Cancel the Student Debt? Kiss the Working Class Goodbye.

by Kerry Dougherty

We only have ourselves to blame. Baby Boomers, that is.

We were the progeny of the Greatest Generation, but growing up in their houses, with their rigid rules and endless chores, our folks didn’t seem like the greatest.

They seemed heartless when they sided with teachers over us and when they doled out corporal punishment for lackluster report cards.

So, when we had our own kids, we coddled them in ways our tough-love parents never imagined.

The every-player-gets-a-trophy culture was created because my generation couldn’t stand to see our dejected kids stand empty-handed at the end of the sports season while the gifted athletes took home all the hardware.

Our parents told us to try harder if we wanted to win. We told our kids that winning didn’t matter.

Our parents were children of the Great Depression. They were leery of debt and credit cards. They warned us against buying things we couldn’t afford, be it houses, cars or shoes.

They taught us that our word was our bond. That when you borrowed money you had to pay it back.

Looks like those are lessons we also forgot to pass on to our children.

And now young adults who are saddled with student debt — 45 million of them signed documents promising to pay the loot back with interest — want the government to bail them out.

Seems we forgot to teach them who the government is, too.

It’s us. The taxpayers. The people who paid off our own student loans, or who managed to get through college without borrowing by joining the military or ROTC or working multiple jobs. Oh, and it’s the vast majority of Americans without a college education.

Why should America’s waiters, plumbers and laborers pay off the student loans of doctors, lawyers and MBAs?

Naturally, these profligate borrowers have friends on the far left.

Senators Chuck Schumer and Elizabeth Warren want Joe Biden to cancel federal students loans up to $50,000 for each borrower by executive order on his first day in office. That would cost taxpayers $1 trillion and would probably be illegal.

Biden wants Congress to act by cancelling $10,000 for each borrower, which would carry a price tag of $370 billion. He says these indebted folks are suffering during the pandemic.

Actually, they aren’t suffering right now, since President Donald Trump paused all federal student loan repayments through Dec. 31 and dialed the interest rate down to zero.

Someone should tell Biden that it’s Americans with only high school diplomas who are truly suffering as a result of the shutdowns during the pandemic. Their unemployment rate is 8.1% while those with college degrees enjoy a rate of  4.2%.

In “The Case Against Student Loan Forgiveness,” for Forbes, Preston Cooper points out that any sweeping cancellation of student debt would be horribly regressive, benefiting those with advanced degrees the most, since they incur the largest debt.

The most straightforward argument against mass loan forgiveness is that its benefits are skewed towards the rich. The top fifth of households holds $3 in student loans for every $1 held by the bottom fifth, according to an analysis by the People’s Policy Project. In fact, that probably understates how regressive student loan forgiveness might be, because many student borrowers in lower income quintiles are young and will probably earn more later in their careers.

Democrats will be making a monstrous mistake if they attempt to cancel student debt simply to pander to millennials. Republicans made inroads with the working class in the presidential election with their new-found populism and many observers see a political realignment coming, with the left continuing to alienate workers who traditionally voted Democratic.

Cancelling student loan debt for the upper classes on the backs of the working class will only accelerate this trend.

Because nothing says you care about working Americans like forcing them to pay the bill for someone else’s gender studies degree.

This column is republished with permission from Kerry: Unemployed & Unedited.

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55 responses to “Cancel the Student Debt? Kiss the Working Class Goodbye.

  1. Mass cancellation of debt is a moral abomination.

    Let’s put the problem where it squarely belongs — the U.S. created a system that guaranteed loans with no pretense to judging the credit-worthiness of the borrower or the prospects of repayment. Come one, come all. The institutions that doled out this money indiscriminately should be held accountable. Similarly, institutions of higher education have let their costs run out out of control; they have become engines of wealth distribution from their customers to their governing elites. They, too, should be held accountable.

    Yet the people who took on the bulk of this debt did so knowingly. As Kerry observes here, those with the biggest debt are those who pursued advanced degrees, and have the largest earning potential. Debt cancellation truly would be a payoff to the professional classes. I have sympathy for one group only: those who took on debt under fraudulent circumstances, usually fly-by-night for-profit enterprises.

    • But my wife and I do not make $400K per year, so the incoming administration has sworn on a stack of Bibles that we won’t be paying more tax to pay for these promises. I am relaxed….zzzzzzzzzz.

      • >>They taught us that our word was our bond. That when you borrowed money you had to pay it back.
        Looks like those are lessons we also forgot to pass on to our children.>>

        We did a lot worse. Check out Mitch Daniels comments at Butler College in 2009, starting at 4:30

    • “Mass cancellation of debt is a moral abomination.”

      Very true, but not limited to student loans. Each moral hazard leads to the next.

      After the housing crash, multiple people I know walked away from their mortgage obligations. While I understand that many had no other option, many others did.

      I personally know of multiple situations where the individuals let their homes go into foreclosure because they owed more on the home than it was then worth. These were high income individuals. Some bought another home beforehand so they could secure a loan prior to the foreclosure which ruined their credit rating.

      My father was poorly educated but stressed personal responsibility. He warned against borrowing money unless it was absolutely necessary. This advice was followed with, “But if you do borrow money, you damn well better pay it back.”

      I guess my father wasn’t as enlightened as today’s generation. He was born in 1924.

    • Many recent graduates with degrees and high debt are angry. It’s too bad their anger is often misdirected.

      In some cases, I can empathize to a degree. They did what they thought would provide them with a good career and income, but find their degree doesn’t lead them there. They often they find themselves working at menial jobs and unable to pay their loans.

      In my career, I’ve interviewed more people for jobs than I can count, and no longer assume that someone with a degree in an area, has any competence at it. Our education system is failing us.

  2. One of the great cons of modern liberalism is the assertion that college students are children. Children as in minors. You read it all the time … “low income college students …” Almost all college students are “low income”. In fact, college students are adults in every sense of the word. They may have once been the dependent children of low income parents but they are adults by the time they get to college. They are also unlikely to be low income citizens after they graduate given the increased earnings capability a college degree generally confers.

    Kerry is completely right – erasing the debt of adults who willingly took on the debt in large measure to enhance their earnings potential is about as regressive as regressive gets.

    Funny that you never hear a liberal talk about a “low income Marine private …”.

  3. Would SCOTUS ever become involved to countermand such a Biden move?

    • I don’t believe the Constitution has an article prohibiting stupid.

      And in those instances where specific laws or Constitutional principles are violated, they don’t always rule to honor the law, particularly if what would be stricken down is popular.

      Supreme Court Justices were given lifetime appointments to prevent that from happening, but many of our justices don’t like to do things that would be unpopular. In my view, this is particularly true of Chief Justice Roberts. He knows better, but wants to be liked.

      • Being owed money for working for your employer is a property right. Being owed money to repay a loan is a property right. The Due Process Clause of the Fifth Amendment to the U.S. Constitution states “No person shall be . . . deprived of life, liberty or property, without due process of law.” The Fourteenth Amendment, Section has similar language directed to the States. (The federal Bankruptcy statute is based on an express grant of power to Congress under Article I, Section 8, Clause 4 and provides due process to debtors and creditors though elaborate judicial proceedings. But, the advocates of student loan cancellation do not seem interested in having students pursuing relief from their loans through the bankruptcy process.)

        It will be interesting to see how courts will address the cancellation of student loans in the face of claims that such cancellation deprives the lenders of property without any due process.

        Apart from the legality, I wonder whether the beneficiaries of student loan cancellation (if it happens) realize that in the future they may be on the other end of the stick when some other group in the future cries out for a bailout of their debts by the government?

        Besides, if a precedent is set that the government can simply “erase” massive debts by fiat, then there will be a perverse disincentive against making loans in the future. Who would want to make significant, long-term loans if there is a chance that the government would unilaterally grant loan “relief” to the debtors? Imagine the effects of such uncertainty on mortgage loans, car loans, business loans, bond issues, and other forms of debts.

        • Weeeeellll – we had something like this during the Great Depression with the outlawing of the possession of gold and contracts tied to gold clauses. The gold clause was how they protected against inflation and generally had the payment option of getting the old gold amount or a new amount of cash measured by the change in the gold price. The case went to the Supreme Court and it basically side-stepped by saying it was a “private” taking, not a public taking.
          One other thing about the current student debt – I don’t like the debt cancellation for “public service.” Seems to be designed to increase the supply of good little apparatchiks, as I am sure it was intended!
          Make the colleges have skin in the game. They have to eat the uncollected amounts after X number of years.
          Better yet kids – get a job and do Coursera courses…

        • Regarding the wisdom of student loans cancelation, I think we are in agreement, but my response was not about that. The post I was responding to was about the Supreme Court.

          Much of your post was about canceling loans from the private sector. I don’t think you have been paying attention. The U.S. Government owns most of the debt now.

          The Federal Government as Creditor
          As of July 8, 2016, the federal government owned approximately $1 trillion in outstanding consumer debt, per data compiled by the Federal Reserve Bank of St. Louis. That figure was up from less than $150 billion in January 2009, representing a nearly 600% increase over that time span. The main culprit is student loans, which the federal government effectively monopolized in a little-known provision of the Affordable Care Act, signed into law in 2010.

          https://www.investopedia.com/articles/personal-finance/081216/who-actually-owns-student-loan-debt.asp#:~:text=As%20of%20July%208%2C%202016,increase%20over%20that%20time%20span.

  4. This is particularly irksome to me (and, I am sure, many others like me). After leaving college, I immediately began paying back my student loans, and I had them paid in full two years before the deadline. Making student loan payments was definitely a financial burden for me and it took some personal sacrifices to make the payments each month, but I never once considered trying to get out of paying. I alone took on the debt and all associated repayment requirements when I signed my name on the loan papers.

    I think it is beyond outrageous for anyone to suggest that people should not be held responsible for paying back debts which they voluntarily incurred.

    • I don’t know that “voluntarily” is the coorect word. It was more of a hobbsian choice.

      • Hardly. They might not have liked the other choices available to them, but that is not the same thing as having only one choice available to them.

      • I went to work after high school and saved money for college. It took me 6 years, but it’s an option.

        High school to college is an expectation, not a requirement.

      • The individuals chose the area of study which they wanted to be conferred a degree. If they were not aware of the cost of said education and weighed it against their project compensation following graduation, perhaps they shouldn’t have attended college in the first place.

        • MDs are racking up $200,000 in debt. I’d say that most of them did a cost analysis.

          • Physicians (M.D.’s and D.O.’s) are not degrees in hospitality management from a private college to the tune of $40k a year while knowing your compensation won’t touch that.

  5. “I can’t work! I’m trained to think!”

  6. Baconator with extra cheese

    I sacrificed to pay back my loans well before the deadline. I also have sacrificed to pay for my daughter’s education and only had one child to be able to provide for that child. This is a source of great personal pride and satisfaction.
    I guess I got it all wrong. Damn my privilege.

    • Yeah. Don’t you feel like a chump? I know I do.

      We have obviously wasted our lives by striving to be responsible and productive citizens, and by working to instill these traits in our children.

      😉

      • Baconator with extra cheese

        Yep. Maybe us good tax payers should just vote for freebies and embrace the YOLO (you only live once) lifestyle. Let the pro athletes and actors pay for it all…. businesses will be offshoring soon enough.
        Smoke the weed, get some guranteed income, wander over to the food pantry, etc…
        I am waiting for free college so I can go live in a dorm somewhere… free food, heat, and wifi… plus plenty of eye candy!

        • I don’t think ANYONE is advocating for free dorms or food.

          Tuition-free.

          Which, of course, actually makes sense from a $ pov. The average college graduate made $1.5 MILLION more than the average high school graduate in their lifetime for our generation.

          What’s 5.75% of $1,500,000?

          • “I don’t think ANYONE is advocating for free dorms or food.”

            …until AFTER they manage to extract free tuition from the taxpayers.

          • A battle to fight that makes sense once the one that doesn’t make sense is done.

            The point is, Wayne, that someone in my time, who did not attend college to save $12,000 in tuition cost the State $65,000+ in lost tax revenue.

          • I understand your point about [potential] lost tax revenues, but I am a firm believer in “camel’s nose in the tent” syndrome.

            Today’s free tuition is tomorrow’s free housing is the next day’s free food is the next year’s guaranteed minimum salary and a boat.

          • I like the boat idea, but it would be cheaper to give them a crack habit.

            Actually, I had it backwards. Had I chosen to not go to college because I could not afford the tuition, then they would have been out the $12K (more like $10K) and the nearly $80K in taxes.

            I’m against the loan forgiveness, maybe some reform, but tuition is the government picking winners and losers again.

          • I am not as hard-core as some people on this issue. I would support locking in a uniform (and low) mandated interest rate for student loans, and even extending the pay-back period for people who are genuinely struggling.

            But if the government starts wantonly offering total loan forgiveness, I may have to transition to a “wartime footing”.

          • What under your plan restrains the colleges from adding hundreds more administrators and padding their costs to be reimbursed by the government? Pretty much what happened over the past 20 years when they figured out how much money their students would be lent under federal loan guarantees.

          • I dunno. Does it work that way with the military? Admin always has the newest buildings, best parking, and just about everything else. How do you stop them in any other “business “.

            But tuition at a State school is punishing to the working poor with the ability to excel. And, unnecessary.

            The difference between the fed guarantees and state funding is that the state has the carrot and the stick. The lenders don’t care if the kid graduates or not. The state can.

        • I’m going to adopt a new role-model:

          I’m going to be like “The Dude” from The Big Lebowski.

      • I certainly do, while I didn’t pay it back ahead of schedule I paid every month for 10 years to absolve myself of student loan debt.

    • As did I, and as I have pointed out to Ms. Kerry in the past, you cannot do today what we did in the 60s and 70s.

      We had a workable minimum wage and State supported schools.

      It took me 6 years for a 4-year degree. I graduated with $100 in the bank and $40 debt on my credit card.

      I worked part time, year round, for a little more than minimum wage at one job, (in earlier comments I said “minimum wage”, but since then I looked at my 1040 from 1972 (the oldest I had) and looked up the 1972 minimum wage. I made $0.10/hr more at my part time job), and a full time, minimum wage job during the summers and for two semesters where I had to stay out to bank money.

      I averaged about 1900 hours per year while attending. Do the numbers based on 2020 minimum wage and 2020 tuition at, say, JMU. Good luck.

      • What was minimum wage in 1972, $1.15?

        When I started my first job in 1977 I think its was $1.25.

        That brings back memories. It just occurred to me that I’ve been paying in to FICA since I was 13 years old.

        • Well, the charts say $1.60 and my W2 from my part time gig, based on 5 to 9 m-f, and 12-8 on Sunday came to $1.72, but I did get raises, so. But, I can’t say I didn’t average 28 hrs.

          But, it wasn’t until my Junior year that I stroked a $1000+ check for tuition. That I remember. I think most of my tuition was around $8-900. First two years, I paid cash.

          • you are correct. My first job was as a farm worker which until sometime in 1977 had a lower minimum wage rate than other jobs. The more I think about it the more I remember getting a big (for me) pay increase just a couple of months after I started. I think minimum wage went to $2.30 and farm jobs were given parity.

  7. College should be two things; cheap, possibly even subsidized, and hard as crap!

    • That won’t do it. Lots of things are hard, but worthless.

      – Those teaching must have the knowledge and skills. Sometimes adjuncts can be better if they bring real world experience

      – The instruction must lead to careers that benefit society. I see no value in most of the ____ Studies programs. We don’t need 10s of millions of professional social justice warriors.

      – The instruction should support the traditions and values that have produced this country’s wealth and freedom, not tear at them.

    • “College should be two things; cheap, possibly even subsidized…”

      Absolutely not! I am becoming less and less willing to contribute a dime to this nonsense. Higher Education has lost its way and must change or be defunded.

      The Office for Inclusion and Diversity
      Organizational Chart

      https://www.provost.vt.edu/content/dam/provost_vt_edu/inclusion-and-diversity/oid-org-chart.pdf

      I honestly think the only way to bring about significant change if for massive reductions followed by layoffs of those sucking the life out of our institutions of Higher Education. Higher Education has forgotten its mission. It won’t change until its very survival is threatened.

    • I think you may very well get half of your wish. But with the new “social justice” mindset being so prevalent among our country’s “leaders”, college will almost certainly not become “hard as crap”. If anything, it will become more like the 13th grade.

  8. If not cancellation, could student loan bankruptcy rules parallels other debt types? I am especially sympathetic to those who attended predatory schools. I’m referring to schools that exaggerated earnings potential, overstated degree value, and downplayed final costs. I believe some grace is due to the bamboozled 17 year old investor.

  9. Baconator with extra cheese

    It’s a good thing then Norfolk State had a 37.8% graduation rate! ODU proudly comes in at 50.5%.

  10. Baconator with extra cheese

    Makin’ more millionaires in Hampton Roads! Enroll all the kids for free at NSU and we solved poverty right?

  11. 1) “The most straightforward argument against mass loan forgiveness is that its benefits are skewed towards the rich. The top fifth of households holds $3 in student loans for every $1 held by the bottom fifth, according to an analysis by the People’s Policy Project. ”

    2) “Biden wants Congress to act by cancelling $10,000 for each borrower”

    You realize the structure of #2 specifically addresses the problem raised by #1 right?

    If the “problem” is that rich people have $50,000 in debt per person and poor people have $10,000 in debt per person, then forgiving $10,000 in debt per person solves the problem, especially when more poor people have student loan debt. The only reason the “rich” have more debt is because it’s much higher per person, the # of people is actually far lower.

  12. One good thing about Kerry’s opinion: in the last two years she has come to realize that most students aren’t spoiled brats wasting their parent’s money and are just racking up debt instead. A silver spoon that large could pay off the current student loan debt.

  13. Proposals like $200 pharma gift cards and $50k student loan forgiveness are consequences of a political system that rewards politically expediency rather than addressing structural problems. These ideas both perpetuate and propagate poorly designed systems.

    Resource allocation has tradeoffs, even if they’re not explicit. With seemingly no constraints on deficits now, there is an illusion of zero tradeoffs. The result is policymaking that, in using band-aids, weakens public demand — and hence political will — for needed reforms.

    It’s hard to argue against band-aids. People like the relief. Industry likes more revenue. But these systems need real reform because they waste 100s of billions of taxpayer & consumer dollars better spent elsewhere and, more importantly, these systems are hurting a lot of good fine folks.

    If we believe there’s a chance of real, revolutionary reform, then we need to agitate for that immediately and vigorously — I’d like to see us in the streets over this just as much as we were in January over the Virginia AWB. But if we believe we’ve been sold down the river already and there’s effectively zero chance of wholesale corrective action, then, well…BS band-aids are probably better than being miserly and snide toward our indebted youth.

  14. James Wyatt Whitehead V

    Look at the bright side. The path to limited government might be found in a overspent and broke government.

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