Here is the Republican solution to student debt, as brought to you by the Libertarian Reason.com

Can Republicans Fix Student Debt? Unlike Democrats, Senate and House Republicans have released proposals that would actually tackle the root causes of increasing student loan debt. Emma Camp | 6.16.2023

As a long-awaited Supreme Court decision on President Joe Biden’s massive student loan forgiveness plan looms, Senate Republicans have unveiled a plan of their own to address the nation’s climbing student loan debt burden.

However, instead of promising blanket forgiveness, the Senate Republicans’ plan aims to reform how student loans are given out in the first place—seeking to direct students toward high-quality programs and limit access to schools that provide a poor return on students’ investment.

As you will see later in this “plan,” the Republicans believe the only purpose of attending college is to make more money. They measure “return on students’ investment” solely by the salaries students will receive after graduation.

The plan is composed of five separate bills. Three of the bills focus on ensuring that prospective borrowers are aware of the financial tradeoffs of taking out student loans and the financial outcomes for alumni of specific institutions.

The last two tackle the federal student loan system itself, cutting down the number of repayment plans and limiting the circumstances in which federal student loans can be given out.

The first bill in the package focuses on increasing transparency from colleges.

The bill seeks to require colleges and universities to provide a wide range of data on student outcomes and enrollment trends to the National Center for Education Statistics, which would create a database of this information aimed at helping prospective students make informed educational decisions.

Transparency is a good thing.

“Student outcomes” might have to do with graduation rates, dropout rates, advanced degrees, and employment after graduation. But they wouldn’t measure what students learn.

And most importantly, it doesn’t address the student loan indebtedness problem.

Can anyone tell me why a nation whose competitiveness relies on its young people to being educated wants to “limit the circumstances in which federal student loans can be given out?”

If the Republicans ran a company, would they want to limit the circumstances in which the company could profit?

It’s absolutely nuts, especially since the U.S. federal government has infinite dollars.

The proposal’s second bill would require colleges and universities to use a standardized financial aid offer form to maximize transparency around the true cost of attending a given institution.

The third bill in the proposal has similar aims, requiring that students applying for federal student loans receive information detailing sample payments for their loans, as well as how long they would expect to be paying off their student loans and what income they can expect to make after graduating from a given school.

These two “solutions” are reasonable in that they provide borrowing information. But they still fall far short of solving the student loan indebtedness problem.

They merely say, “Here’s what it will cost you, and if you can’t afford it, don’t go to college or take out a loan.”

But the purpose of the student loan program is to enable more children to attend college, not to winnow down the number that can afford it.

The fourth bill cuts down on the number of repayment plans available to borrowers.

The bill would consolidate the host of current repayment options down to two—a standard 10-year repayment plan and a Revised Pay As You Earn (REPAYE) repayment plan with minor changes.

The REPAYE plan is an income-driven repayment (IDR) plan, which currently allows borrowers to pay a monthly amount fixed to their income, achieving forgiveness after at least 20 years of payments.

Importantly, the fourth bill also cuts off access to federal student loans for students attending programs that do not result in median earnings higher than those of adults who only have a high school diploma—or a bachelor’s degree, in the case of a graduate program.

To Republican minds, the purpose of attending college is to make more money. Otherwise, it supposedly is a waste of time and money.

The right-wing mentality says that the arts — music, dance, painting, theater, writing, sculpture, etc., — should be measured by how much money you can make from them.

History and philosophy also should be measured by the money you can make, not by their contributions to human culture. Mathematics, too. And teaching. And physics.

To the right-wingers, if your education doesn’t pay you more money, the government shouldn’t help you, no matter how valuable to America it might be. WHY?

Most importantly, the Republicans assume college has no social benefits. But, the 18 through 24 age period is a maturation time, a time to go from childhood to adulthood.

College provides the non-financial benefits of learning about the world along with other young people of like age.

Again, the Republicans measure everything by dollars, while falsely claiming the government doesn’t have enough dollars.

The final bill in the package would eliminate Graduate PLUS Loans—a type of federal student loan whose borrowing cap was removed in 2006.

The removal of this cap has been directly connected to a rapid increase in graduate school tuition, as—unlike for undergraduate programs—graduate students were able to borrow an unlimited amount from the federal government, incentivizing universities to jack up prices.

The function of the student loan program is to help more students afford college. So, of course, colleges have more room to “jack up” prices with more students able to pay. That is a fundamental result of affordability.

The government must pump more growth dollars into the economy when colleges increase prices. That benefits the economy.

Capping loans merely means that fewer students will be able to afford advanced degrees. How does that benefit America?  It doesn’t. It simply reduces the number of highly educated Americans and widens the income/wealth/power Gap between the rich and the rest.

Notably, House Republicans have also introduced their own legislation aiming to reform federal student loans.

Their proposal would provide “targeted” student debt relief to those who have consistently made payments but have seen their debt increase anyway.

The GOP (aka, “the party of the rich”) wants to give “targeted” relief to those who were able to afford debt payments, conveniently leaving out those who were financially weaker and unable to make payments.

The proposal would also reform existing income-driven repayment plans and mandate considerable warnings for borrowers before student loan payments resume in October.

“Colleges and universities using the availability of federal loans to increase their tuitions have left too many students drowning in debt without a path for success,” said Sen. Bill Cassidy (R–La.) in a Wednesday statement.

No, Sen. Cassidy, the government has left students drowning in debt by lending them money that should have been given.

Grades K-12 have been government supported for centuries. Grades 13+ also should be government-funded, not just at community schools, but top schools, too.

The more kids who decide to go for advanced degrees, the better off America will be.

“Unlike President Biden’s student loan schemes, this plan addresses the root causes of the student debt crisis. It puts downward pressure on tuition and empowers students to make the educational decisions that put them on track to academically and financially succeed.”

No, it cleverly disempowers poorer students and widens the education gap between the rich and the rest. It does nothing about the “root causes of the student debt crisis.”

The Republicans’ plans offer a constructive solution to the problems that plague the federal student loan system. Rather than focusing on short-term solutions—like Biden’s $400 billion student loan forgiveness boondoggle—Republicans’ plans target the sloppy government policies which directly cause rising student debt.

In particular, the Senate’s attempt to eliminate Graduate PLUS Loans and both plans’ proposals to reform income-driven repayment plans take direct aim at some of the most fiscally irresponsible federal student loan policies.

To Republicans, “fiscally irresponsible” means money going to the poor and middle classes. Notably, it does not mean the tax loopholes given to the rich.

While both bills face an unlikely path toward actually becoming law, they provide a clear template for what a sensible response to the student loan crisis looks like—and policies that are actually likely to lower the cost of college, not raise it.

Except, the bills ignore the fundamental purpose of education in America: To improve America.

The original Colonists understood that. Sadly, today’s inferior crop of politicians is so taken with what’s in it for them that they completely ignore the question, “What’s in it for America.”

THE ROOT CAUSES OF THE STUDENT DEBT CRISIS

Educating young people benefits America. That is why the American colonies mandated free education for our children.

And that came when reading, writing, and arithmetic were much less important to our agrarian society than they are today.

Yet, taxpayers willingly bore the cost of education.

Today, primary education and especially advanced education are far more critical. The world has advanced, and to remain competitive, America must rely on its educated young people.

There are three root causes of the student debt crisis:

1. Attending college is expensive. Many families find tuition, food and lodging, books, and materials unaffordable.
2. Not having a job is expensive. Many children can’t afford college because their families need them to stay home and work full-time. Even with a free ride that includes everything in point #1, some kids can’t afford not to work full time.
3. The federal government, which has infinite dollars, lends rather than giving money to the students.

The latter point is an extension of the false belief that our Monetarily Sovereign government’s finances are like personal finances.

The ignorant idea that the federal government spends too much contradicts the simple formula: Gross Domestic Product (GDP) = Federal Spending + Nonfederal Spending + Net Exports.

GDP is the measure of our economy, so by formula, increased Federal Spending grows our economy, and decreased Federal Spending shrinks our economy. Simple algebra.

Thus, the Federal Government never should lend to Americans; it only should give to Americans.

The student debt crisis results from requiring students to borrow from the government rather than receiving dollars with no payback requirement.

The government neither needs nor even uses the dollars that are paid back. The solution to the student debt crisis is straightforward. Just as local governments fund local schools, the federal government should fund colleges and universities.

In fact, the federal government can do it more easily than can local governments because the federal government uniquely is Monetarily Sovereign; it cannot run short of dollars.

The federal government even should pay students a salary for attending college, so the students’ college attendance does not penalize the student’s family monetarily.

It is beyond stupid for the U.S. government to take dollars from students when America’s competitive position depends on our young people being educated, and the government has infinite money to pay for their education.

Of course, a government that refuses to recognize Monetary Sovereignty and the formula GDP = Federal Spending + Nonfederal Spending + Net Exports is already beyond stupid, so the extra stupidity is to be expected.

Rodger Malcolm Mitchell Monetary Sovereignty Twitter: @rodgermitchell

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The Sole Purpose of Government Is to Improve and Protect the Lives of the People.

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