By Jane Brady – Chair of the Delaware Republican Party
There was a time when a person’s ability to pay back a loan was one of the most significant factors in determining whether to give them credit. That was true even for student loans. Prior to the government agreeing to secure those loans, parents were required to cosign any loan for their student’s education. After all, what bank officer would offer credit to a young person with no experience, no income and no or few assets? Not a solvent one, that’s for sure.
When the government decided to offer security for student loan debt, they disconnected the amount students could borrow from their ability to pay. As a result, market forces were no longer affecting the amount of tuition colleges could charge and tuition and other costs of education skyrocketed.
What we have now is a situation where some people owe a lot of money. The Biden administration is giving serious consideration to excusing up to $50,000 in student debt for each borrower. Who are these individuals that might have their debt excused and how much do they owe?
First, the highest-level income families owe the most debt. And, the vast majority of student debt is owed by students who attended private school or received graduate degrees. Of course, these are the very individuals that will have the resources in the course of their careers to pay the loans back.
Essentially what the government will be doing if it excuses that debt is taking $1 trillion off of the government’s balance sheet and putting it on the backs of taxpayers.
Apart from the fact that the President will be obligating all of us to pay for those individuals’ education, there are significant inequities in the student loan forgiveness policy. The first is that it does nothing to reward those individuals who have and do honor their legal and moral obligation to pay their debt. It rewards those who chose to spend the money they could have used to pay their student debt in other ways. The second is that those who did not attend college and who secured their experience or education through other programs are not included. Further, given that the majority of debt is held by high-income families and households, this is among the most regressive of solutions; that is, it benefits the higher income families more than it does lower income families and households.
What many politicians have not discussed is that there is a program already in place that provides a safety net for people who aren’t doing well financially and owe student debt. The government will establish income-based repayment plans where their payments are tied to their income. Some borrowers may actually have zero payments when they fall into some of the lowest income brackets until they are able to improve their financial situation
That is certainly a far more equitable, a far more fair way to resolve the issue of student debt. Let’s not give a boon to the higher-income families and those who made poor choices about their borrowing practices. Let’s encourage a sense of responsibility to meet legal and moral obligations
Jane Brady is the Chair of the Republican Party and is a lifelong Delawarean and Republican. She has lived and worked in all three of Delaware’s counties throughout her lifetime. Jane served as Attorney General from 1995-2005, the FIRST Female elected to that position in the State of Delaware. From 1977 until 1990, she served as Deputy Attorney General in the Delaware Department of Justice.