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Is student loan forgiveness fair to everyone else?

US representative Ilhan Omar speaks to activists holding signs in favor of canceling student loan debt
Reuters/Evelyn Hockstein
Representative Ilhan Omar (D-MN) speaks activists at a demonstration outside the White House.
  • Sarah Todd
By Sarah Todd

Senior reporter, Quartz and Quartz at Work

Published

The question of what—if anything—to do about Americans’ $1.6 trillion in federal student loan debt has fueled political debate for years. But in the wake of a pandemic-era moratorium on student loan payments that has already disrupted the status quo, the conversation about canceling student debt has gained momentum. Now it looks increasingly likely US president Joe Biden will announce a student loan forgiveness plan this summer, according to the Wall Street Journal. Insiders say that under Biden’s most likely course of action, people with annual incomes below $125,000 will be eligible to have $10,000 wiped from their student loan balance.

Some argue that canceling $10,000 in an individual’s debt doesn’t go far enough. Even if that amount was forgiven, about 67% of the 45 million Americans with federal student loan debt would still owe money, according to estimates from the US Department of Education. Most of those who support debt forgiveness also say that it will only be impactful in conjunction with a broader slate of reforms that address the cost and financing of higher education.

Opponents to debt forgiveness, meanwhile, cite a range of concerns, including not just economic but ethical and moral considerations. “Canceling student debt would also be grossly unfair to the Americans who worked hard for years to pay off their loans,” Republican senator John Thune of South Dakota told CBS News last month.

Another common position holds that it’s wrong to use the tax dollars of low-income and working-class people to bail out college graduates who are comparatively well-off. Conservative politician JD Vance, who’s running for a US senate seat in Ohio, alluded to this idea when he called loan forgiveness “a massive windfall to the rich, to the college educated, and most of all to the corrupt university administrators of America.”

So is debt forgiveness fundamentally unfair—or is it student loan debt that’s unfair in the first place? Quartz took a look at what the fields of ethics and moral philosophy have to say.

Do we have a moral obligation to repay our debts?

Broadly speaking, when we make a promise, the most ethical thing is to do our best to keep it. German philosopher Immanuel Kant applied that logic to financial debt, pointing out that if borrowers didn’t feel obliged to repay their debt, lenders would stop lending, and the entire system would break down. “Supposing it to be a universal law that everyone when he thinks himself in a difficulty should be able to promise whatever he pleases, with the purpose of not keeping his promise, the promise itself would become impossible,” Kant explains in his 1785 book Groundwork of the Metaphysics of Morals.

But the duty to uphold our promises doesn’t necessarily trump all other considerations. Utilitarianism, for example, judges the morality of an action based on its outcomes. People who struggle to keep up with debt payments may also feel compelled to delay getting married and having kids and suffer from issues ranging from financial instability to worse mental health—negative outcomes that could potentially outweigh the importance of the initial promise. In the bigger picture, when student loan borrowers are under such financial strain that they can’t afford to buy a house or start a business, that has a negative impact on both the borrowers and the greater US economy.

The utilitarian way of thinking is “not so much about what you did in the past, but as we look forward, how can we make people happier in the future?” explains Kate Padgett Walsh, an associate professor of philosophy at Iowa State University who studies the ethics of debt. The path to greater happiness for the most people could be to cancel student debt.

When people fail to uphold their promises, it’s also important to consider the reasons why.

“There’s good reason to think that a lot of those who can’t repay their debts, they’re not doing it to take advantage of society in a really cynical way,” says Joanna Demaree-Cotton, a research fellow at the University of Oxford’s Uehiro Centre for Practical Ethics. “In fact, the people not repaying their debts tend to be those who are the least well-off.” For example, nearly 90% of people who default on their student loans received a Pell Grant—financial aid that’s available exclusively to low-income students. If the vast majority of people who default come from disadvantaged backgrounds, that suggests they’re struggling financially, not trying to game the system.

Is student debt forgiveness unfair to people who already paid for college?

Some people may bristle at the prospect of the government canceling student debt because relief wasn’t available to them back when they were paying down their own debt. Others may recall working their way through school so they would graduate debt-free, or choosing to go to lower-cost schools even if they got into more prestigious (and expensive) ones. “You hustle,” one middle-aged man who’d worked multiple jobs during college told CNN Money last year. “It’s called being an adult.”

But the rising cost of higher education means that there are real generational differences in the financial circumstances of college graduates today. Students who graduated in 2020 borrowed an average $29,927, according to a US News survey, while the average debt at graduation in 1990 was $6,760 ($14,953 in today’s dollars). Housing costs have also gone up significantly: Between 1985 and 2020, Americans’ rent-to-income ratio nearly doubled, meaning that rent and student-debt payments together take a bigger bite out of people’s budgets.

“We’re often just looking at this very narrow lens of our own experience or our family’s,” says Padgett Walsh. “And that’s a big mistake.”

That said, it’s understandable that some people feel that debt forgiveness is unfair to those who won’t benefit from it. A concern with fairness is deeply ingrained in people from the time they are infants onward, Demaree-Cotton points out. One study found that by the age of seven, children are willing to give some of their share of stickers to a child who doesn’t have any in order to make the circumstances more just. Conversely, a famous behavioral economics experiment called the Ultimatum Game found that many people are so averse to unfairness that they would rather get nothing at all—and ensure the other person gets nothing too—than receive less than their fair share of money.

But there’s an ethical issue with arguing that others should pay their debt simply because you had to. Demaree-Cotton offers the example of a person who gets into a bad car accident because the roads in their city are full of potholes. It’s certainly unfair that that happened—but the solution isn’t to never fix the roads so that everyone else has to face the same hazards.

“It seems like clearly the wrong response is to put me in a car crash,” she says. In other words, the injustice may lie less in the fact that some may get student debt forgiveness while others did not, but that the US requires many people to go into significant debt in order to get an education.

Is student debt forgiveness regressive?

Another important ethical consideration is that many policy experts argue that blanket student debt forgiveness is regressive—that is, it benefits higher-income people more than lower-income people. People who graduated from college or graduate school—even with debt—are generally in better financial shape than other Americans.

The argument against forgiving debt for people with incomes of up to $125,000, then, is that while doing so would indeed help some poorer people, it would ultimately wind up working primarily to the advantage of middle-class, higher-income graduates.

Ethically speaking, Demaree-Cotton says, it is indeed important to prioritize actions that have the greatest benefit to the least well-off. There are alternatives to blanket debt forgiveness that could allow the government to do just that.

One equitable approach would be “a system where the government could reduce the debt burdens of low-income students, and that would be progressive and targeted,” says Adam Loomey, executive director of the Marriner S. Eccles Institute for Economics and Quantitative Analysis at the University of Utah.

He’s also in favor of the Biden administration’s recent move to forgive $5.8 billion in student loan debt to former students of the for-profit college chain Corinthian Colleges, which shuttered in 2015 following a government investigation into its fraudulent practices. “There’s a good case that they were defrauded, and a good case that they got nothing of value,” Loomey notes.

However, some researchers argue that blanket student loan forgiveness could turn out to be a boon for racial and economic justice as well. Writing for Bloomberg, researchers Carl Romer and Andre Perry point out that the average Black American graduates from college with roughly twice the amount of student debt of the average white graduate. Given that more targeted attempts at debt relief, such as the income-based repayment plan, have thus far proven unsuccessful, they’re in favor of blanket debt cancellation.

A report last year from the Roosevelt Institute, a left-leaning think tank, also argued that blanket debt cancellation is in fact a progressive policy. “Attempting to ensure that not a single student debt cancellation dollar goes to the proportionately tiny numbers of advantaged households with some student debt is counterproductive,” the authors write, “potentially derailing efforts to relieve masses of young borrowers, many of whom are Black and Latinx, from the burden of financing higher education.”

The upshot

It’s true that there are elements of unfairness baked into a student debt cancellation plan. But the ethical consensus seems to be that it is even more unfair—both to people with debt, and to Americans as a whole—to refuse to take any kind of action.

“Ultimately the question is, what do we want our society to look like in, say, 30 years?” says Padgett Walsh. Alleviating the student-debt burdens of current and future borrowers is a step toward a more fair society in the long run, because greater educational opportunities are associated with improved outcomes in everything from public health to economic growth.

By contrast, Padgett Walsh says, allowing people to continue to struggle with debt “disincentivizes education and causes people to limit their spending. It makes them unwilling to take more risks and try new things, and that actually just feeds inequality as well as a result.”

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