Biden’s Cancellation of Billions in Debt Won’t Solve the Larger Problem

Belatedly canceling some debt is what a country does when it refuses to support students up front.

College graduates on commencement day
Erica Lansner / Redux

For years, American lawmakers have chipped away at the fringes of reforming the student-loan system. They’ve flirted with it in doomed bills that would have reauthorized the Higher Education Act—which is typically renewed every five to 10 years but has not received an update since 2008. Meanwhile, the U.S. government’s student-debt portfolio has steadily grown to more than $1.5 trillion.

Today, calls for relief were answered when President Joe Biden announced that his administration would be canceling up to $10,000 in student loans for those with federal debt, and up to $20,000 for Pell Grant recipients. As long as a borrower makes less than $125,000 a year, or makes less than $250,000 alongside a spouse, they would be eligible for cancellation. The president will also extend the current loan-repayment pause—originally enacted by then-President Donald Trump in March 2020 as a pandemic-relief measure—until December 31.

The debt relief—which by one estimate could cost a total of $300 billion—is a massive benefit for Americans who have struggled to repay loans they accrued attending college, whether they completed a degree or not. But equally as important as addressing the damage that student loans have caused is ensuring that Americans aren’t saddled with overwhelming debt again. And the underlying issue of college affordability can be addressed only if America once again views higher education as a public good. Belatedly canceling some student debt is what a country does when it refuses to support students up front.

According to a White House fact sheet, 90 percent of Biden’s debt relief will go to those who earn less than $75,000 a year—and the administration estimates that 20 million people will have their debt completely canceled.  “An entire generation is now saddled with unsustainable debt in exchange for an attempt, at least, for a college degree,” Biden said at a White House event. “The burden is so heavy that even if you graduate, you may not have access to the middle-class life that the college degree once provided.” That Democrats arrived at this point at all, though, is a testament to how grim the student-loan crisis has become. A decade and a half ago, Democrats were advocating for small increases in the federal grant program to help low-income students afford college. Over successive presidential campaigns, Democratic hopefuls, including Senator Bernie Sanders of Vermont and Senator Elizabeth Warren of Massachusetts, have called for canceling most, or all, student debt issued by the government—effectively hitting reset on a broken system. And now the party is announcing one of the largest federal investments in higher education in recent memory.

When he was running for president in 2007, Biden advocated for a tax credit for college students and a marginal increase in the size of individual Pell Grant awards—tinkering around the edges of solving a brewing mess as America lurched toward a deep recession. From 2006 to 2011, college enrollment grew by 3 million, according to the U.S. Census Bureau; at the same time, states began to cut back on their higher-education spending. On average, by 2018, states were spending 13 percent less per student than they were in 2008.

Historically, when states look to cut their budgets, higher education is one of the first sectors to feel the blade. Polling shows that the majority of Americans agree that a college degree pays off. But college, unlike K–12 schooling, is not universal, and a majority of Republicans believe that investment in higher education benefits graduates more than anyone else. So lawmakers have been willing to make students shoulder a greater share of the burden. But this shift leaves those with the fewest resources to pay for college—and those whose families earn a little too much to qualify for Pell Grants—taking on significant debt.

The shift flies in the face of the Framers’ view of higher education, though. “There is nothing which can better deserve your patronage than the promotion of science and literature,” George Washington, an early proponent of the idea of a national university, said in his first address before Congress, in 1790. “Knowledge is in every country the surest basis of public happiness.” Washington, James Madison, Benjamin Rush, and others believed that colleges might be a place where Americans could build a national identity—a place where they could, for lack of better words, become good citizens.

In that spirit, the federal government provided massive investments in the nation’s colleges, albeit inequitably—through the Morrill Act, which formed the backbone of state higher-education systems as we know them; the GI Bill; and the Pell Grant program—which directly subsidize students’ expenses. But in the past half century, radical investments in higher-education access have dried up. Now a political divide has opened up: Conservative lawmakers—whose voters are more likely not to have attended college—have grown not only suspicious of but in some cases openly hostile toward the enterprise.

Meanwhile, 77 percent of Democrats believe that the government should subsidize college education. “We want our young people to realize that they can have a good future,” Senator Chuck Schumer said in April. “One of the best, very best, top-of-the-list ways to do it is by canceling student debt.” He wanted the president to be ambitious and called for giving borrowers $50,000 in relief—“even going higher after that.” A month into his administration, though, Biden shot down the idea of $50,000, to the chagrin of relief advocates. “Canceling just $10,000 of debt is like pouring a bucket of ice water on a forest fire,” the NAACP’s Derrick Johnson and Wisdom Cole argued today. “It hardly achieves anything—only making a mere dent in the problem.”

The administration is coupling its announcement with a redesign of payment plans that allows borrowers to cap their monthly loan payments at 5 percent of their discretionary income. But the basic problem remains: Young Americans of modest means can no longer afford to attend their state university by getting a part-time job and taking out a small loan. For millions of students, borrowing thousands of dollars has become the key to paying for an undergraduate degree. Biden’s plan will give graduates—and those who have taken out loans but not finished school—some relief, but the need to overhaul a system reliant on debt remains as urgent as ever.