Critics of a Student Debt Jubilee Are Right (and Wrong)

One must imagine Sisyphus on hold with Navient. Photo: Paul J. Richards/AFP/Getty Images

Imagine that you’ve just been accosted by a street-corner socialist. She presses a pamphlet into your hand and tells you that her movement has a big, bold idea for rectifying the inequities of late capitalism, and restoring faith in the concept of public goods. You look down at her manifesto. It reads:

The federal government should take $1.4 trillion (or, roughly 75 times what it spends each year on welfare for needy families) and:

A) Give it to a disproportionately upper-middle-class subsection of U.S. residents, who collectively make up only 14 percent of the country’s population.

B) Distribute the $1.5 trillion within that subsection, such that the most privileged individuals receive the biggest government handouts — which is to say, in a manner that provides six-figure checks to many doctors and lawyers, but only a few thousand dollars to the typical working-class “14-percenter.”

You look up and ask, “Wouldn’t that be kind of … regressive?” The socialist rips the pamphlet out of your hand and hisses “neoliberal shill” over and over, until you walk away in exasperation.

This is, ostensibly, what the debate over a student debt jubilee has felt like to David Leonhardt. In a piece titled, “Eliminating All Student Debt Isn’t Progressive,” the New York Times columnist chides left-wing politicians like Alexandria Ocasio-Cortez — and left-wing writers like myself — for championing universal student-loan forgiveness, despite the fact that such a policy would deliver the lion’s share of its benefits to the millennial bourgeoisie:

The fatal flaw of universal student-debt cancellation is that it’s not, in fact, progressive. It mostly benefits the upper middle class. “Education debt,” as Sandy Baum and Victoria Lee of the Urban Institute have written, “is disproportionately concentrated among the well-off.” The highest-earning quarter of the population holds about half of all student debt, according to Baum and Lee …

… I understand why sweeping ideas like “cancel all debt” or “free college” seem appealing … But this country has too many big problems to start showering the upper-middle-class with enormous government benefits.

The right approach is a debt-forgiveness program that helps families who really need it. People whose income is below a certain threshold should have some of their debt forgiven (expanding the income-based repayment programs that already exist). And federal financial aid should expand too, with a focus on poor, working-class and truly middle-class families.

The “neoliberal shill” has a point.

I still think that “cancel all student debt” is a worthwhile rallying cry for progressive Democrats (and I’ll lay out my case for thinking so in a moment). But I also think that there’s more truth to Leonhardt’s argument than many on the left care to admit.

Indeed, if one isolates student-debt cancellation (and/or free public college) from the rest of the progressive agenda, then it does look like a regressive proposal that would do more to advance the class interests of millennial activists (who are, disproportionately, middle-class college graduates) than to realize the egalitarian ideals that said activists claim to stand for.

When confronted with the distributional implications of a student debt jubilee — and/or tuition-free college — progressives will often argue that their critics are making a category error: The point of these policies is not to equalize the distribution of income, but to affirm that higher education is a public good. When young Americans are given the opportunity to realize their full intellectual potential, the entire country benefits — a well-educated citizenry strengthens our democracy, and a highly skilled workforce enhances our economy. Leonhardt would almost certainly endorse these very premises in other contexts; it is hard to imagine the columnist endorsing means-testing for library cards, or charging upper-middle-class kids tuition to attend public high school. So why does he refuse to see higher education in the same light?

This strikes me as a sound rebuttal — but only when paired with a call for the state to assume the costs of helping young, non-college-educated workers get a foothold in the labor market. Without the latter component, the argument for higher education as a public good ends up reiterating a regressive, meritocratic logic — one that equates an individual worker’s social worth with the market value of her labor.

To thrive in the coming decades, America is going to need more computer scientists and environmental engineers — but also more home health-care aides, physical therapists, cooks, solar panel installers, and a wide array of other blue- and pink-collar workers. According to Labor Department projections, most of the fastest-growing occupations in the U.S. do not require a college diploma. Our economic system might treat a home health-care aid with a GED as exponentially less valuable than a hedge-fund manager with an MBA — but the progressive movement certainly shouldn’t. If the latter’s education is a public good that the state must subsidize, than surely the former’s training is, as well.

Thus, Matt Bruenig of the People’s Policy Project has argued that the rallying cry of “free college” should be replaced with (the decidedly less catchy) “universal labor-force attachment benefits”:

[W]e should as a society designate ages 18–24 as the attachment zone during which all paths into a career are fully supported by public benefits and services. Students get their free school. But, under the exact same umbrella, nonstudents get their free vocational training, subsidized apprenticeships, in-work subsidies, public jobs, and whatever else it takes to ensure a lasting labor force attachment. That would be a program that is actually in fitting with the ideals of universalism.

One might quibble with Bruenig’s suggestion that a college education’s only purpose is to prepare young people for the labor force. But it remains the case that, for the foreseeable future, a large portion of America’s young people will not have the aptitude or interest necessary to pursue a liberal arts education — while America’s economy will have an acute need for a wide variety of non-college-educated workers. In this context, no progressive should argue that massively increasing subsidies for higher education is in the public’s interest, while massively increasing subsidies for vocational training is not.

Why Leonhardt should learn to stop worrying and love “cancel all student debt.”

Now, imagine that you’ve just been accosted by a street-corner technocrat. He presses a white paper into your hand, and tells you that his think tank has a perfectly rational proposal for rectifying the inequities of American higher education. You look down at his report.

It reads:

America has too many big problems to spend $80 billion, annually, to make public college tuition free — let alone to devote $1.4 trillion to wiping out student debt that is disproportionately held by upper-middle-class borrowers. Thus, the federal government should:

A) Target debt relief at low-income borrowers.

B) Expand federal financial aid for low-income students.

C) Continue spending $674 billion a year on a bloated military that has spent trillions of dollars over the past 16 years waging wars that failed miserably on the Pentagon’s own terms.

D) Allow the wealthiest one percent of Americans to continue hoarding roughly 40 percent — or $36 trillion — of the nation’s wealth.

You look up and ask, “If we didn’t do C and D, couldn’t we easily afford to forgive everyone’s student debt, establish free college, and enact various transfer programs to lift the incomes of the most disadvantaged Americans?” The technocrat stares blankly, and intones, “forgiving all student debt is regressive,” over and over again, until you walk away in exasperation.

This is what the debate over a student debt jubilee feels like to many on the left. As indicated above, such progressives have a simple response to arguments like Leonhardt’s: Yes, when framed as an alternative to increasing aid to the poor, forgiving all student debt is regressive — but why on earth should we frame it that way? Why suggest that any public funds spent on the middle class will have to come out of the pockets of the poor, when there’s so much fat to be trimmed from the Pentagon’s budget and the one percent’s trust funds?

Leonhardt would likely respond with an appeal to political realism: In 2021, there aren’t going to be congressional majorities for expropriating the one percent’s wealth, or massively reducing the military-industrial complex’s allowance. In practice, as subsidies for the affluent have grown in recent decades, welfare for the indigent has declined. Joe Manchin’s appetite for new social spending is a finite resource; progressives can’t afford to waste it on the upper-middle class.

And yet, appealing to political realism cuts both ways. If the legislative process is inevitably going to moderate progressive policy ideas, then why should figures like Ocasio-Cortez begin that process by negotiating with themselves? It is easier to mobilize movements around simple, maximalist proposals like “cancel all student debt” and “free college (or vocational training)” then to do around carefully calibrated, technocratic ones — and mobilizing a movement for student-debt relief is probably a prerequisite for passing the smaller-bore reforms that Leonhardt endorses.

What’s more, advocating for mass student-debt forgiveness is politically pragmatic for the left in another sense: In the current moment, debt-burdened college graduates happen to be a (if not the) primary constituency for radical, social democratic change in the U.S. Without the avid support of such voters in 2016, Bernie Sanders would still be a relatively obscure septuagenarian senator; without the donations, votes, and canvassing efforts of such voters in 2018, Alexandria Ocasio-Cortez would not be in Congress.

Many of these voters would qualify as socioeconomically privileged by most definitions. But the fact that so many of the (downwardly mobile) children of leafy suburbs now chose to identify as members of “the 99 percent” should be cause for celebration not ridicule. In the current political environment, any movement for progressive change will require significant support from the upper-middle class. By putting universal student-debt forgiveness on the left’s agenda — beside Medicare for All, a jobs guarantee, and universal child care (among other things) — progressives keep one of their core constituencies energized, while fortifying the cross-class alliance that enacting any of those proposals will require.

Finally, there remain sound, substantive arguments for universal student-debt relief. For one thing, it would almost certainly stimulate more economic growth — in a less regressive manner — than the $1.5 trillion tax cuts the GOP Congress passed last year. At present, student debt weighs like an anchor on aggregate demand. Thus, if the government forgave all the student debt it owns (which makes up more than 90 percent of all outstanding student debt), and bought out all private holders of such debt, a surge in consumer demand — and thus, employment and economic growth — would likely ensue. According to a recent paper from Bard’s Levy Institute, canceling all student debt would increase GDP by between $86 billion and $108 billion per year, over the next decade, adding between 1.2 and 1.5 million jobs to the economy, and reducing the unemployment rate by between 0.22 and 0.36 percent, in the process.

On the other hand, means-testing programs create administrative costs for the state and bureaucratic hassle for beneficiaries. And the latter can reduce participation in the program (among those eligible), as well as providing hostile administrations with a means of deliberately depressing enrollment.

All this said: Forgiving the first $15,000 of everyone’s student debt (as part of package of reforms that includes some form of aid or debt relief to blue-collar workers) might make more sense than a universal jubilee — that way, you deliver relief, automatically, to the most burdened borrowers, without giving a six-figure windfall to graduates of Harvard Law.

Still, Alexandria Ocasio-Cortez doesn’t need to make the argument for moderating the left’s ambitions — that’s what New York Times columnists (and red-state Democratic senators) are for.

Critics of a Student Debt Jubilee Are Right (and Wrong)