Americans are drowning in student-loan debt. The U.S. should forgive all of it.
Politicians in both parties say getting a higher education is not only the ticket to the middle class but also that it is vital to America’s future prosperity. Yet they’ve created a system that prices college out of reach and forces children to take on growing levels of debt to pay the fare. That debt too often becomes a millstone on the young people it was intended to assist.
The reason for the debt crisis is clear: The cost of college has exploded in recent decades while median household-income growth has been relatively flat. Part of the cost increase is because state funding didn’t keep up with rising costs, so students and parents are expected to bear more of the expense. A big reason, though, is the obscene growth in administrative salaries and staffing at public colleges and universities, even as more and more of the teaching is done by impoverished adjuncts.
The debt burdens not only the debtors but also the entire economy by dampening consumer demand. The federal government guarantees more than 90 percent of all outstanding student debt. A recent paper by Scott Fullwiler, Stephanie Kelton, Catherine Ruetschlin and Marshall Steinbaum of the Levy Economics Institute found that if the government canceled the debt it owns and bought out the remaining private creditors, it would increase gross domestic product by between $86 billion and $108 billion per year over the next decade, adding between 1.2 million and 1.5 million jobs.
More importantly, if combined with making all public universities tuition-free, this country would ensure that no young person is condemned to debt for pursuing the higher education or technical training that virtually everyone agrees is vital to this nation’s future.