflation after all is a tax on everyone’s savings. Essentially the population as a whole will be subsidising the portion that collect. This isn’t right.
Why should the non-college educated be forced to pay for those who make the life decision to follow the college track? What about those who have saved, worked and earned the financial rewards to pay off their college degrees? Why should they be excluded? The inequity here is obvious. One group is deliberately been favoured at the expense of others based on a handout that will add to the federal budget deficit, negate a whole slew of current anti-inflation methods and further indebt the nation at a time when interest rates are on the rise.
And for what? This is not a fix as Joe Biden alluded to. Not even close. The US post-secondary education system has been broken for some time. It is far more expensive than comparable systems elsewhere in the developed world. The cost of education for students has been growing at a rate that definitively exceeds wage increases. Subsidies are met with further increases by the college and universities that in real terms render these subsidies moot.A positive feedback loop in driving costs upward with each government spending initiative does not need further stimulation
Of course this would be somewhat reasonable if the quality of education was improving but the evidence in this regard indicates this is not necessarily so. Many students are graduating with degrees that have limited utility in the work world creating. The market is not responding to this supply. What is also true is that a vast amount of the money that finds its way into the Academic institutions goes to strengthening college sports and funding building initiatives on the campus which have questionable pedagogic worthiness (lazy rivers are the big thing now).
So why add fuel to the fire?
The answer of course is that this has nothing to do with education. Nor is this an attempt at genuine education reform. That would involve the capping of university fees and the decoupling of the universities from the sports industrial complex. Neither will happen and politicians from both parties know this.
Now Congress can block the executive initiative (they ultimately control the purse strings) but in a midterm election year this could place a number of politicians on the hotspot. Student debt holders are vital to Democratic Party success especially in a year where the White House sits far to the south of the favourability line. Handouts help. Nobody likes having freebies removed. Spend now and push the debt can further down the road. Remember stupid it is the election that matters. The greater problems will be dealt with later if that ever comes around. This is the rationale.
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