I will say upfront that I support wholesale student-loan forgiveness. As numerous studies have pointed out, burdensome student debt has kept millions of Americans from buying homes, having children, and saving for retirement.
If the President were to cancel all student debt, 45 million college-loan borrowers could pour approximately $5 billion a month back into the economy. That would be good for everybody.
Nevertheless, I don't think President Biden will wipe out $2 trillion in student debt. As Betsy DeVos, President Trump's Education Secretary, pointed out in a 2018 speech, student loans make up one-third of all federal assets.
What will be the consequences if the federal government removes one-third of its assets from the national balance sheet? I don't think anyone knows.
Also, the President surely realizes that forgiving all student debt undermines the integrity of the federal student-loan program. If all student loans are forgiven this year, how can the Department of Education expect to collect on the student loans it makes in the future?
Moreover, I don't see the wisdom of wiping out $2 billion in student debt unless American higher education is fundamentally reformed. Tuition rates have reached an insane level--$25 thousand per semester at most private colleges. Colleges are cranking out worthless degrees in the liberal arts and social sciences, not to mention vapid graduate degrees in law and business.
And we have far too many colleges. Does it make sense to grant wholesale student-loan forgiveness while the government continues propping up the for-profit college industry and small schools that are losing enrollment and teetering on closure?
I think everyone who calls for massive student-loan forgiveness is sincere. I believe our President and most members of Congress really want to grant relief to millions of Americans who are saddled with unmanageable debt levels.
But when we look closely at the federal student loan program, we see what a monster it has become. We can't fix the loan program without fixing higher education on a massive scale. And no one has a clue how we can do that.