President Joe Biden‘s student loan cancellation program is widely seen as providing financial help for the 43 million people with college debt, but it’s also a major financial boost to the higher education system.
Critics of Biden’s plan say it will further incentivize colleges to raise tuition and encourage future students to take on more debt hoping for future rounds of cancellation — all of which will lead to more money running through America’s higher education system.
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“I guess what I find annoying about it is that it doesn’t address the higher education cartel,” MSNBC political analyst Elise Jordan said during an appearance on Morning Joe. “And it basically is infusing money into a higher education system that is basically just corrupt at this point. You look at how much tuition has just skyrocketed over the last 20, 30 years.”
The Committee for a Responsible Federal Budget estimates that Biden’s unilateral student loan program will cost $500 billion in taxpayer dollars. Its president, Maya MacGuineas, made a similar point about the program’s downstream effect on colleges.
“It would do nothing to actually make education more affordable, and if anything, this policy will drive up tuition costs while raising prices on a variety of other goods and services for ordinary Americans,” MacGuineas said.
Roughly 43 million people hold a collective $1.7 trillion in student loans, and the average price of attending a public college has risen from $1,410 annually in the early 1970s to $22,690 for in-state students today. At private colleges, the cost rose from $2,930 per year in 1971 to $51,690 in 2021.
Biden’s plan includes an income-based repayment cap in which borrowers would pay no more than 5% of their income, but that, too, may encourage borrowers to take on more debt than they would otherwise. The White House has further discussed increasing the size of Pell Grants, which would also increase the amount of funding available to colleges.
Critics say one reason the White House’s student loan plan does not include efforts toward tuition caps or curtailing the true costs of college may be that the higher education sector is a major benefactor of Biden and Democrats.
Biden received more than $64.5 million in contributions from people in the higher education sector during his presidential campaign in 2020, making him the top recipient by a large margin, according to data compiled by OpenSecrets. Overall, Democrats have been responsible for 70% of all political contributions from groups in the education industry since 2002.
The president and the White House also have ties to some prominent Ivy League schools. In 2017, then-University of Pennsylvania President Amy Gutmann appointed Biden as a professor for $911,000, even though he didn’t teach any classes.
In 2021, after becoming president, Biden appointed Gutmann as ambassador to Germany and appointed the school’s former board of trustees chair as ambassador to Canada. Another tie is that White House economic adviser Cecilia Rouse is on leave from Princeton University and plans to return there after leaving the Biden administration. She has promoted student loan forgiveness.
After the loan forgiveness program was announced, Harvard Law School professor emeritus Laurence Tribe was roasted online for thanking Biden because thousands of his former law school students would have loans canceled.
Biden promised on the campaign trail to cancel $10,000 of student debt for anyone earning less than $125,000 — if they attended a public college. The White House did not respond to a question from the Washington Examiner about why private colleges were also included in the final forgiveness plan.
Richard Painter, a University of Minnesota law professor and the chief ethics lawyer for former President George W. Bush from 2005 to 2007, said the close ties between higher education and politics warrant further inspection.
“It’s shocking that nobody is willing to condition federal [loan] money on capping tuition or salaries for the president of the university,” he said. “The number of bureaucrats employed by these universities who don’t teach is astronomical.”
Painter argued that the issue of rising tuition would likely be addressed if the loan forgiveness program had been negotiated in Congress but was left out because Biden acted alone.
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“It’s time to recognize that higher education is an enormous industry and it has a very powerful lobby,” Painter said.
