The sales pitch: "President Biden on Wednesday announced a plan to erase thousands of dollars in student loans for borrowers, aiming to help more than 40 million Americans who owe a combined $1.7 trillion in debt."
The reality: this cost is being passed from people who assumed debt voluntarily to people who did not consent. The debt is not going away. The process of quiet inflation and taxation is a scheme to buy votes from people who only see the loud sales pitch. We also can't ignore the fact that an election is only a few months away, and this smacks of posturing and pandering rather than serving the "public interest," whatever that may be.
Further on in the article linked above, the author writes, "Student debt has soared in recent decades as rising higher education costs have far outpaced inflation. And loan programs haven't kept up, with the Biden administration noting that Pell Grants once covered almost 80% of the cost of a public four-year college, but today only provides enough support to pay for one-third." Nowhere do they ask why government is in the business of moneylending, why these costs have outpaced inflation so dramatically, or whether easy credit and government subsidies might be the root cause.
Reporters and analysts also ignore the deeper implications and consequences of this policy. What economic signal does this send to future borrowers and lenders? Will this encourage people to be more fiscally responsible, or will it reward poor decisions on the part of both universities and students? Many degrees are literally worthless, and others have been over-promoted to the point of flooding the market.
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My generation was told the path to success was through a diploma, and now the same people who mock Millennials for being the "participation trophy generation" want to reward some for the failure they thrust upon us. "Hey, we sold you a bill of goods, but see? We're wiping off some of that for ya." Where is the recognition that we were told half-truths about the benefits of these degrees? If a degree won't pay for itself, some acknowledgement of falsehood is in order.
This also clearly benefits a specific class of people: college students. What about people who did not choose the debt because they saw more benefit in immediate earnings in the trades? Take auto mechanics, for example. If this were a Snap-On loan forgiveness program, it would be a more blatant handout to specific borrowers and lenders. It would also be a more obvious political move to buy blue-collar support while handing money to corporate interests. It is much more subtle, but no less real, under the new Biden policy.
There is no denying we face real problems in the American education system, but this kind of political grandstanding does not address any of the real root problems or encourage the necessary changes we need in a modern world. The solution to degree inflation is the same as money supply inflation: stop the presses and stop increasing debt.
Let the consumers see real prices without manipulation and obfuscation so they can make rational economic calculations with better information. Education doesn't even need to come from accredited institutions for most careers. It has never been easier to learn, and it is time to stop subsidizing legacy models with easy credit and taxpayer funding. If you want to pursue engineering, medicine, or law, a university degree will likely continue to be the best process. Gender studies, history, and business degrees are less useful in the real world, and seem primarily to serve the interests of bureaucracy rather than the market. The only way to reveal these realities is to stop covering them up with subsidies and bailouts, just like what should have occurred with corporate boondoggles in previous recessions.
Remember, everything the government has is stolen, and everything they give must be taken from someone productive, either through taxation or inflation. Every promise made in politics is a lie.
The state—or, to make the matter more concrete, the government—consists of a gang of men exactly like you and me. They have, taking one with another, no special talent for the business of government; they have only a talent for getting and holding office. Their principal device to that end is to search out groups who pant and pine for something they can’t get, and to promise to give it to them. Nine times out of ten that promise is worth nothing. The tenth time it is made good by looting A to satisfy B. In other words, government is a broker in pillage, and every election is a sort of advance auction sale of stolen goods.
—H.L. Mencken, “Sham Battle,” published in the Baltimore Evening Sun, October 26, 1936
