One of the organizing principles of the 99 Percent Movement is that millions of Americans are being suffocated by personal debt. One of the common forms of this suffocating debt is student loan debt, which is debt accrued simply by trying to get a good college education. Last year, national student debt actually surpassed credit card debt, with outstanding student loans totaling $829 billion.
In a post for the Heritage Foundation blog speculating about President Obama’s upcoming announcement about how to alleviate student debt, Heritage senior policy analyst Lindsey Burke not only attacks the idea of student loan forgiveness, but suggests that we’d all be better off if federal student loans never existed in the first place. She goes onto argue that loan forgiveness would be pitting students against Americans who didn’t graduate college and that federal subsidies simply make college more expensive:
While it’s unclear what exactly President Obama will propose, economist Richard Vedder calls the idea of student loan forgiveness “the second-worst idea ever—the worst was the creation of federally subsidized student loans in the first place.”
And he’s right: It is unfair to forgive student loans on the backs of waitresses and construction workers and the nearly three-quarters of Americans who didn’t graduate college. Increases in federal subsidies or student loan bailouts shift the burden of paying for college from the student—the person directly benefiting from college—to the millions of Americans who did not graduate from college. [...] Increases in federal subsidies give students increased purchasing power, which incentivizes colleges to raise tuition, in turn leading students scrambling for more student loans. It’s a vicious cycle that does nothing to mitigate the cost of attending college.
It’s difficult to imagine what America would look like today without federally subsidized student loans. Millions of Americans have benefited from the ability to go to school thanks to the federal student lending programs first pioneered in the 1960′s and 1970′s. According to data from the Department of Education, 9,020,465 Americans utilized the federally subsidized student loan program during the last academic year.
The argument that these loans and other forms of federal student aid leads to cost inflation is an old conservative canard. As Sandy Baum, an economist at the College Board explains, “There are a number of explanations for rising college prices, with declining state appropriations per student high on the list for public colleges and universities. Difficulties in improving efficiency and productivity, expansions in the services offered to students, rising costs of technology, and increases in institutional financial aid budgets are also major factors.” Direct federal subsidies in the form of Pell Grants, for example, have actually covering a “smaller portion of college tuition than they did 25 years ago.” One study released last year actually found that tuition increased as federal aid fell, indicating that aid is perhaps altogether unrelated to rising tuition.
Without subsidized federal loans and grants that many on the far-right seek to undermine, students would be pushed into the arms of private lenders, whose rates tend to be far more suffocating. If those on the right were to have their way, Americans would be forced into even further debt bondage, unable to make ends meet and lead productive and prosperous lives under the weight of student loan debt. That is not a fate the 99 percent wants.