Affirmative action for elite debtors: Why are we forgiving loans for people who can afford to pay?August 24, 2015 |
by Emil Guillermo
If you think you have heard it all about the student loan crisis, then I bet you think the main culprits are the undergrads, who amass debt and then ask for forgiveness?
But you would be wrong.
The real problem, according to the Wall Street Journal last week, are graduate students, who now account for 40 percent of all student debt.
That’s even though grad students represent just 14 percent of the student population in higher ed.
Talk about tail wagging the dog.
Grads students take out the most loans and are America’s elite student debtor class.
According to the Journal, the number of students with at least $100,000 student debt went up more than FIVE TIMES to 1.82 million students. That’s a little larger than Philadelphia. Imagine an entire city with massive student debt, living on ramen noodles.
The number of all student borrowers nearly doubled to 43.4 million.
That’s just slightly larger than the state of California.
No wonder the issue has become a presidential campaign issue.
But here’s the real problem.
The loan amounts are skyrocketing because federal programs encourage the grad students from borrowing unlimited amounts.
Undergrads are capped for federal loans at $57,500.
But grad students are all set for a well-funded educational orgy. And the schools are more than willing to take advantage of the rules, knowing their increased charges will be subsidized through the loans.
The trough is open at this “All you can eat” joint.
There’s no caps, and little credit checking on the students.
But here’s the zinger.
The grad students know they can ask for forgiveness and have their debt essentially forgiven.
That’s right. Enrollment in extended payback plans has more than doubled to 3.8 million, and the paper reports that half of all debt from one of the main programs, Grad PLUS, is covered under the relief plan.
As of 2012, the Department of Education put the number at half of all law school borrowers, and 30 percent of all medical school borrowers are on this kind of extended repayment plan that amounts to loan forgiveness.
I know the effects of student debt and am quite sympathetic. And I know some of the future doctors and lawyers will be helping the poor and minorities in urban and rural settings, right?
Most, of them, however, will not be.
The forgiveness of loans to these folks amounts to affirmative action for the elite debtor, many of whom will be well into One Percent income territory.
It makes sense to go after these grad students and make them pay. Or extract some kind of service.
It doesn’t make sense to subsidize these elite earners, instead of say the 4-year graduates with $70,000 in loans making a modest living with their liberal arts degrees.
Sen. Lamar Alexander (R-Tenn.), chair of the committee overseeing education, has got to do a better job making sure the loan program is equitable, both in terms of access and forgiveness.
Knowing that there aren’t enough minority doctors and lawyers in certain communities, one can imagine instances that would justify high amounts for groups.
Here’s some examples: The Hmong student who wants to be a doctor in Fresno. The Black student who wants to work in an urban clinic. The Latino student who wants to help migrants.
But they are in a super tiny minority.
The rest of the debtors just are playing the game that’s there. And it’s not a good one.
Loan forgiveness is affirmative action for the future One Percenters. And it doesn’t make sense.
Emil Guillermo writes on race and social justice issues for the Asian American Legal Defense and Education Fund. http://www.twitter.com/emilamok ; http://www.fb.com/emilguillermomedia ; www.amok.com.Semantic Tags: Financial Aid • Undergraduate Students