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1/ This essay by @rgay makes a powerful moral and political argument to forgive student debt.
But it also raises an issue that many debt forgiveness advocates are avoiding: What should we do about graduate school? https://www.nytimes.com/2020/11/20/opinion/student-loan-forgiveness-biden.html
But it also raises an issue that many debt forgiveness advocates are avoiding: What should we do about graduate school? https://www.nytimes.com/2020/11/20/opinion/student-loan-forgiveness-biden.html
2/ Ms. Gay has $140,000 in outstanding federal loans -- most, the essay suggests, to cover living expenses in graduate school. The U.S. Dept of Education limits total federal loans for undergraduate degrees to $31,000 for dependent students and $57,500 for independent students.
3/ By contrast, there are no hard limits on how much money students can borrow from the federal government for graduate or professional school, including living expenses along with the cost of tuition.
4/ Columbia University, for example, estimates the full cost of its 9 ½-month masters in journalism at $115,243, all of which can be financed with federal loans.
https://journalism.columbia.edu/cost-attendance
https://journalism.columbia.edu/cost-attendance
5/ The essay describes “a young woman who attended Brown and was working at Walmart and had $300,000 in loans and was desperate for help.” It would be very unusual to borrow $300K for a B.A. from Brown. Much of that debt was likely from graduate school, at Brown or elsewhere.
6/ Why are undergraduate and graduate programs treated so differently? Because, broadly speaking, policymakers believe undergraduate education is a public service that should be affordable, accessible, and subsidized, whereas graduate education should be a private market.
7/ For example, in-state tuition at UC Berkeley is $15K, compared to $56K at Georgetown. But Berkeley charges $2,700/ credit for its Masters in Data Science, *more* than Georgetown charges for the same degree.
Public graduate school is often, de facto, private.
Public graduate school is often, de facto, private.
8/ There are good reasons for this approach.
Undergraduate education is the first rung on the ladder to economic success. It’s also how people learn to learn and live and be, an enrichment we all benefit from and all deserve.
Undergraduate education is the first rung on the ladder to economic success. It’s also how people learn to learn and live and be, an enrichment we all benefit from and all deserve.
9/ Graduate and professional degrees prepare people for careers. They're also only available to the more privileged third of the population with bachelor’s degrees. So, the thinking goes, there’s much less need for public subsidy -- the labor market will sort prices out.
10/ This philosophy is also reflected in how most big universities are financially structured -- undergraduate programs are managed and financed centrally, while individual departments bear the costs and earn the revenues from graduate programs. https://www.huffpost.com/highline/article/capitalist-takeover-college/
11/ Notably, progressive “free college” proposals don't subsidize the cost of grad school. One thing @BernieSanders, @EWarren, and @JoeBiden have in common with conservative politicians is that none of them have a plan to make graduate or professional school less expensive.
12/ Which raises a question: If we don’t want to reduce graduate debt in the future, why do we want to forgive graduate debt from the past? Any plan to forgive the whole or a portion of all federal loans is, by definition, a plan to forgive enormous amounts of graduate debt.
13/ Limiting forgiveness to smaller amounts, like $10K, would mitigate this substantially, since federal undergrad loans are smaller and held by more people. Many defaulted loans are owed by students who dropped out of undergrad programs owing relatively small sums.
14/ Increase the amount to $50K, as Sen. Warren and @SenSchumer have proposed, and the grad school subsidy is vastly larger. 41% of all federal loans dollars are used to pay for graduate and professional school.
15/ Ms. Gay is right to observe that many public services benefit some and not others. We should help each other. Only a hard-hearted person would be angry that college will be more affordable in the future just because it was less affordable in the past.
16/ But the current progressive plan for grad school is essentially the *opposite* of that -- to make grad school more affordable in the past, via debt forgiveness, but not in the future. And the politics of that strike me as tricky, at the very least.
17/ Indeed, the palpable sense of unfairness about college costs--that previous generations got a good and just deal on affordable tuition and then robbed their children of the same benefits--is a driving force behind the political case for free college and debt relief today.
18/ Which leads us to: Should we make grad school much cheaper by sending a bunch of $ to Berkeley to buy down tuition for that market-rate Masters of Data Science, or subsidize it on the back end, along with Columbia’s $115k journalism degree (!), via blanket loan forgiveness?
19/ Personally, I don’t think so. The graduate market, to be clear, has a ton of problems. Prestigious universities are monetizing the heck out of their brands by charging big $$$ for less selective programs. Quality and value signals often don’t work well.
20/ But a new regime of federal subsidy via rolling debt forgiveness or other means wouldn’t solve those problems. It would make them worse.
Instead, let's treat past and future education debt the same.
Focus forgiveness on distressed borrowers with small balances.
Instead, let's treat past and future education debt the same.
Focus forgiveness on distressed borrowers with small balances.
21/ Clean up servicing and make private loans dischargeable in bankruptcy.
For grad school, fix the program we already have, the one that’s handling the majority of grad school loan volume *right now*: income-driven repayment, coupled with public service loan forgiveness.
For grad school, fix the program we already have, the one that’s handling the majority of grad school loan volume *right now*: income-driven repayment, coupled with public service loan forgiveness.
22/ To be sure, PSLF has been plagued with design and implementation problems, resulting in large numbers of people applying for forgiveness despite not being legally eligible. https://www.nytimes.com/2019/07/24/upshot/student-debt-forgiveness-already-happening.html
23/ But the principle is the right one: Make monthly payments affordable and subsidize people who earn less because their jobs contribute to the public interest. @Chingos has a bunch of good ideas here: https://twitter.com/chingos/status/1331251834770649088?s=20
24/ The underlying case for immediate, across-the-board loan forgiveness via executive order is powerful. It’s a rare opportunity to just help people, in a time when it feels like we’ve abandoned one another to poverty and disease and despair.
25/ But public policy is about making choices: Who should we help, how much, and in what way? While applying that principle to graduate school debt might be more complicated and less satisfying, it’s the right thing to do.
P.S. See also this report from CAP https://www.americanprogress.org/issues/education-postsecondary/reports/2020/01/15/479442/fixing-graduate-school-debt/
