November 24, 2020

What About Tackling the Causes of Student Debt?

Emergency financial support for state and local governments would reduce the need for the kind of university budget cuts that have led to steep tuition increases and more borrowing during past recessions. Mr. Biden has also proposed doubling the size of the federal Pell grant program for low-income students.

All of these depend on Senate approval, which is far from a sure thing. Collectively, they would substantially reduce indebtedness among undergraduates attending public universities.

But this would miss a big part of the problem. Less than a third of student loan dollars are borrowed by such students today. Much of the borrowed money goes to private nonprofit universities, for-profit colleges, graduate schools and professional schools of medicine and law. While Mr. Biden has promised to crack down on predatory for-profit schools, that sector is much diminished from its enrollment peak in the late 2000s. The Biden plan leaves the sources of most future student debt untouched.

There are ways to reduce that kind of borrowing, too, but they are much more politically complicated.

Congress could limit the size of loans for graduate and professional schools, but that would anger influential research universities and the powerful medical and legal establishments. The federal government could stop lending people money to go to colleges that tend to load up students with debt they can’t afford to repay — not just in the for-profit sector, but among public and private nonprofit colleges, too. Using detailed information that is now available, colleges themselves could give much closer scrutiny to certain programs where students borrow a lot and then struggle to find jobs with a good salary.

All of this would incite fierce opposition. As much as student debt is lamented in the abstract, every dollar that students borrow goes into someone’s pocket, and those people and institutions know who they are.

Mr. Biden’s free college plan would involve tough negotiations with states that may balk at contributing their financial share of the new program. The experience of states opting out of Medicaid expansion under Obamacare shows that even extraordinarily generous federal subsidies — larger than that envisioned in the college plan — can’t always overcome ideological opposition to government spending.

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