The Debt Forgiveness Distraction

The student loan forgiveness debate is back with a vengeance. Progressives hope student loan forgiveness will finally become a reality under a prospective Biden Administration. The Biden campaign wants immediate forgiveness of $10,000 for economically distressed borrowers. Senators Elizabeth Warren (D-Mass.) and Chuck Schumer (D-N.Y.) favor forgiving up to $50,000 per borrower in federal student loans.

The debtors themselves usually favor these plans. But Americans who will pay for this forgiveness are skeptical. They argue that students chose to go to college and go into debt—it’s unfair to make more fiscally prudent citizens pay for students’ debt. At most, they suggest ameliorating the crisis with limited responses such as reforming repayment programs and debt forgiveness of no more than $5,000 per student.

None of these recommendations fix the underlying dynamics that produced the student debt crisis in the first place. The current debate overlooks the true issue: higher education’s increasing dominance as the gatekeeper to good jobs.

In 1973, fewer than 30 percent of American workers had any postsecondary education. By 2018, that number had increased to more than 60 percent. A Georgetown report projected that 65 percent of job openings in 2020 would require some postsecondary education. Some of this change reflects America’s demand for a more educated workforce. Our country needs more software engineers than it did in the 1970s.

But these numbers also reflect a more disturbing trend. High school graduates once qualified for positions as secretaries, dental hygienists, and manufacturing workers. The jobs have not changed significantly, but employers increasingly require applicants to possess a postsecondary degree. 

Master’s degrees have increasingly replaced bachelor’s degrees as the entry-level requirement for positions in research, engineering, and other leadership roles. The federal government is among the worst culprits of degree inflation: 30 percent of federal employees now hold a master’s degree, more than double the proportion 25 years ago.

The 1971 Supreme Court ruling in Griggs v. Duke Power Co. produced much of this change. Because of that ruling, companies could not administer educational or other testing requirements if the outcome negatively affected a protected class. Employers turned to college degrees as an intelligence-test proxy that wouldn’t expose them to discrimination lawsuits.

Americans without college degrees have fewer employment opportunities—and they can expect their opportunities to shrink further. Outsourcing has reduced the number of jobs that don’t require a college diploma and mass immigration, which increases the labor supply, has reduced the wages of those fortunate enough to secure a job. 

Entrepreneurship provided an escape from the Griggs trap—only about half of business owners have postsecondary education. But the COVID-19 lockdowns have decimated small businesses while large corporations flourish. Small business was the best remaining refuge for risk-tolerant frontiersmen, but it may never recover.

Higher education’s gatekeepers also take advantage of their power by forcing students to endure social justice orthodoxy, as part of the price to keep a foothold in the middle class. Access into the American elite requires enthusiastic endorsement of the radical progressive worldview, as well as collaboration in America’s regime of increasingly oppressive technocratic censorship. The rise of social justice activism is another story—but universities could not impose it if they didn’t have a gatekeeping monopoly on access to good jobs.

Student debt forgiveness does nothing to change this status quo. The student loan system provides an illusion that young Americans can still achieve the American dream. But instead, it creates a class of indebted renters who struggle to build the wealth of previous generations, all while universities continue to gouge and propagandize.

Unconditional debt forgiveness would only encourage colleges to continue to increase their costs. They know that students will be even less afraid to borrow if debt forgiveness is offered once. At best, it shifts the burden between student loans and taxpayer subsidies.

But prescribing “personal responsibility” is not an adequate answer to the higher education shakedown. As more jobs require higher education, students will be forced to choose between a life of indebtedness or a life with extremely limited opportunities. We have to offer Americans better choices.

A lasting solution to the student debt issue must restore economic opportunities for citizens of all educational levels. The Griggs ruling should be loosened so that employers can substitute employment tests that don’t require students to take on crushing debt. Universities should be made financially accountable for the debts of ill-prepared students who drop out of college. States should redirect taxpayer support away from institutions that refuse to slash propaganda such as social activism classes.

The current debt forgiveness debate is a distracting sideshow. We need to prevent students from taking on massive debt in the first place. We must remove universities’ power to act as irresponsible, gouging gatekeepers.

That’s the only way truly to give Americans hope for a better life.

About Neetu Arnold

Neetu Arnold is a research associate with the National Association of Scholars. Follow her on Twitter @neetu_arnold.

Photo: Getty Images

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