Benjamin Studebaker

Yet Another Attempt to Make the World a Better Place by Writing Things

Tag: Student Debt

A Critique of Biden’s Student Debt Reforms

I’ve written a new piece about the state of the American university system for Sublation. You can read it here:

https://www.sublationmag.com/post/the-american-university-system-is-a-rotting-carcass

The Higher Education Bubble Isn’t Going to Burst Without Our Help

For a long time, we’ve been sending more and more people to college. We’ve sent so many people to college that many graduates can no longer find good jobs when they leave. More than 40% end up working in jobs that used to require no degree:

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Some have been waiting for market forces to solve this problem. Way back in 2015, Senator Marco Rubio argued that folks would stop going to university and start pursuing jobs in the trades. Instead of studying philosophy, Rubio suggested the kids take up welding:

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The Case for Combining Tuition-Free College with Debt Relief

This week, Bernie Sanders launched his campaign to annihilate all $1.6 trillion in student debt. This far exceeds the amount Elizabeth Warren promises to alleviate ($640 billion). Warren pledges to eliminate up to $50,000 in debts for those making less than $100,000 per year. Those who owe more than $50,000 would still have to pay the remaining balance, and those earning more than $100,000 would receive smaller reductions. By contrast, Sanders vows to eliminate all outstanding debt. Sanders also promises to use federal money to make public colleges and universities tuition-free. Warren’s policy on tuition relies on state governments to provide a large percentage of the funding, and that means that Republican governors and state legislators would be able to refuse to participate, in much the same way that they refused to participate in Barack Obama’s Medicaid expansion. This would create a two-tier system, in which Americans living in blue states would enjoy educational rights denied to Americans living in red states. The Sanders plan is the only plan predicated on the principle that further education ought to be a universal right of all Americans, regardless of where they live or how much money they earn.

But there are those who resist the Sanders plan, arguing that cancelling student debt and providing tuition-free college subsidises economically inefficient behaviour and rewards people who made mistakes. Others argue that debt relief is regressive, because college-educated Americans tend to be higher income than those who did not go to college. I think both of these arguments are wrong. Here’s why.

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Could Corbyn Cancel All the Student Debt? Yes–But He Has to Bend a Rule

There was a row this week in the UK over Labour’s plan for the university system. Individual Labour politicians have in the past talked about doing something about student debt, but this week Labour leader Jeremy Corbyn distanced himself from outright debt relief:

What I said was we would deal with it by trying to reduce the burden of it, we never said we would completely abolish because we were unaware of the size of it at that time.

Some in the British press are trying to portray this as a U-turn, but the Labour manifesto did not itself make any firm pledges on debt relief. It promised to eliminate tuition fees, but the debt issue was left to one side:

The average student now graduates from university, and starts their working life, with debts of £44,000. Labour will reintroduce maintenance grants for university students, and we will abolish university tuition fees.

Corbyn indicated this prior to the election–Labour was still trying to figure out the debt issue:

Yes, there is a block of those that currently have a massive debt, and I’m looking at ways that we could reduce that, ameliorate that, lengthen the period of paying it off, or some other means of reducing that debt burden. I don’t have the simple answer for it yet – I don’t think anybody would expect me to, because this election was called unexpectedly; we had two weeks to prepare all this – but I’m very well aware of that problem. And I don’t see why those that had the historical misfortune to be at university during the £9,000 period should be burdened excessively compared to those that went before or those that come after. I will deal with it.

So instead of playing he-said he-said, let’s take a look at what Labour could do about student debt and see if we can help Corbyn figure it out.

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John Oliver Doesn’t Understand How Stein’s Student Debt Policy Works

Last Week Tonight‘s John Oliver recently ran a segment in which he slated Jill Stein’s proposal to eliminate student debt through quantitative easing:

His criticism seemed to suggest that the Federal Reserve is obviously irrelevant in this policy area:

It’s basically akin to saying, ‘I’ll make us energy independent by ordering the Post Office to invade Canada.’ No, Jill. That’s impractical, it’s a terrible idea, and you don’t seem to understand anything about it.

Oliver, who is usually quite perceptive and well-informed, gets this wrong, and he gets it wrong in no small part because monetary policy is complicated and difficult to understand, both in terms of the economics and in terms of the politics. So let’s talk about how Stein’s idea works.

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