An Ancient Solution--Cancel Student Debt

2020. The year of coronavirus and its economic effects. And $1.56 trillion student loan debt. According to CNBC, more than 30% of student loan borrowers have stopped making payments, are late, or in default. One top of this, student loans also vary depending on race and sex. On average, white borrows owe $30k while black borrows owe $34k.

While opposition to debt relief can be formulated along various lines, such as regressiveness, poor formulation, lack of economic benefits, and perverse incentive, such considerations overlook the fact that there is a specific situation that needs to be addressed: racism.

As Jillian Berman correctly points out, there is a major difference between White and Black American experiences on debt. Black people are not only likelier than White people to borrow for college in the first place, they borrow much more too. Not even because they are necessarily poor. Even well-off Blacks borrow more (due to the structure of Black wealth), and to compound this, Black graduates earn less than their White peers.

So, for anyone who gives an argument about why we shouldn’t forgive student debt because it’s regressive, give them this. Afterwards, kindly refer them to the fact that the government also has paid for people’s education before–when it was limited specifically for white people. After WWII, the US had no problem paying for the returning White veterans’ education while denying the same opportunity to many Blacks. This took many forms, such as underfunding Historically Black Colleges and Universities and even outright denying people GI assistance for being Black. Thus one can make a moral argument for forgiving student loan debt.

According to philosopher Kate Padgett Walsh at Iowa State University, student loans should be forgiven however with a caveat. By appealing to moral hazard, or the idea that people don’t give a care about consequences when they know someone else will bail them out, Padgett Walsh advocates for a combination of debt cancellation with programs that reduce the need for borrowing by first-generation, low-income Black students. To do so, she seemingly appeals to Rawls.

At first, this approach seems great. It forces people to be responsible for their own decision to borrow while targeting loans held by people experiencing the worst effects of crippling student debt.

Yet, I must disagree. While Padgett Walsh is correct in noting the inequality of borrowing and even provides an answer that addresses the inherent inequality in loan forgiveness, it isn’t relatively obvious to me that outright forgiveness is in itself unfair under Rawlsian considerations. For example, which scenario benefits the worst off the most: some debt cancellation + specific programs to stop people borrowing too much or outright cancellation? And remember, the former will takes time will the latter will be immediate.

Of course, such an analysis opens the door to much economic consideration, and it is a direction I’d prefer not to venture toward. Quoting Armand D’Angour, Professor of Classical Languages and Literature at the University of Oxford, “[Like] the oracle at Delphi. Always ambiguous enough to be right afterwards. Rather like modern economists.”

Rather, a different argument is needed. Larry Strauss, a high school teacher based in the venerable city known for its angels, rightfully argues that our democracy needs student loan forgiveness. I’m inclined to agree. He correctly argues that university cultivates the vital skillset needed to sustain democracy: intellectual growth, an understanding of science and history, and critical thinking. These skills not only promote the foundation for democracy, economic security, but also sustain democracy by having a population that is able to tackle such grappling issues, such as whether to take COVID-19 seriously and how not to fall prey to disinformation campaigns. While Strauss emphasizes critical thinking, I would push this further and say that it’s only with such thinking that people are able to truly be free in the sense needed to rule over themselves as a demos.

Interestingly, Strauss ends his op-ed by saying, “If free college or loan forgiveness is a radical idea, then let’s not forget that so is democracy itself.” He may not realize it, but loan forgiveness is even older than democracy (and thus less radical!). As most of us learn early on, the Greeks (specifically Athenians) invented democracy. Most do not know the background of the development, however. Once upon a time in sixth century BCE Athens, pretty much everyone, except a select few, was in such crippling debt that they were forced into slavery.

To solve the problem, Athen’s leader, Solon, cancelled all debt. This, along with other reforms, such as substituting wealth in place of noble birth to be a leader and (debatably!) admitting even the poorest to the Assembly, laid the foundation of a citizenry that was free to rule over themselves.

In discussing Greek notions of slavery, this is of importance because the whole idea of democracy is that the citizenry has the ability to self-rule. Being crippled by debt is obviously a form of servitude because it prevents one from leading the good life. Instead, student loan debtors are forced to direct their attention to paying off burdening debt instead of doing things that promote their well-being and development, such as saving up for a house, paying for healthcare, starting a family, and/or taking a low-paying, but rewarding job that contributes to society (e.g. teaching).

So my point is that we don’t need to debate whether or not cancelling student loan debt is fair. Not doing anything about student debt is extremely unfair to Black Americans and other minorities, but it isn’t nearly as unfair as simply cancelling student debt. Furthermore, the benefits are not economic. This isn’t a case of “cancelling student-debt will promote economic growth”. Rather cancelling the debt is needed in order to preserve and sustain American democracy. Rather than focus on deontological arguments (i.e., “pay your debt”) or a Rawlsian notion of justice (fair distribution of equality), we need to focus on what debt cancellation does: foster the conditions needed for freedom. In other words, debt cancellation is needed in order for all citizens (not just Whites!) to dedicate the time to develop the virtues required for self-rule.