With student debt cancellation, Biden admin is preparing vast gifts to the better off

Minnesota’s own Rep. Ilhan Omar urged the Biden administration to cancel federal student loan debt last week. As the NAACP helpfully pointed out, one of the beneficiaries of such a measure would be Rep. Omar herself. Rep. Omar currently earns $174,000 a year and has a reported net worth of $3 million. The fact that a person in such a position should be agitating to have taxpayers pay off a debt she willingly incurred highlights the gross unfairness of plans to ‘write off’ student debt.

Student debt is taken on willingly. Nobody forces you to borrow it. Yes, you may be led to believe by a great many people that a college education is the only path to prosperous adulthood, but there are tens of millions of Americans who didn’t fall for that and it isn’t fair to expect them to bail you out.

Rep. Omar spoke about student debt shackling people, but of course, if that debt is the cost of learning a skill that enables you to earn more, it isn’t a “shackle” at all. Again, it isn’t clear why someone who didn’t choose to run up a debt upskilling themselves should have to pay for you.

(My fix to this problem would be to restore the bankruptcy protections to private student loans, which they had prior to the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act in 2005, which was supported by then-Senator Biden).

The facts are that, on average, a college degree does increase your earnings. That is partly why the overwhelming majority of student debt is held by the affluent; nearly 40 percent of it is held by students who earned advanced degrees — many of them now doctors and lawyers. Unemployment for the college-educated is less than 2 percent. By contrast, the bottom third of earners hold less than 10 percent of student debt.

Plans to ‘cancel’ student debt are plans for a vast transfer of wealth from the less well off to the better off. A lawyer earning $100,000 with $200,000 in student loan debt will be bailed out by an auto mechanic who got her $60,000 a year job without running up college debt.

You often hear about fiscal policies that benefit ‘the rich’ at the expense of ‘the poor’: student debt cancellation is that policy.