Student-Loan Forgiveness Is Bad Policy
Student-loan debt has been shown to have a relatively modest impact on marriage rates and almost no effect on borrowers’ ability to have children.
The White House is gearing up for another installment of its interminable debate over whether to forgive some student loans. Its self-imposed deadline for a decision is August 31, and some reports suggest the President is considering wiping out up to $10,000 in student-loan balances for those making up to $150,000 a year.
There are numerous ways we could make repaying college loans less burdensome to those who took them out, such as programs that tie repayment to household income. But conservatives should avoid misplaced compassion. Holding a firm line against executive action to cancel student-loan debt is the politically popular and prudent stance to take.
It’s easy to find mainstream-media narratives of hard-case stories that make a kind of pro-family case for student-loan cancellation (many journalists themselves likely bear six-figure debts incurred at the worthless cartel that is journalism school). Profiles abound of recent graduates like Nick and Megan, who live in New York and have put off marriage until Megan's student loans are paid off. Richard Williamson, who dropped out of college with about $19,000 in loans, told CNBC he likely would have married his wife and had kids sooner if it weren’t for the albatross of debt.
Some conservatives have had their heartstrings pulled too, and are worried that recent college graduates cannot afford to have children or buy homes because of loan debt. The possibility of using executive action to alleviate barriers to marriage or fertility might tempt some to make a populist case for pro-family student-loan forgiveness.
But they should resist the bait. The evidence shows that student-loan debt has a relatively modest impact on marriage rates, and not much of an impact at all on the likelihood of having a child. Making family life more achievable and affordable is a worthwhile goal, but it should be pursued across the board—not by wiping out debt for those who pursued higher education.
As a paper one of us wrote for the Joint Economic Committee in 2021 shows, women with a large amount student debt tend to have somewhat lower rates of marriage—but that is likely driven by their choice to put off starting a family to pursue additional years of education in the first place. And the literature around student debt and fertility suggests even less of a relationship—a variety of studies suggest that for students who attend four-year colleges, “student loans are not significantly associated with the transition to parenthood.”
Reducing the cost of attaining a professional degree or Ph.D. would not make those women more likely to marry, whereas providing targeted support to married, pregnant, or parenting graduate students, like the University of Notre Dame has sought to do, would provide more meaningful assistance in juggling the responsibilities of scholarship and family life.
So the pro-family case for student loan forgiveness is largely belied by the evidence. Because a few select borrowers have racked up big balances, the average student-loan balance has increased far faster than the amount held by the typical individual. The fastest rise has occurred among graduate-program attendees. As the JEC report paper found, there is slight evidence that recent debt run-up may have curtailed fertility among those who seek graduate degrees, but the type of people who choose to become doctors or lawyers may be the type of people interested in delaying fertility until they are professionally established.
A Brookings study that found the five degrees responsible for the most student debt are MBA, J.D., B.A. in business, B.S. in nursing, and M.D., and that the top fifth of earners owe 35 percent of all student debt. There may indeed be recent MBA graduates, newly minted lawyers, and doctors in residency eating ramen noodles to make ends meet. But a point-in-time analysis of their financial situation ignores their vastly higher earnings potential down the road.
Colleges and universities have found a gullible demographic in people willing to take out an average of $77,000 in debt to get professional degrees in social work, counseling, and social health services. As American Compass’ Oren Cass pointed out, forgiving student debt without addressing structural incentives would only make the problem worse, setting a precedent for future handouts to the managerial class and the schools that cater to them.
And there are sound reforms we could pursue to make student loans less onerous on families. Many people who took out loans to go to fly-by-night schools, like Corinthian College, are truly deserving of compensation. Rep. Vicky Hartzler of Missouri has proposed a common-sense bill to remove a marriage penalty in the treatment of student-loan interest. Currently, single filers are allowed to deduct $2,500 in interest paid, while couples are limited to deducting the same amount. Doubling the allowable amount to $5,000 for married filers would remove a penalty in the tax code and give a little assistance to married couples with student-loan debt.
Get weekly emails in your inbox
Another solution is the streamlining of the income-driven repayment process, which ties the payment owed to a household’s income. These programs offer a sensible way forward for helping ease the burden of student loans on low- and middle-income households. But they can sometimes treat married couples more harshly, since a higher income can mean a higher fraction of their income going to student-loan repayment. This could be addressed by ideas such as offering a grace period for newlywed households or giving more generous treatment to households with children.
But conservatives who would attempt a counterintuitive defense of student-loan forgiveness as being somehow a populist move betray a misguided sense of empathy. Conservatives who attended high-cost institutions of higher education may have a distorted sense of how common student-loan debt is—two-thirds of Millennials owe no student loan debt at all.
Only 20 percent of young adults end up more than 100 miles from where they grew up, and even fewer attend high-cost Ivy League schools or extortionate graduate programs. The better way to help would-be parents get married and have kids is to pursue policies that lower the cost of parenthood across the board, such as making housing more affordable. But when it comes to student-loan forgiveness, standing on principle is a sounder, more conservative way of advocating for young adults from all walks of life.