Student debt has risen to 1.6 trillion dollars in the US. College graduates spend years, sometimes decades, repaying loans. Elizabeth Warren and Bernie Sanders, two leading democratic presidential candidates, have proposed two variations of a student debt forgiveness plan each promises to implement if elected. These plans are designed more to gain votes than to solve the systemic issue of the rising cost to attend college. I will outline each plan, relate them to Solon’s ancient plan of seisachtheia, and make my concluding arguments.
Bernie Sanders’s plan is very simple. He would use a new tax on stock trades to cancel all 1.6 Trillion dollars of student debt. Elizabeth Warren’s plan includes graded support, with lower income individuals receiving more benefit. She would place a new tax of at least two cents on every dollar of a family’s net worth over 50 million dollars and three cents on every dollar above 1 billion dollars.
Proponents of the student debt cancellation plan claim that doing so would decrease the racial wealth gap, increase GDP, and decrease unemployment. Some even say that the plan does not go far enough, with more attention needed to address living costs, make graduate education free, and ban private or for-profit colleges.
Shortly after 600 B.C.E, Solon was elected chief magistrate in Athens and made it his main priority to free the peasants, or hektēmoroi, from the debt that made them practically slaves. He followed through with his plan, but the consequences of his actions were unintended and largely negative. (Plutarch Life of Solon) The newly freed peasants were forbidden to sell themselves in return for land or agricultural supplies, and they had no other method of securing loans. Two decades of anarchy and a revolution followed, until Peisistratus came to power and restored order in 561 BCE.
Solon’s seisachtheia, translated as “shaking-off the burdens,” was well-intentioned but fundamentally flawed. The current debt reduction plans are also fundamentally flawed. If the federal government bails out students from their loans, future students will feel entitled (and rightfully so) to have their debt erased by the government. Additionally, universities will feel no pressure to keep costs low if they know the government will step in to pay the costs. When the federal government can no longer pay the cost of another generation’s student debt, the problem will only be heightened. The solution to the rising cost of post-secondary education does not lie in a federal government bailout. A one-time cancellation of debt will do nothing more than absolve individuals of their personal responsibility, infuriate future generations, and introduce higher costs in higher education.
John Brooks, a professor at Georgetown University Law Center, said “We have fairly robust and generous loan forgiveness programs and income-driven repayment programs.” (NPR) There are already systems in place that are designed specifically to benefit people in the type of predicament intended by the proposed debt cancellation plan. They work. However, they are not well understood by policymakers or borrowers. If students utilize more of the resources already available to them, they can find solutions to their problems. In the future, governments may have a role to play in reeling in the extreme increase in higher education costs in the United States over the past several decades. Education is essential for a democratic government to function properly, and it should be accessible to individuals regardless of their socio-economic background.
Proposing to cancel all outstanding student debt sounds really good. However, it will not have the intended effect. It will likely have the opposite effect, one that is already seen in government contracts for construction and military equipment. Once the federal government steps in to write checks, firms have very little incentive to keep prices low. Young adults who stand to immediately benefit from their debts being cancelled have a very high incentive to vote for the candidates promising to do so. Young, educated Americans tend to vote democrat and a debt cancellation policy is a very effective way to pander to them.
— Jon Dollahite
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