President Joe Biden should cancel student loan debt. As Congress continues to pass COVID-19 relief packages, students — many of whom have continued to pay in-person rates for a virtual education — are eager for long-term relief. In the United States, student loan borrowers collectively owe more than $1.7 trillion in debt, an amount greater than the gross domestic product of Australia.
It is helpful to think of student loans in this international context because of how much debt American graduates carry. In 2019, the average debt amount for an individual college graduate in the United States was more than $32,000 — greater than the average for almost any other country’s graduates. Though this issue may seem less urgent for UC and CSU students — who are less likely than students in other states to graduate with debt — students of color and low-income students in these systems remain more likely to take on student loans, with an average of more than $22,000 at graduation.
While all families have been feeling the effects of increased college spending in recent years, a study from Sallie Mae found that the rate of increase from the 2018-19 academic year to the 2019-20 academic year was higher for low- and middle-income families than it was for high-income ones. Annual college tuition at private institutions currently hovers at an average of about $35,000, while tuition at public schools costs about $9,700 for in-state students and $21,200 for out-of-state students.
These amounts include neither room and board nor other living costs. UC tuition costs nearly $4,500 more per year than the national average for public in-state attendance, and that figure does not take into account that several UC campuses are located in or near the most expensive cities — such as San Francisco, Oakland, San Diego and Los Angeles — in one of the most expensive states in the country.
For too long, students have become the financers for public universities’ year-over-year cost increases as state funding decreases. Since 1985, the cost of attending college, whether private or public, has more than doubled. Compare this to the U.S. annual rate of inflation, which has fluctuated between 0.12% and 3.14% in the last decade, and the rate of wage growth, which has been consistently positive for only 10 of the last 40 years. As a result of the mismatched rates of increase, students have had to take out more than double the amount of loans compared to their 1985 counterparts.
This would be all right, perhaps, if the quality of education was improving. In the UC system, a significant portion of student fees goes toward enriching campus administrators. A 2017 audit showed the UC Office of the President had provided employees with “generous salaries” and “atypical benefits” and had increased administrative spending by 28% in three fiscal years. Although some of these additional staff members are needed to support demographics of students that higher education institutions are not prepared for, many top administrators — often not students’ first choice when asking for support — earn salaries similar to those of their private sector counterparts.
Of course, those who believe student debt is not an urgent issue may point out that the United States is not the most expensive country for university and that the average American’s student loan debt is lower than at least one other country’s. In both instances, the United States is second only to the United Kingdom. In Britain, however, graduates only begin to make loan payments once their monthly income has hit a certain threshold.
Contrast this with our system, which requires payment to begin six months post-graduation and therefore pushes a considerable number of students to take the highest-paying position available, regardless of whether it connects to their area of study. In Australia, where the cost of tuition is low and loan repayments are based on a sliding scale relative to the graduate’s income, loan defaults are rare and loan repayment happens faster. While the UK offers student loan forgiveness for all borrowers based on age or time spent repaying, people in the United States with student loan debt may spend 20 to 40-plus years repaying their debt, and those in the upper end of that range pay more in just interest than the original loan was worth.
Having such high levels of student debt puts Americans seeking expanded professional opportunities in a precarious situation. Graduates unable to pay back their loans will likely see their credit scores go down, which can make it difficult to purchase basic but more expensive necessities such as a car or home. At this point, it seems that opting out of higher education is simply not an option, as the effects of not going to college include higher rates of unemployment, lower salaries and a higher likelihood of living in poverty.
Canceling student loan debt, whether outright or, as other countries do, after a set number of years, would go a long way toward ameliorating the health outcomes of those suffering its attendant negative psychological and physical effects. Among the many ways stress can affect students with loan debt, people with debt are constantly performing mental calculations to ensure that they will be able to afford the costs of daily life, creating an additional mental tax.
People with debt also often feel isolated and are more likely to suffer from depression and severe anxiety. Add this to the fact that those diagnosed with mental health issues are more likely to have trouble with debt, and beginning life post-graduation with debt can become a never-ending cycle. But research has shown that debt relief can improve cognitive functioning and thereby enhance job performance — results that have the potential to expand professional opportunities and alleviate some of the strain on a health care system that already leaves many behind.
One possible solution would be for the government to assume the debt before providing tax credits to institutions tasked with collecting from borrowers. The United States could also look to many other countries for sustainable ways to finance higher education. Though canceling all student debt would be a bold step, it is vital that the government address the inequities the current system perpetuates.
Earlier this year, Biden walked away from $50,000 in debt relief in favor of $10,000. His most recent proposal, the American Families Plan, makes no mention of student loan debt forgiveness at all. Biden won the election fighting for the soul of America, but his failure to take direct action on this issue essentially commits college graduates to selling their souls to the highest paying job or worse, student loan servicers such as Navient.