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Gabriel Karam was named the Outstanding 2020 Graduate for the University of Maine’s School of Business. He lives in Bangor and works at a local financial institution.
With President Joe Biden’s announcement of student loan forgiveness of $10,000 to $20,000, many Americans have cause for celebration. This provides relief for working Americans who have been overwhelmed with student debt.
However, while being well intentioned, I believe this plan is unfair to Americans who have already paid their student debt, is an overstep of presidential authority, and will exacerbate national debt.
This national plan is estimated to provide assistance for more than 40 million Americans. However, this is estimated to cost the federal government up to $500 billion.
The federal government has already spent more than $2.5 trillion in COVID related expenditures over the past two years. In response to Vladimir Putin’s assault on Ukraine, the U.S. has spent an additional $4.5 billion for foreign assistance. The federal government had a 45 percent increase in spending from 2019 to 2020, and spent 68 percent more than its annual revenue in fiscal 2021.
Federal spending has seen a large increased trajectory over recent years. U.S. inflation for 2021 was 4.7 percent, which was the highest rate since 1990. This parallels the stagflation of the 1970s. Such immense inflation contributed to higher gas prices, grocery expenses and other costs for Americans. The Wall Street Journal notes how wages cannot match rising inflation rates.
Paying $300 billion to $500 billion in student loans, from taxpayer revenue, would only increase federal spending and the national debt, and may worsen inflation.
More international students in the U.S. are choosing to stay and work in the U.S. upon graduation. Pew Research indicates that from 2004 to 2016 there was a 5.2 increase in the number of international college graduates in the STEM fields who sought work authorization to stay in the United States upon completion of their degrees. The National Science Foundation similarly indicates that there may have been a 35 percent increase in international doctorate graduates choosing to stay and work in the U.S. from 1995 to 2015. Such widespread student debt forgiveness could result in an influx of international students incentivized to attend U.S. universities for debt forgiveness, and return to their home countries to compete against America.
Jason Furman, a Harvard economist and economic advisor for President Barack Obama, believes that Biden’s decision could result in higher college tuition rates. As quoted in The Atlantic, Furman says that this “will … raise college tuition, as colleges move to capture [increased spending in loans, instead of through grants].” With the possibility of more students enrolling in universities due to loan forgiveness, universities could reciprocate by increasing tuition.
This student loan forgiveness is not equitable for many others, including those who have already paid for their education. Students who have paid for their education through a combination of achieving merit scholarships, working during college, attending less prestigious schools, and/or other means, will not receive $10,000 to $20,000 in their tuition reimbursed. Students who have obtained tuition assistance through their employers or from military service earned this through personal sacrifice or deliberate choices. Now, millions of Americans who took student loans will have tens of thousands of dollars of debt forgiven, which other Americans who have already paid for their education through diligence and sacrifice will not see.
This debt forgiveness is also not fair to Americans who never attended college. Now, working-class people and tradesmen will support millions of other Americans’ college education, which they never partook in. Like other forms of debt, attending college (or taking out loans) is a personal, non-mandatory choice.
Biden’s groundbreaking decision was too large in scope for one individual to make, even the president. A decision impacting millions of Americans and involving billions of dollars in spending should have been a decision for the American people, or at least Congress. Article I, Section 8 of the U.S. Constitution delegates Congress to have control over the nation’s commerce.
Biden’s sweeping decision is an overstep of presidential authority. Although well intentioned, this decision exacerbates national debt, presidential power, and inequity for those who have already paid for their education or never attended college.
