The news of President Biden’s student debt forgiveness last week sparked a rush of responses from people on all political and economic sides, including Catholics.
What is suggested by the plan?
Student debt forgiveness is a measure that the Biden administration has long promised, carving it out as a prominent plank on the campaign path.
In the previous several decades, the price of attending college in the United States has skyrocketed. After graduation, the typical American student owes $28,950, amounting to a $1.75 trillion national student loan burden.
The administration claims that the three main initiatives in the proposal, which was unveiled last Wednesday, would “cancel” debt for certain Americans and “make the student loan system more bearable for working families.”
According to a fact sheet issued by the White House, the Government of Education would forgive $20,000 in debt to Pell Grant winners and $10,000 in debt to non-Pell Grant recipients for loans that the department is holding.
Borrowers must income less than $125,000 annually ($250,000 for married couples).
Only loans owned by the government are covered by the rule. No one is eligible for debt forgiveness if they have consolidated their federal loans using SoFi or Navient, for example.
The administration is also recommending changes to how borrowers repay their debts, including a reduction in monthly payments and an expansion of the Public Service Loan Forgiveness (PSLF) program, which enables Americans who work in public service, the military, or nonprofit organizations to achieve loan forgiveness after a predetermined threshold.
The data sheet also gives a sneak peek at planned declarations by the Department of Education to hold universities “accountable,” including the publication of an annual “watch list” of the courses with the largest debt loads nationwide.
According to a Catholic economist, the proposal doesn’t change the issues that influence college expenses.
In an email to CNA, Patrick T. Brown, a fellow at the Ethics and Public Policy Center (EPPC) and a former senior policy advisor to the Joint Economic Committee of Congress (JEC), said that Biden’s approach does not address the problem’s fundamental causes.
Catholics have a moral duty to give the poor preference, but this widespread student debt bailout “goes well beyond what is required,” the author argued. “A better strategy would have been to seek out better repayment alternatives for those who did not finish their degrees or who were taken advantage of by predatory colleges,” says the author.
Pro-family economic policies are the main subject of Brown’s work. He has looked at the connection between the high expense of higher education and the tendency of young individuals delaying getting married and starting a family.
He proposes exploring remedies including broadening the range of alternatives for postsecondary education, income-driven repayment, and social assistance for families.
“There are far better methods to lessen the strain on those coping with high student loan debt loads without investing what may be $1 trillion for a one-time fast fix that would do little to address the underlying reasons pushing the expense of higher education ever higher,” he added.
Inflation, according to critics, will increase.
In the last week, both left and right-wing critics have been outspoken, and many of them share the opinion that the policy will not stand up in court.
Speaker of the House Nancy Pelosi said in July of last year that “people believe that the President of the United States has the authority to erase debt. Not at all. Although he has the ability to delay and postpone, he lacks that power. That must be a Congress-passed law.
The approach was praised by Pelosi in a statement last week, but opponents from all political perspectives claim that the advantages of Biden’s plan would be offset by increased inflation and more taxes.
Pouring almost half a trillion dollars’ worth of fuel on the inflationary fire that is already blazing is dangerous, according to Jason Furman, a former chairman of President Obama’s Council of Economic Advisors (CEA) and a professor of economics at Harvard University.
“Everyone else will pay for this either in the form of greater inflation, more taxes, or reduced benefits in the future,” Furman stated in a twitter thread, adding that “A number of attorneys (and political leaders) have argued inconsistent with the law.”
The idea was dubbed “ill-conceived and misguided” by The Washington Post’s editorial board on Wednesday.
“Mr. Biden’s choice on student loans won’t benefit the most needy Americans enough. But with American taxpayers paying the tab, it will provide people who don’t need it a windfall,” the Board stated.
According to the Wall Street Journal Editorial Board, the proposal would cost over $300 billion, deepen America’s cycle of student loan debt, and “benefit largely college-educated families who don’t need the support.”
The board said that colleges would “certainly” raise fees and start new degree programs with dubious value in order to take advantage of the prospect of recurrent cancellations.
Rep. Tim Ryan, a Democrat from Ohio, agreed with those who said the proposal would put a burden on those who had already repaid their student loans or opted out of going to college.
“Sending the incorrect message to the millions of Ohioans without a degree working just as hard to make ends meet” is what he stated on Wednesday. “Waiving debt for those already on a trajectory to financial stability.”
Many on the right, who are claiming that the proposal amounts to “debt transfer,” agree with this.
Costs for the whole scheme “may approach $1 trillion,” according to the nonpartisan Penn-Wharton Budget Model.
Catholic charity will continue assisting individuals considering religious or the priesthood
A Catholic charitable organization claims that Biden’s proposal won’t alter its goal of assisting individuals considering convent life in becoming debt-free so they may follow their vocation.
The Labouré Society offers financial help to Catholics who are seeking a vocation to the priesthood or convent life and have unpaid college debts.
The majority of religious organizations stipulate that prospective members must be debt-free in order to be admitted since the communities are unable to cover the expenses. This is a challenge for the Church at a time when there are historically few candidates for the positions of priest, nun, and brother.
According to the Labouré Society, student debt, with an average debt of $60,000, prohibits 42% of aspirants from following their vocation.
John Flanagan, the executive director, told CNA over the phone that the initiative is not particularly “altruistic”: We need priests, nuns, and brothers because we are Catholics, to put it simply. If there is anything the laity can do to aid those who will sacrifice their lives for us have access to the doors, we need to.
The organization does this by offering a demanding training curriculum and direct financial help to aspirants whose educational debts are standing in the way of their calling to serve the Church.
“We think that individuals should be accountable for their promises and that God respects them. “[It’s] a process of formation for them,” Flanagan remarked.
In order to be able to accept responsibility for their debt even if they do not personally pay it off, aspirants who complete the Labouré program get training in appropriate church engagement and are anchored in Catholic philanthropic ideals.
They are “taking responsibility and developing skills that will assist them in their life as a nun, as a priest,” Flanagan said. They are doing this in a manner that is not just responsible but also exclusively Catholic.