Sunday, September 29, 2019

Warren's Student Debt Plan Won't Work

Cooper is basically correct in his criticism of the Elizabeth Warren college debt relief plan. His key points:

1) It would cost a lot, over $600 billion as a low estimate. We don't have this money in the federal budget, and her proposal for a wealth tax to fund the plan is iffy.

2) The largest debt relief would go to those with graduate and professional degrees

3) In the wake of any mass debt relief, there's a good chance that students would simply take on more debt, knowing it would get canceled in the future with another debt relief program

4) Colleges would probably raise tuition, knowing that debt relief might happen down the line

5) The debt relief only covers tuition, and not other costs. Cooper cites a survey that shows that public college students who quality for free tuition today still borrow an average of $24,000 to pay for room and board.

6) The debt relief doesn't cover private colleges and graduate school

I happen to agree that we don't have any choice but to forgive some, most, or all college debt. We have to put our collective heads together and figure out how to do this. Some ideas include colleges spending their endowments, wealthy donors and employers kicking in money, selling off college assets, etc. Anything except to put the taxpayers on the hook in a major way.

I'm generally in agreement with those who say people shouldn't be allowed to welsh on their debts. But in the case of higher ed it's debt they shouldn't have been forced to get into in the first place, because of the obscene and indefensible costs.

Warren's and all the other debt relief proposals (including that of Bernie Sanders) don't address the costs of college. It's the astronomical costs, not just debt that's the issue with higher education. 

I will deal with the costs of college and how to reduce them in a later post. 

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