Why student debt relief scares philistines, the economically “inclined” and resentful formerly indebted millennials of all kinds 

Photo by Kenny Eliason on Unsplash

Student debt relief is a no brainer so long as resentful thinking and a crude undervaluing of the humanities doesn’t cloud judgement. 

I got inspired to talk about this hot button issue after listening to a debate between Sam Seder of The Majority Report and policy correspondent for Foundation of Economic Education, Brad Polumbo. 

To put things into context, United States’ President Joe Biden released the Inflation Reduction Act over the summer which alleviated $400 billion in student loans, resparking the debate around the effectiveness and morality of relieving student debt. Polumbo argues that as a taxpayer he doesn’t want to subsidize people who choose to go into degrees that have a low return on investment (ROI), which he equates to basically any program in the social sciences except economics (which Polumbo has his degree in). 

For this reason Polumbo thinks that banks should give out student loans rather than the government because then college aspirants would have to prove to a less beneficent lender that either their plan has a strong ROI, they have a lot of assets or they have substantive collateral of some sort if they want to get loans for a major with a smaller ROI. An implication of this is drawn out by Seder:

“In the world you’re talking about only wealthy people would study art, only wealthy people would study philosophy, only wealthy people would study English, only wealthy people would study civics, only wealthy people would study archeology or study anthropology—our humanities would only be dominated by people who enter college wealthy.” 

Polumbo eventually concedes this point, “If wealthy people want to waste their money that is their right.” 

Aside from this ultra philistinism, Polumbo is also saying that poor people ought to go into high paying fields i.e. STEM fields. However, if this economization of college is fully realized through banks brokering student loans, this could easily cause a potential flood in the STEM fields and cause a short to long run lack of employment openings in the most paid fields which has been the case for law school graduates in the U.S. going into legal fields

Another strange sentiment which comes primarily from millennials like Polumbo, often because they’ve had sizable student debts follow them their whole life as the major jump in college expenses happened in the 1980s which job earnings didn’t keep up with, is thinking it’s unfair to relieve student debt for the next generation when their generation had to pay them off themselves. A quick reminder that in Canada the total student debt is $22 billion and in the U.S. it’s a whopping $1.748 trillion. Meanwhile, the U.S. military budget this year was 11 per cent ($755 billion) of the annual budget and education four per cent ($297 billion) of the annual budget. 

Millennials had to struggle with exponentially growing student loans which did not keep up with job earnings during their formative years on top of the cost of living only rising and the likelihood of owning a home fading after the great recession. It’s not hard to see why some may be bitter at the idea of the next generation getting help. That being said, this is unproductive resentment and only reinstates the ideology that made those very millennial’s lives so financially stressful. 

Completely waiving student loans is the answer, it means more purchasing power for the up and coming generation which will encourage less austere spending habits, stimulating the economy as a result. 

How will we pay for it though? Free is never actually free after all right?

In the U.S. case, Bernie Sanders as part of his former presidential campaign outlined how a simple tax on Wall Street exchanges could be enough to fund free college nationwide. Raising taxes on the rich in Canada in a similar fashion is also an option, whether that’s through upping our ludicrously low capital gains tax, which currently taxes only 50 per cent of a capital gain, to returning to a progressively bracketed marginal income tax structure which existed before Brian Mulroney’s major cuts. 

The point is, it can be done. 

Free college becoming a reality requires less of a stretch on the parameters of what can be done in reality in terms of capital allocation as it does the ideological parameters that dominate a society hellbent on individualism, philistinism and ressentiment

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