September 2, 2022 | OPINION | By Karly Hamilton
When I first heard about Joe Biden’s plan to cancel student loans, I was dazed and confused. I’m still not sure how a one-time cancelation of debt makes higher education more accessible for future college applicants (answer: it doesn’t), but after reading more about the cost of education over the years, I understand more of the logic behind it.
In 1972, the cost of tuition, fees, room, and board for a private college was about $18,580 in 2018 dollars. The cost to attend Colorado College for the 2022-2023 academic year is estimated to be $83,228.
A “Time” article explains that while inflation has risen over the years, college tuition has increased more. This is true for public and private institutions.
“When House Minority Leader Kevin McCarthy, who called the policy a ‘debt transfer scam,’ graduated from California State University, Bakersfield in 1989, tuition was less than $800,” the article reads. “Today, it’s more than $7,500, a 400% increase when adjusted for inflation.”
Knowing this, I think I better understand some of the disconnect for people opposing student debt cancellation. Getting an education was cheaper decades ago, and tuition prices continue to rise each year. As such, I can see how someone who graduated in the 1980s cannot fathom having tens of thousands of dollars in student debt when their own tuition was likely less than CC’s expected costs of textbooks today.
Of course, CC being a small liberal arts school and private institution means tuition is higher than many large, public colleges and universities. For example, tuition, room, and board at CU Boulder is expected to be about $30,452 for this academic year.
The high sticker price on college education is also due to a change in the government subsidizing secondary education. The American Council on Education reported that Colorado lawmakers cut state funding for education by 70% between 1980 and 2011.
With this in mind, it’s not shocking to hear that more people are taking out student loans in today’s atmosphere relative to 1980, or that the loans themselves are larger. Per the Education Data Initiative, 14.8 million millennials have student loan debt, more than any other generation, totaling about a third of the millennial population.
With all this debt, what does Biden’s announcement actually mean?
Student loan forgiveness will only apply to single borrowers who earn less than $125,000 annually, or less than $250,000 for married couples. Individuals who meet this requirement are eligible for up to $10,000 of student loan debt forgiveness, and those who were Pell Grant recipients are eligible for up to $20,000 of loan forgiveness. To receive this forgiveness, borrowers need to apply by Nov. 15 to lower or eliminate their debt before the loan payment pause ends at the conclusion of the calendar year. Additionally, about 8 million people will have their loans automatically forgiven because their income is already on file.
The question now becomes, how much will this cost?
According to the Congressional Budget Office, the federal deficit in 2020 was $3.1 trillion, with reported revenues of $3.4 trillion and outlays of $6.6 trillion. Of that, $526 billion was recorded as going toward the Paycheck Protection Program (PPP), forgivable loans made to businesses during the pandemic to cover payroll costs or other expenses.
Meanwhile, the Wharton School of the University of Pennsylvania published a brief predicting that a one-time student debt forgiveness as Biden has outlined it will cost about $300 billion. If the borrower income limit is eliminated and the forgiveness is extended over the standard 10-year budget window, the brief predicts the cost would rise to $344 billion.
Even the more expensive of these plans is less costly than PPP was in 2020. By no means does that make this an inexpensive venture –– it will be quite costly. But in comparison to other areas of government spending, it will not make as big a dent as I originally thought.
I still don’t know how I feel about student loan debt forgiveness. A one-time forgiveness is something I can try to wrap my head around, but if this becomes a long-term program, I find it harder to understand. There are better ways to address the cost of higher education than having people take out loans and later forgiving them—all that does is put a Band-Aid on a bullet wound.