By Greg Moses
As we invest in V-shaped recoveries for businesses and their employees, we assume there is some hilltop of prosperity to get back to. For this year’s college students and graduates, we forget, there is still the first hill to climb.
I’m not blaming the tenured classes who have long forgotten their eleventh thesis. Nor am I blaming college presidents in their mirror stage of consciousness, gazing into that looking glass where everyone appears as a CEO.
I won’t even blame students themselves, who have no time to think about what just hit them as they are ordered off campus and told to log in for further instructions.
But somehow, America these days has fallen into a numb assumption that, even in the middle of this pandemic crisis, it can just keep its economy riding upon backpacks filled with student debt.
We instinctively rush to backstop other credit markets. We talk loud and fast about loan forgiveness to several other classes of worthy economic actors. Yet somehow we don’t give a second thought to young American scholars who carry heavy loads of debt for higher education.
Read between the lines of national policy discourse, and the thesis that prevails is preservation of the student-loan credit complex. When it comes to addressing the needs of this year’s college students and grads, debt forgiveness is too costly to imagine.
Readers removed from the policy kitchens of Washington, D.C., can get a whiff of what’s cooking for college students by inhaling a couple of articles archived Tuesday morning at the COVID-19 web center of the National Association of Student Financial Aid Administrators (NASFAA).
The first article is all about debt postponement. The second article begins with debt postponement sure enough. But the second article goes on to stir another pot where seasoned cooks are prepping debt cancellation and grants.
This is where you are invited to skip to the end and taste the finished dish, if you already agree that debt cancellation and grants are what we need to provide our most vulnerable 2020 college students and grads.
However, to begin our taste test of today’s polite policy palate, we begin with report number one that says NASFAA on Monday joined a coalition of higher education groups asking the US House of Representatives to extend and expand student-loan deferrals.
Student loan deferrals, authorized for six months under the recent CARES Act, should be extended to nine months, and instead of just deferring government-held loans, the pause in payments and interest accrual should be extended “to all federal loans, including commercially-held Federal Family Education Loans (FEEL) and Perkins Loans.”
Student loans should also be relieved of immunity from bankruptcy proceedings. And debt loads that are lifted by lawfully adjusting student loans should not be counted as taxable income.
As for any “large-scale debt relief initiative,” says the higher ed coalition, Congress can control that cost–if forgiveness is “targeted to borrowers who are financially distressed and face the greatest difficulty repaying their loans.”
The second Tuesday morning report from NASFAA begins with Congressional proposals by Sen. Mitt Romney (R-Utah) and Rep. Josh Harder (D-Calif.) to allow 2020 graduates to defer their student loans for three years.
Rep. Harder admits that the whole student loan system is “horribly broken.” But this is old news, and if there is a groundswell of outrage about it, nobody seems to know where. Romney and Harder kick the can of postponement. And who knows, maybe in three years we can revisit the issue under more favorable political realities.
With loan postponement strategies duly noted, the second NASFAA news report then turns to three think tanks, where the policy world seems to be setting a wake-up alarm.
The Economic Policy Institute’s (EPI) senior economist Elise Gould reminds us that our ability to expect debt liberation fell victim to the crisis of ’08, but did not recover. She warns that we should think twice before declaring any deadline for when the 2020 graduating class will be prepared to assume the classic position of loan re-payer.
Plus, federal response today needs to anticipate state budget cuts tomorrow, warns Gould. When pandemic austerity hits state legislatures, forcing reductions in college funding, the heaviest burdens will fall on low-income students.
Pell Institute for the Study of Opportunity in Higher Education director Margaret Cahalan spices our discourse with the G-word, grants. If we are thinking about first generation, low-income students, then we have to consider what has suddenly happened to their family support networks as a result of COVID-19. For these students, especially, loans will be long-term running weights that they can’t take off.
Finally, Council for Opportunity in Education (COE) president Maureen Hoyler says our economic attitude toward today’s students will have impacts on their ability to become tomorrow’s home buyers.
“The recent college graduates, who graduated in 2020 and 2019, certainly need to be looked at separately,” Hoyler said. “And everybody who was a Pell [Grant] recipient who was in loan repayment–that’s a group that needs to be looked at.”
Hoyler’s recipe helps policy makers identify students who have already qualified for federal grants as a good group to start with when it comes to spending frugally on outright debt relief.
Still, it may seem to the earnest reader that higher education policy is stuck with COVID-19 problems but constrained by pre-COVID fiscal thinking. Trillions of dollars have been speedily applied to other areas of the economy these recent weeks. When it comes to student loan debt forgiveness, or a truly supportive college grant program, why is everybody suddenly reaching for the frozen dessert of frugality?
PS: Front-line COVID doctor: We want student loan forgiveness, not hazard pay ABC News