As President Biden prepares to extend loan repayment suspension, governors address root causes of student debt crisis
As members of Congress call for passage of billions of dollars in blanket student loan relief and the White House signals the potential for executive action in this direction, governors continue to offer vision alternative for education and labor policy reforms that will eliminate the need to go into debt to qualify for well-paying jobs. Maryland Gov. Larry Hogan (R), for example, on March 15 announced a new initiative to scrap the four-year degree requirement for thousands of state government jobs.
“As a lifelong small business entrepreneur, I know that a growing economy goes hand in hand with a thriving workforce, which is why we’re launching an effort to make Maryland the first state in the nation to eliminate the “requiring a four-year college degree. of thousands of jobs in the state,” Governor Hogan said of his decision.
“There are more than a million people in Maryland who don’t have a license, but have skills for jobs that are in demand by both the state of Maryland and other employers,” Byron said. Auguste, CEO and co-founder of [email protected], a nonprofit workforce development organization that will partner with the Maryland Department of Labor as part of Governor Hogan’s initiative to eliminate college requirements for thousands of jobs in a state whose government employs nearly 38,000 people.
The Biden White House and congressional Democrats, meanwhile, are more focused on forgiving student loans for millions of Americans, whether or not they are able to pay off their debt without taxpayer help. Many are waiting to see if President Joe Biden will extend the current student loan repayment pause beyond the current expiration date of May 1, 2022. As was also the case with his extension of solar tariffs from the former President Donald Trump, it is highly likely that President Biden will extend the student loan repayment pause that Trump instituted two years ago.
In fact, the Department of Education recently asked the loan service providers it contracts with to stop notifying borrowers when loan repayments resume in May, indicating that the White House is considering extending the repayment break. The White House has signaled that additional executive action on student loan forgiveness may accompany the likely upcoming announcement of an extended loan repayment pause.
“Whether or not there is executive action [on] cancellation of student debt when [student loan] resuming payments is a decision we will make before payments resume,” White House Chief of Staff Ronald Klain said. Members of Congress are calling on Biden to extend the repayment break and find ways to enact loan forgiveness.
“Until we fix our student loan system, the student loan payment pause must continue to provide borrowers with much-needed relief,” said the chair of the Senate Health Committee, Education, Labor and Pensions Patty Murray (D-WA) on March 16, who called for the cancellation of “certain debts for all borrowers”.
Just as progressives wanted Biden to extend the CDC’s expulsion moratorium after it was clear the votes weren’t there for Congress to do so, any effort to enact broad student loan forgiveness will take the form of executive action. And as with President Biden’s efforts to have the CDC unilaterally extend the eviction moratorium without congressional approval, any executive branch action to cancel student loans is almost sure to be challenged in court.
“Without legislative action by Congress, the only way for Biden to establish some form of broader student loan forgiveness initiative would be through executive action — which many legal experts and student loan advocacy organizations say is authorized by federal law,” Adam Minsky noted in a March 10 Forbes article. But Biden and other key experts, as well as many congressional Republicans and some former Education Department officials, have expressed skepticism that there is sufficient legal authority under current federal law. to allow a president to simply cancel student debt.”
Polls show that a broad cancellation of student loans would be a politically unpopular action that Democrats would support in an election year. Hank Naughton, a Democratic member of the Massachusetts House of Representatives for three decades, warns his fellow Democrats that “to forgive the college debt of millions of Americans regardless of whether or not they deserve this forgiveness, would only further alienate the president from most Americans.” .”
However, that is what the Biden administration has already indicated it is looking to do. In fact, there are fears that the White House is now viewing an existing anti-fraud program as the vehicle through which billions of dollars in student loans can be offloaded by the government. This program, the Borrower Defense Against Reimbursement Program (BDTRP), provides financial assistance to people defrauded by for-profit education providers.
Last November, a coalition of nonprofits warned Education Department Secretary Miguel Cardona in a joint letter that abuse of the BDTRP “could unfairly leave taxpayers responsible for billions of dollars in fraudulently canceled student loans”. The joint letter to Secretary Cardona noted that the BDTRP has been abused for a time, but has worsened since President Joe Biden was sworn in. By February, about $2 billion in loan forgiveness for more than 100,000 students had been approved by the BDTRP.
“While the BDTR provision is important for students who have been genuinely defrauded by a higher education institution, what is troubling is that the Biden administration has signaled that it may eliminate any requirement for proof that students have actually been defrauded, and also that this approach will only apply to students in for-profit schools – ignoring the concerns of those in traditional schools,” noted the joint letter sent in November. “It would cause hundreds of thousands of student loans to be canceled just because they filled out an online form.”
By accepting all fraud claims without verifying evidence and expanding the program to nonprofit colleges, the BDTRP could be used to erase billions of dollars in student loans from Americans who were not defrauded, transforming the BDTRP into a large loan. forgiveness program, as opposed to a program focused on combating and compensating for actual fraud. If such use of the BDTRP were to become a precedent, many expect calls to be made to extend this blanket, unchallenged pardon to those who attended traditional nonprofit universities.
The November coalition letter to Secretary Cardona explained that “the idea of the federal government willy-nilly forgetting billions of dollars in student debt is bad policy. Yet that is exactly what is happening as the Biden administration seemingly adopts a policy that cancels student debt if that debt was accrued at a for-profit college, regardless of the quality of education that was dispensed.
As with the state and local tax deduction, any mass student loan forgiveness program would disproportionately benefit those with above-average incomes and means. According to the Urban Institute, almost half of student debt is held by the top 25% of households. That’s why any large student loan forgiveness would disproportionately benefit already well-off people.
“This kind of wholesale debt forgiveness is unfair to the millions of American families who have skimped and sacrificed to save for their children’s education,” former Massachusetts Rep. Naughton added. “After all, were these parents naïve to sacrifice meals and vacations to accumulate savings for college? Were the students stupid to take jobs to pay for their education and avoid or reduce their debts?”
As the White House considers extending the student loan repayment pause and mulls ways to forgive more student loan debt without congressional approval, governors across the country are taking an alternative approach that tackles root causes and promotes alternatives to the four-year college route. In addition to passing income tax cuts that make it easier for workers to repay student loans, many governors and state legislators are also promoting apprenticeship programs and other alternatives to the stream. traditional four-year university.
“This year, governors from both parties have made it clear that learning will play a leading role in their efforts to strengthen the economy, improve economic mobility, and create new and better career opportunities for residents of their states. “, noted the National Association of Governors on February 8. “This substantial, bipartisan support for learning has grown during a period when the price of getting a college degree has steadily risen and labor market outcomes for those who graduate remain unequal.”
Governor Hogan’s new initiative to reduce unnecessary accreditations in state government is, as Auguste notes, “a promising model for other states and employers to follow.” It could also be a model for the federal government, which employs 2.8 million people. As economist Tyler Cowen noted of Hogan’s initiative in a March 18 article, since two-thirds of Americans do not have a college degree, this reform “could make government more representative and less prone to mistrust and resentment”. It could even, Cowen added, “trigger a broader movement, including in the private sector.”
Comments are closed.