Pandering to a Privileged Class: The Student Loan Rate Debate

Indebted college graduates are not the category of Americans who need help right now.

student loan debt.jpg

Flickr user a.mina

Every month for roughly 10 years I've sent hundreds of dollars from my bank account to lenders who helped finance my undergraduate and graduate degrees from Pomona College and NYU. It was a burden when I was taking home less than $30,000 per year at my first full-time job. Several years back, when a publication I worked at went out of business, payments became a lot more stressful for awhile. As I prepare to get married, I can't say I wouldn't rather divert more of my journalist's salary from Sallie Mae interest to a down payment fund, or my 401(k), or any number of things I'll get less of every month for the years of repayment awaiting me.

And yet.

Like Warren Buffett pondering a tax cut the beneficiaries of which include people like him, I'm incredulous at the notion that my bankrupt federal government is keen on extending an interest rate subsidy that would benefit people like me. A one year extension runs $6 billion dollars. Barack Obama and Mitt Romney both support it.

That's their idea of how best to spend billions on education?

It isn't that there aren't folks with student debt who've got it rough and need some help. By all means, give relief to the unemployed or folks with unexpected medical bills, even if they're college grads.

But people with outstanding student loans as a class?

As a class, we've already benefited from subsidies to higher education, we've acquired human capital and a credential that sets us apart from most people on the planet, and we're certainly not the Americans in most dire need of help, though we are more politically influential than the less fortunate. "If we think it more important to spend this dough on education," says Will Wilkinson, "then we should hand out the $6 billion in the form of scholarships to deserving prospective collegians of modest means, to help them earn their degrees without having to take out any loans at all."

He's right.

Yet look at how President Obama talks about this issue:

This is not something I read in a briefing book. This is not some abstract idea for us.  We've been in your shoes.  When we graduated from college and law school, we had a mountain of debt, both of us.  That means when we got married, we got poorer together. We added our assets together, and they were zero. And then we added our liabilities together, and they were a lot.

We paid more for our student loans than we paid for our mortgage each month when we first bought our small condo in Chicago.  And we were lucky to land good jobs with a steady income, but we only finished paying off our student loans about eight years ago.  Think about that.  I'm the President of the United States and -- (laughter and applause) -- so here I am, and we were writing those checks every month.  And that wasn't easy, especially when we had Malia and Sasha, because at that point, we're supposed to be saving for their college educations, and we're still paying off on our college educations.  So I've been in your shoes.  I know what I am talking about here.  This is not something that I just read about.

This makes my point.

Obama earned degrees from Columbia University and Harvard Law, where he was editor of the Harvard Law Review. His wife, Michelle, graduated from Princeton and Harvard Law School. Once you've done that it doesn't matter how much you've borrowed. You're in the one percent. The Obamas ought to have been writing those checks every month, because to subsidize couples with four graduate degrees from Ivy League schools between them -- in a country with impoverished immigrants and struggling high school dropouts and hard-pressed single mothers -- is perverse. That Obama offered up his own story in that way is a testament to our collective loss of perspective on this.

Of course, most people with student loan debt don't have Ivy League degrees. They're still generally better off than people without diplomas. And while decreasing the cost of college for those who've yet to attend ought to be a public policy goal, especially since educational subsidies have been structured in a way that helped to drive up costs to begin with, there is no good reason to subsidize not just hard up folks with student debt, but folks with student debt generally.

It's a pander. People like me would benefit from it. But I don't like it.