Should Biden Give Up on Student Loan Debt? | Crooked Media
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September 01, 2023
Positively Dreadful
Should Biden Give Up on Student Loan Debt?

In This Episode

After a three-year hiatus during the COVID-19 pandemic, Americans will have to begin repaying their student-loan debt this month. And after the Supreme Court’s 6-3 decision in June to strike down President Biden’s student-loan forgiveness program, mass relief probably won’t come anytime soon. Biden has adopted other, narrower programs, and may try to salvage a Plan B for broader forgiveness. But in the meantime, millions of Americans are financially unprepared to start making payments again, and the Department of Education is stuck in a logistical quagmire, trying to restart a repayment system that wasn’t designed to be paused. What should Biden do in the face of a right-wing Supreme Court that seems uninterested in changing its views? Or about the larger, systemic problems that caused a student-debt crisis in the first place? Even in an ideal world of free or affordable public universities, what impact would right-wing ideology have on curriculum? Host Brian Beutler discusses all of these questions and others with Kevin Carey, vice president for Education Policy and knowledge management at New America, where he directs the Education Policy program.

 

 

TRANSCRIPT

 

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Brian Beutler: Hello and welcome to Positively Dreadful. With me your host, Brian Beutler. One of the first things that happened after school broke for summer earlier this year is that the Supreme Court’s six Republican appointed justices threw out President Biden’s plan to forgive a bunch of student loan debt. They said the forgiveness program that Biden announced about a year ago in which several million graduates and former students had already applied for, was an unlawful use of the administration’s emergency authority to waive or modify student loan arrangements. So the new class of students poised to begin college and rack up more debt, the administration has had to decide how to respond to the court, and that has essentially revived the intra Democratic, intra liberal debate over the merits of forgiving student loans as a policy priority. There are those who say Biden should reintroduce the same relief plan all over again, this time under a different authority contained in the Higher Education Act. There are others who say a Plan B like that is is destined to meet the same fate as Plan A, and that Biden should therefore cut his losses on mass student debt forgiveness and focus on forward looking policy. For his part, Biden appears to be attempting both things at once in the near term to help borrowers whose payments will become due again next month. He’s announced a plan to tie repayment to income and family size in ways that should help many borrowers save money. Then sometime next year, he’ll try to wipe most of that remaining debt off the books like he did a year ago. When you add all that up, you get a kind of policy mishmash that could leave even highly attuned student debt holders confused about what they should do. Some will likely end up delinquent on their loans. Others will pay only to find out that Biden’s going to try to forgive their debt anyhow. And then to make matters more confusing, still, there are a whole other set of experts who believe this should never been a priority for Biden at all. Loosely speaking, I think this schism divides a class of wonks. So we’re talking economists and higher education policy experts from advocates and politicians, and of course, the people who are carrying around all this debt. And because there’s a lot of money and a big moral question at stake, the argument between these factions can become heated. The policy people point out, for instance, that student loan relief is a form of economic stimulus. That the plan was developed at a time when the economy needed to be stimulated, which it no longer does. They note that distributionally student debt relief is poorly targeted. Most people have no student debt. The people who do aren’t typically the neediest among us. They also note that wiping a bunch of this debt off the books one time does nothing to address the policy failures that landed so many people with large debt burdens in the first place. Without those kinds of reforms. They argue the best will be able to do is   a kind of debt relief jubilee, where every few years we look to see if higher education is paying off as intended. And if not, we nuke a bunch of the debt. But proponents of relief say you can’t just ignore the first victims of those policy failures. And they note factually that this is something Biden promised to do without any caveats. He didn’t say he’d forgive student loan relief if macroeconomic conditions justified it, just that he’d do it because it was the fair thing to do. What’s interesting to me about the dispute is it is it viewed in isolation, everyone’s points are unobjectionable, but that’s because those points aren’t really responsive to one another, which is why the debate itself seems so impossible to resolve. The moral case for debt relief runs on a different track than the economic or incentives based case against relief. It’s like if somebody you trusted said, eat these foods, they’re great for your health and you’ll be helping the environment. And someone else said, But these other foods are cheaper, so you should eat them and save money. They could both be completely right. And who you find most persuasive will depend on what your priorities are. If money’s not an issue, but you need to lose weight, that first pitch will sound great and vice versa. Or maybe you’ll mix and match and try to get the best of both worlds. So who should Biden listen to? Is there any way he can be everything to all people? Is there a viable middle ground? And what can he do after his debt relief policies are in place so that we don’t end up right back here in five or ten or 15 years? Kevin Carey directs the Education Policy Program at the New America Foundation in Washington, DC. One of my old haunts and has argued that the best way to help the most people under the current Supreme Court regime is to give up the ghost en masse debt relief and help those who continue to owe money to reduce and eventually eliminate their debt burdens in more targeted ways. Kevin, it’s great to have you on. I’m really glad you’re able to do this. 

 

Kevin Carey: Yeah, great to be here. 

 

Brian Beutler: Before we get into the substance of it, did you have any objections to how I framed this issue? 

 

Kevin Carey: No, it’s a complicated issue, and I think you did a great job of laying out all the particulars for your listeners. 

 

Brian Beutler: Okay, so do you do you still see the piece that I referred to that you wrote for Vox about telling saying Biden should cut his losses? Plan B is going to run headlong into the Supreme Court. That was a few weeks back. Do you still see a big train wreck coming? 

 

Kevin Carey: Well, we don’t know exactly. The Biden administration has chosen to implement its so-called Plan B, trying again to do mass debt cancellation using a different legal authority. As you said, you know, the first try was under the Heroes Act, emergency legislation that was tied to the pandemic. The Supreme Court knocked that down. So now they’re going to try under that, the Higher Education Act, which is a a an older statute originally passed in the 1960s, that is basically the umbrella law for most federal higher education policy, including our whole student loan system. But the way they’re doing that specifically is through a pretty complicated and lengthy process of federal rulemaking by the Department of Education, where you have to have a lot of meetings and notices and comments. And this is the way the Department of Education is legally required to do all of its rules. And so so it’s not an unusual process in that sense. It is the standard process, but it’s a process that can take, you know, up to a year sometimes depending on how fast you do it. And so the the way it works is the department kind of puts a bunch of issues on the table, invites a bunch of people to negotiate, sees that they can come to some consensus around a new approach. If they don’t come to a consensus, the department can then come in and more or less just implement whatever rule it wants to, but it has to go through all the motions, first of all, which is to say that the Department and the White House have not actually said exactly what Plan B is. They haven’t said we’re going to try to do exactly the same thing that we announced a year ago, that the Supreme Court just knocked down. They have, I think, strongly implied that they’re going to do that. I mean, it’s not like Plan B subset, whatever. It’s, you know, same thing, new, new, new law. But that means there’s a little a little confusion, which to me is sort of part and parcel of the whole problem, which is this is all happening at exactly the same time that the student loan system repayment system is being turned back on again in a couple of days after having been turned off for the last three and a half years. No one has owed any money on their federal student loans since March 2020 because of the pandemic and a series of first laws and then executive actions that followed that, no interest has accumulated on loans during that time. Anyone who is in default on their loan has basically been sort of set in place and not had to suffer any of the consequences of that. That’s all starting up again next month in September. We’re recording this late August 2023, loan payments and interest will sort of start up again. And so that is a huge endeavor to you know, this loan system was not designed to be turned off that way. This has never happened before. There’s no precedent for a pause of this length. And I’m not criticizing the fact that there was a pause. There also hasn’t hadn’t been a pandemic in 100 years. You know, like new things happen. But, you know, it means that there are people who graduated from college three years ago who have never made a loan payment because they haven’t had to. They may have moved away. They have new email addresses. There’s a huge logistical task in front of the Department of Education to get this system going back up again as they are required to. And I should say that the restarting the system was a one of the terms of the bargain that the Biden White House struck with mainly the republicans in the House of Representatives, you know, under the debt hostage taking negotiations of a few months ago said they so they are legally required to do this. So having there be confusion about like about people who are now, you know, having to start paying their loans again, am I going to have to pay them? I was told, you know, for for many people, I think up to 20 million people, if the Supreme Court had gone the other way, their debts would have been wiped out. They would never have had to make another loan payment again. Now, they are going to have to they are you know, their payments are starting up again. And so the fact that the Biden administration has said, you know, we have a plan B but hasn’t even said what plan B is, is just like one more element to a very confusing situation that, again, I think you did a good job of trying to explain, but it’s confusing nonetheless. 

 

Brian Beutler: I didn’t actually prep this question, but I I’ve wondered, I think, since I followed the oral arguments in the in the case of Plan A, it’s common as far as I’ve ever covered the Supreme Court for the solicitor general, the Justice Department, whatever to say. We think the the law or policy that’s being challenged is valid under our interpretation of Statute A. But we also think it’s valid under Statue B, so if you disagree with us about it, you should consider B like, why wasn’t this briefed in a way that allowed them to get to the bottom once and for all? Whether the Supreme Court was just like, no way, no how, under no authority can you do this or this more like piecemeal thing where it’s like, well, maybe, maybe you can like A doesn’t work. But if you come back and and try B maybe, maybe we’ll let that one fly. 

 

Kevin Carey: Well, I don’t think you’re right about that in the sense that, you know, A, like often advocates will make sort of a tiered series of logic. 

 

Brian Beutler: Mm hmm. 

 

Kevin Carey: Like, well we you know, we went on standing. But even if we lose on standing. 

 

Brian Beutler: Yep. 

 

Kevin Carey: You know, we win on statutory you know this but even if we lose on that, we still win in this third thing and this fourth thing, they have these sort of like almost like lines of defense that they’ll continue to fall back. 

 

Brian Beutler: Yep. 

 

Kevin Carey: but it does have to originate with some some original assertion of what statute they are are relying upon to do what they want to do. And you have to just stick with that. You can’t come in and say, because the language of the Higher Education Act is different, you know, they would have to make a whole different set of legal arguments about about which I guess they are now prepared to make about based on, you know, potentially a different set of legal precedents. So I don’t actually think it’s the case that they could have done it. 

 

Brian Beutler: Okay. And I guess we’ll find out like maybe Plan B will be different in ways that they argue they had to make these changes in order to shoehorn it into higher Education Act authority. That Plan A just didn’t fit. So the case you made against reviving the old forgiveness plan or some similar version, I didn’t take it to be really about the merits of mass relief as a concept, but mostly your assessment of the Supreme Court. Like if the court is just going to throw it out anyhow, then it’s wrong and messy for the reasons we’ve already talked about here, to tempt borrowers into thinking they can just wait and get the relief they were promised in a year or whatever. So it’s not really about things like the macro economic consequences of relief or any other policy matter per se. So let’s just pretend the Supreme Court ceased to exist tomorrow. What is your view on the abstract merits of the big plan? 

 

Kevin Carey: Yeah, there’s a bunch of dimensions. And you, I think, named them all pretty well. You know, I’m not an economist, so I’m not going to offer an opinion about how much capacity there is in the economy and whether the stimulative effect of this would make inflation worse. I just I’m not you know, that’s not my field. And and that’s not kind of where I make my arguments. I do think there is a strong both moral and policy argument that the nation made, you know, really a terrible mistake by just by kind of backing into or deliberately choosing a debt finance system of higher education that there was in particular, you know, the millennial generation, which was in college at its peak at exactly the time of the Great Recession. And so, you know, we had the most number of people leaving colleges that had never been more expensive into a job market, that had never been worse in anyone’s living memory, and that damaged people’s ability to get jobs and pay their loans back. Many people, you know, opted to go to graduate school. A lot of the debt we’re talking about is graduate school debt. And that’s probably something worth exploring when we talk about some of the policy nuances of this. You know, we we had a good deal in this country where if you saved a little money or, you know, relied on federal aid or, you know, took out a job that you could emerge from college debt free and we reneged on it and and that people were damaged by that. And we have an obligation to help them. I think that’s a strong moral case. I think it’s a strong policy case, and it’s not something that I disagree with how exactly you do it like for whom and under what circumstances is really complicated. And it very much does tie in to the what do we do next. Part of this whole discussion. You mentioned in your in your framing, you know, the potential for some kind of, you know, future series of jubilees of debt forgiveness. The nature of the Biden plan was that, you know, there would have been some kind of deadline. You know, anyone who has a loan as of this day is eligible for this forgiveness. And anyone who has one as of the next day is not, you know, that that creates a lot of complications and questions, I think legitimate questions of fairness. I’m not all that sympathetic to sort of like past fairness arguments. Right. You know, like, oh, well, I paid my loan back. Why don’t I get forgiveness? I think people generally, you know, want things to get better. You know, I don’t remember anyone complaining when we when we signed the Affordable Care Act, like, oh, well, why didn’t I have Obamacare ten years before that? They’re just like, Boy, I’m really glad we have this now. So I’m not really sympathetic to those kind of arguments. I am kind of sympathetic to the person who goes to college one year later, after the debt forgiveness, who is basically no different than the person who went the year before and yet doesn’t have their loans forgiven. And if the implication of that is that, well, we’ll just keep forgiving the loans. I do think that that becomes a huge public policy morass. We have no price controls over our higher education system right now. You know, we can particularly for graduate school, you can borrow any amount of money to pay any price that an accredited college chooses to charge you. And the idea that we would just finance higher education by, you know, allowing colleges to charge anything. Lending people the money and then just forgiving the loans seems pretty bonkers to me. It’s not how we would do anything else. And it’s kind of an invitation to exacerbate all the existing problems we have with colleges, you know, raising prices too much and loading students up with too much debt. 

 

Brian Beutler: I’m really glad you you you teed this up by saying that the moral impetus is that is that we society like reneged on a promise to essentially the millennial generation in a day, did everything that they thought was right, graduated into this terrible economy. And so the American dream really kind of wasn’t available to them. And that, you know, the the cut off point in the in the Biden student loan plan creates the risk that. Well, so maybe we’ll fix it for the millennial cohort. But if the Gen Z cohort falls into the same, same pitfall, there won’t be anything available for them. And that and that. Yeah, I think the implication there is that if you are going to make a social compact with the public, you have to keep it one way or another. Like either it fails and you make people whole or you rework it so that it, you know, you don’t end up with, with the failure again. And that’s what I always keep coming back to when I when I try to evaluate the arguments that people who are more immersed in this topic than I am make right like I feel like you can make in politics. You can make a decision that on balance isn’t like politically advantageous or ideally like optimally, politically advantageous. And you, like you can live to fight another day or you can make a policy that is suboptimal in some economic sense. And unless you like, unless it’s really catastrophically suboptimal, you can again like live to fight another day. But if you make a big social compact with citizens and then you violate it, then I mean, in addition to the moral problem that that you raised, you’re kind of playing with fire and the people are just not going to trust the government. The the sort of like national storytelling we engage in to try to encourage people to do the right things in life. And and this pile up of debt that Biden is trying to help people out from from under, it just looks to me like that’s what you get If there’s a major abrogation of this idea that we try to impart to kids, like if you go to college, that’s the golden ticket to to the middle class or the upper middle class. And it’s. At the end of the day, you can set aside these questions of economic policy maximization or whatever and just say, we really can’t just pretend that didn’t happen. 

 

Kevin Carey: Yeah, I know, I agree. And I think, you know, and I say this as someone who I work in education policy for my my job. I’m a big believer in education, in higher education. But in a lot of ways, it was kind of an easy way out for policymakers to say, well, look, you can just take out a loan, go to college or get a degree. That’s the opportunity. We don’t have any other obligations to you. And that was a much too cheap and narrow vision of what our obligations to people were. You know, we ought to also manage the economy and not have gigantic fiscal crises that cause recessions we ought to make sure that when people graduate, there are good jobs for them to graduate into, which, you know, there’s never been a guarantee that a college degree would get you a good job. But the more expensive it becomes, the more sort of tenuous the cost benefit becomes for people. You know, often the, you know, places that are hiring for people with college degrees have unaffordable housing. Right. So so that’s kind of the pluses and minuses on all of that. There are all kinds of things kind of going on. And so so, you know, I think that the the the the the anger, the passion, the resentment, the the the real deep grassroots call for change that is fueled by the student loan forgiveness movement is entirely legitimate. And I think it’s a very positive thing that it’s become mainstreamed as a real force in American politics. We’re just now running into some real complications when it comes to what our current Supreme Court will allow, quite frankly. And then, you know, also, at some point, you have to figure out the policy details. They do matter in some really important ways. You know, often what people will say is, look, what we need. What we need is loan forgiveness in the past for people who were harmed and then free college in the future. So we don’t have this kind of problem, which I support. A good idea. A lot of complicated questions about how exactly to do free college. But it’s worth noting that even the most ambitious free college proposals, and I’m thinking of the proposals that had been put forth by Bernie Sanders or Elizabeth Warren, they’re only proposing free undergraduate college for people who go to public universities. Most student loan dollars were taken out either to go to graduate school or to go to a private college. More, more borrowers who go to public colleges, they don’t borrow as much money. So if you just look at the volume of loans, you know, most of that outstanding $1.7 trillion that we have graduate school or private college, nobody has a free graduate school plan that they put forward, and nobody has a free private college plan that they put forward. And, you know, for some good reasons, we do make. I think distinctions in how we think about how best to spend public money and who should be subsidized and how much they should be subsidized. And and a system as vast and diverse and complicated as American higher education, those distinctions matter, like to the tune of hundreds of billions of dollars often. And so that, you know, that was going to be another complication of of mass loan forgiveness, which is even if we, you know, you know, the the next election goes better than anyone could possibly imagine. And there’s a you know, there is there’s a legislative window for real fundamental change in American higher education. And we did free college. It still would have been a windfall for graduate students in the past and not in the future. Right. Kind of regardless of how much money you made and all these things. And, you know, that is you’re kind of the you’re kind of bringing the deserving and the not as deserving alike into sort of one big policy. And we need to pay attention to these things. Like these things do matter when it comes down to the specifics. [music plays]

 

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Brian Beutler: I’m going to back us into the the policy question of what a government like a governing minded, comprehensive reform might look like. But I do want to talk about the Supreme Court a little more first, just because I think you’re probably right that the justices aren’t going to say, well, now that we’ve heard this other legal rationale for a big debt forgiveness plan, our hands are tied. And even if we don’t think it’s a good idea, the law requires us to allow you to implement it. I, I don’t think they’re like that. But it just is the case that the Supreme Court, as currently constituted, is making these kinds of unprincipled decisions, or they’re just, you know, glomming on to doctrine that allows them to do what they want because they say, well, this is, you know, too big of a policy. And so it has to it has to fall unless Congress says it’s okay. Doesn’t Biden have to? Does he have some obligation to consider the implications of just accepting these rulings without putting up a fight, like stipulating to all of the confusion it might create for him to to forge ahead with Plan B and and how that might ensnare a bunch of the former students who have this debt that. It’s like he ought to be thinking to himself, like, if. Like, I should be standing up to the Supreme Court. Like for the for the institutional prerogatives of the executive branch if they’re going to act like this towards us. 

 

Kevin Carey: Yeah, no, I mean, I mean, definitely people in the the debt forgiveness movement have made that case in the in the Vox article that you that I wrote that you mentioned, you know, I did interview the legal director for one of the main debt forgiveness advocacy organizations, and he made exactly that argument. He said, look, the normal the normal rules don’t apply in terms of, you know, court, you know, your your likelihood of succeeding in the court. This is really an inflection point for the Biden administration’s relationship with, I think he said, a corrupt Jim Wallace, Supreme Court. And, you know, plenty of people have as made the argument that, look, this is what FDR did. Right, that he was he went through a, you know, a decade of obstruction before the court finally kind of caved in to the to the weight of of political pressure for reform. And and that, you know, there’s an analogous situation today. I don’t know. I mean, I understand those arguments. That was 80 years ago. And I would say there are different ways that you can you can not back down. Right. There are different ways that you can continue the fight. But I don’t know that, you know, running your head back into the same brick wall that you just bounced off of is necessarily one of them. I mean, you know, it’s been not that long, for example, since the Dobb’s decision overturned Roe v Wade. Right. And the you know, the Biden administration has said and done, you know, many things, not as many as some would hoped and not, you know, kind of defending the totality of their response. But, you know, they very much said we disagree with the decision. You know, we’re going to try to do these various things to, you know, support women and their access to health care and their right to have an abortion. And that’s playing out in like lots of different ways. Right? Like Tommy Tuberville, the the dimwit senator from Alabama is holding up like every military promotion because he doesn’t like the fact that the Biden administration is going to allow service members to travel to states where abortion is legal, just as one example. What I don’t think anyone is saying is let’s let’s put the same issue back in front of the same six justices again. And just have them decide again. I don’t hear anyone saying that that’s what constitutes standing up to the Supreme Court on Dobbs. Because it wouldn’t work. You know, I mean, you know, none of them seem to have signaled any real second thoughts about their their decisions there. And the idea that we’re going to just if we yell at Clarence Thomas enough, he’s just going to change his mind about that. I mean, you know, it kind of depends on the issue. I think this is a little bit of a tangent. It does seem like the last decade of yelling at John Roberts about his decisions and the Voting Rights Act absolutely did work right when he kind of came back around and had to make some decisions about the the you know, the Supreme Court there that took ten years. It was a lot of yelling. But John Roberts is you know, he’s susceptible on some things and on other things. And he is definitely a believer in this major questions doctrine. He wrote this opinion on the the loan forgiveness for a reason. He really just does not like the idea of an executive making big new broad interpretations of old laws to do things that it wants to do. And again, lots of people have have criticized that approach as being unprincipled and essentially, you know, asserting the Supreme Court’s, you know, role and making it into a, you know, a third branch of Congress. And I, I agree with a lot of those criticisms, but I’m just making an observation about what’s likely to work and what is not. 

 

Brian Beutler: You could also win over John Roberts and still lose [laughter] is like the problem that we keep running into. 

 

Kevin Carey: It was, it was 6-3 not 5-4.

 

Brian Beutler: Yeah. So okay let’s let’s let’s as I said, back into the policy discussion, what would you do to retool the system so that higher education isn’t just kind of a permanent debt trap and it loses its luster as like the a good thing for people to to aim for when they’re young. If if free college has some of the shortcomings that you already discussed because it wouldn’t touch private universities or graduate schools like what’s. What’s a like a five point Kevin Carey plan to to fix higher ed? 

 

Kevin Carey: Yeah, I would start with a form of free college. You know I don’t know that we need to make every single public university in America tuition free all at the same time. You know, again, it’s a huge system and there’s a lot of variation. Right. So, you know, I thought that the free community college plan that sort of was lost in the the blood bath of the Build Back Better program a couple of years ago was actually a really good start. But the Biden administration put out I would actually extend that to a public four year colleges and universities mostly focused on the less expensive regional institutions that tend to educate a lot of lower income and Pell Grant eligible students. I think you can get most of the public college colleges and universities in America into a well-financed, well-run system where, you know, essentially free tuition for everyone making below, say, median family income and a modest tuition, you know, for everyone else, maybe no more than $5,000 a year. So we are making some distinctions about prices based on income and and things like that. It is sort of a nod to the fact that overall people who go to college are both more well-off going into college and more well-off, you know, after college, because they had their degree with lots and lots of exceptions in both directions. And then, you know, frankly, for graduate degrees and for private colleges, I don’t think we should have just free graduate school. Yeah, I think that is financially untenable. Both both because I don’t think we should subsidize every single graduate and professional program that’s out there. But the other part of it is the colleges and universities would fight that tooth and nail. They absolutely do not want their graduate programs to be somehow kind of under the egis of federal regulations, because it would basically put the federal government in the position of deciding how much money is spent on those programs. You know, if there’s no tuition, then price controls are revenue controls. Right. And so and that’s fine and works pretty well for community colleges and undergraduate programs that essentially operate like mostly public institutions. Graduate programs are kind of out there in the free market for for what people are willing to pay for degrees that that have some direct path toward a career and a pay off in the labor market. I don’t think making them just free across the board is a good idea. What I do think we need to do is regulate them much more tightly than we’re regulating them now about whether they’re actually good programs that are affordable and lead toward jobs where people can pay their loans back. This is basically an approach that’s only been used for for profit colleges historically. And that’s another thing that, you know, that was a big accomplishment of the Obama administration that was then wiped out by the Trump administration and is now being re-implemented by the Biden administration. But it’s only for for profit colleges. I would actually extend that approach to include graduate and professional degrees that are offered by public and nonprofit institutions, many of which are very expensive. You know, they’re kind of all charging market prices in a lot of ways. And so lets only lend people money to go to programs where they’re actually going to earn a credential that will allow them to pay their loans back. Now, that means that not all debt is bad debt. And I think some of the rhetoric around the student loan forgiveness movement has kind of erased those distinctions as if any any loan was a mistake and a tragedy and and an injustice and therefore, all the loans should go away. I don’t believe that. I think that a lot of them were, but I also think some of them were not. People do borrow money for just completely rational reasons and they are able to pay them back. And we don’t need to subsidize those loans. But we shouldn’t be lending public money to bad programs which exist across the board in both graduate and undergraduate programs. So that would be my approach. 

 

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Brian Beutler: I’m a, you know, a journalist who didn’t go to journalism school, thankfully. [laughs]

 

Kevin Carey: Smart move. 

 

Brian Beutler: And I’m just sort of like. Yeah. And I’m like, just thinking of all the all the justice that could have been done if we had had that approach to journalism, graduate programs over the years. One follow up question on the on the like the the free public college idea is that in the in the health care space, the health insurance space, we talk about the idea of the public option and one of the appeals of the public option. I mean, there’s two appeals. One is that it could grow and just become a single payer, but the other is that if it even if that doesn’t happen, that. It would almost gravitationally bring down costs in the private insurance market because it would lose a lot of the overhead. You’d have economies like it the government could use its monopsony power to bargain down prices across the board, and that that would have knock on effects even for people who are in Aetna or whatever. Is there a similar analysis that that holds to the idea of a public option in in four year colleges that it would make other private schools cheaper just so that they could compete? 

 

Kevin Carey: Yeah. I think. I mean, the public option sort of is the promise that was broken. You know, there was never a time that any college was free in the United States. It was that there would be a a good public university, public, you know, community college or a public university that was not that far away from where you live that you could it would admit you. And that’s another part of it, too. You have to get in. And that would be affordable, right? That was what we used to have. And getting away from that was really the root cause of the debt crisis. And that’s what we need to get back to. But it was never free graduate school. It was never a free private college. You know, again, for reasons it was never, never free Princeton, you know, or anything like that. And so it would be a huge step to get back there, would it? If the question is, would it have the kind of would it restrain prices? I think so. You know, it’s very hard to tell. I mean, the the the reaction, the relationship between public subsidies and college pricing is complicated. And there are some, you know, lots of very smart economists who have done research kind of looking at this relationship. It’s not actually super clear what it is. Exactly. So I see the public option is less a industry wide price control strategy and more a, you know, basic obligations of public services strategy. It’s something that everyone in America should have available to them. Private colleges, you know, a lot of private colleges are in tough shape right now. And, you know, it should be said that that while we think of private colleges as being, you know, wealthy institutions for wealthy students, most of them are neither of those things. Most of them don’t have that much money and neither do their students. And there are a lot of them are going bankrupt right now. And it would be, you know, in a lot of the private colleges when they’ve you know, they’re not supporters of free college. One of the reasons that free college hasn’t happened yet is that when these proposals come to Capitol Hill, the lobbyists who represent private colleges say don’t do that. You know, you should just increase the Pell Grant, which is a voucher system and can be used to go to, you know, a public or private college, you know. That should be our strategy for making college more affordable. So you kind of run into those those dynamics as well. 

 

Brian Beutler: If you could kind of imagine like a grand bargain that would address the injustice to the mostly millennial generation of student debt holders, a a free college option that would a free public college option that would kind of help restore the social compact for the future generations and then a tighter regulatory regime around graduate school lending. I mean, I add that all up, and I think if we had like if Democrats had a more faithful opposition, that kind of compromise or at least like and moving an increment in that direction would be viable because, you know, Republicans would get to crack down on their nemesis in the graduate school realm and Democrats would get some debt relief and affordability measures and everyone wins. Is is that kind of swap? Only not viable because there is this kind of like you have a party that just like, you know, what if if a bunch of millennials who went to college are pissed at Democrats and the government for for screwing them out of the American dream, that’s great. Like, we’re happy to see people upset with how things turned out. The government broke a promise to them, whatever. 

 

Kevin Carey: I think I think it is viable, first of all. I think the the there are pretty clear ways to make all those policy pieces fit together. I think the price tag is not outlandish, is certainly in the realm of costs that, you know, have been discussed in a little bit of a different fiscal context. When we felt like there was more and more money to spend, but it wasn’t, you know, trillions of dollars or anything like that. The politics are funny, not funny. The politics are complicated in the sense that the there’s a couple of different things going on. So. Republicans are generally opposed to this suite of ideas. For one, it’s more federal spending and they don’t want more federal spending. It’s kind of a broad hostility to higher education, although mostly for an increasingly for ideological reasons. And then there’s also just a federalism argument, because it’s hard to envision any kind of enormous new federal investment in higher education that doesn’t involve similar federal involvement in higher education of the kind I’m talking about, like a regulatory regime that would start to say, yeah, we’re going to make some distinctions here between good programs and bad programs. We’re going to start we’re not going to just let you increase your tuition if you want to participate in these programs as you as we do now. And that really cuts against their just like big federal government thing. I should note also that there is a big piece of the higher education system itself that is perfectly fine with the system as it is and does not want it to change. And people need to understand that the biggest opponent of free college is often the colleges because they do not want to be free. They don’t want to be controlled by the government. They want to be in the business of selling expensive things to people who can afford it. They’re doing just fine. You know, I mean, I talked a little a minute ago about some of the small private colleges that are having financial trouble. But the big research universities, they’re doing great. Go visit one some time. They look pretty nice. Yeah, they’re they’re growing. They’re they’ve got nice new buildings. They’ve got a lot of very well-off students there. They don’t want to be free and they’re good at PR. They won’t come out and say that in public. They’re not supporting stuff like the the Biden free community college plan. There’s no money in it for them. That’s all money going into students pockets. Right. So they’re not really supportive of debt forgiveness because it kind of makes them look bad because they were the ones who, of course, got all that money in the first place. So so they’re very good at playing both sides and actually kind of feeding into the arguments of some people who are opposed to these things for social justice reasons. And people should understand that that is also one of the complications to good public policy here. 

 

Brian Beutler: But I don’t understand why. Like, why why can’t. Why couldn’t that be repackaged as an appeal to sort of right wing populism, that like student debt relief and free college with cracking down on on graduate programs that don’t make people better off like that is in some sense taking it to the man at the like that runs the higher education system. And then, you know, you can I don’t know what the numbers are, but if if the majority of the source of student loan debt is coming from graduate programs and you crush that amount of money going out from the government to to graduate students and repurpose it to making community college free or or four year public colleges free. Is it? Is it a huge net cost to the government or can you pay for a lot of it simply by shifting the money from graduate programs down, down the educational ladder to to community colleges, say. 

 

Kevin Carey: I mean a lot of the how much money there is kind of depends on how much of the debt world we’re ultimately going to get pay back. You know, a lot of there’s a lot of that debt is now an income based repayment programs that do have some kind of long term horizon of loan forgiveness. And one thing that we haven’t really talked about is the other big loan forgiveness program that the Biden administration is very actively publicizing right now, which is called the SAVE program, which is confusingly has nothing to do with the program that the Supreme Court just rendered illegal or the Plan B program that the Biden administration is doing. It’s a third program based on a different provision in the Higher Education Act that is actually on very solid legal ground. No one is challenging it right now. That will reduce monthly loan payments for four people to a pretty small amount depending on their income. But if you’re if you’re like a typical graduate of a community college, let’s say you borrow $10,000 to go to a community college and you’re making, you know, 35, $40,000 a year, when you get out, you can enroll in this program, own no money on your loan. And if you stay in the program for ten years, your loan will be forgiven. You’ll never have to make the payment at all. And that’s called the SAVE program again. If you’re listening to this because you had a loan, you have debt, check it out. Because if you enroll in the program now, then that could be the basis for your loan payments once they start up again in October. But, you know, potentially that that program could have the effect of forgiving the hundreds of billions of dollars in debt over the next decade or so. So if we restructure things so people don’t have to borrow so much money in the first place, then that can sort of be savings because we can sort of say, well, look, students were never going to pay this money back anyway under these these very generous loan programs that are existing. The other advantage of the SAVE program, I should say, is that unlike the mass loan forgiveness, it is ongoing. It’s just it’s in place. It goes on forever until somebody changes it. So you don’t have that problem of, you know, kind of a fairness issue of people in the future not getting the benefit that someone in the past got. So, yeah, I mean, to your question about right wing populism, I mean, I kind of feel like the field is littered with good progressive ideas that, quote, “ought to” appeal to right wing populists and then don’t, because maybe right wing populism isn’t exactly what people say it is. Right. And, you know, I think we’re seeing that right now with a lot of the evidence around the, you know, inflation and the IRA and all the new factors we’re building and so on and so forth. I mean, there’s only so much good government that can get people to not vote for Donald Trump if they really like Donald Trump. 

 

Brian Beutler: I heartily agree with that. [laughter]

 

Kevin Carey: But it doesn’t mean we shouldn’t do it. And, you know, Donald Trump will thankfully not be with us in this environment forever. Either he’ll get reelected or he’ll go to jail or he’ll die, you know, like. But all of those things have an endpoint to them. And and if there is a a, a period in the future where we could have some more seen conversations. I do think this is a long answer to your question. I actually do think that there is a deal to be made that again, if you look at who’s going to benefit from the programs the Biden administration has put forward, these are mostly students going to community colleges. These are more vocational focused students. These are more first generation students. These are students who are getting, you know, kind of work and trade oriented jobs and certificates. These are the you know, in many ways, this is very much not the elite of American higher education. Who benefits from these programs. These are not, you know, arrogant, pointy headed people who are going to go from their their degree program to some magazine are here in Washington to kind of look down on everyone else. It’s really for everyone else that’s who would benefit from the programs that the Biden administration is putting forward. And so, you know, again, another reason why I think we should, you know, really focus on making those programs work. 

 

Brian Beutler: Okay. Final question. Obviously, like if Trump wins the election, like the point of this conversation will evaporate, right? Like, who cares? [laughter] We won’t have to revisit it. But like, if Biden wins reelection, but he’s carried forward with things kind of on the trajectory he’s he’s currently on where the student loan repayment system gets turned back on. Getting people out of the woodwork to begin repaying is as big of a challenge as I think, you think, or you know it to be. And he continues to try to implement his plan B for mass student loan forgiveness. Like where? Where does this leave us in 2025, if and when, say, the Supreme Court says Plan B is also illegal? Is it just a like a comprehensive failure of higher education policy by the Biden administration, or is that when they have to go hat in hand to Congress and say, okay, we made a hash of this and now we need your help to clean it up? 

 

Kevin Carey: I think I mean, the Biden administration can’t restructure higher education federalism in America on its own. It needs Congress for that. So it can only really act unilaterally on the loan side of things as it is doing. And again, even even if Plan B fails, which I think it almost surely will, if it looks anything like Plan A, this new side of the SAVE program is by far the most generous program of for limiting loan payments and forgiving debt that has ever been implemented at the federal level. There’s no question before, and I should say the other really great thing about it is it also eliminates negative amortization on loans, which means that if you are like, let’s say you borrow $10,000 and you but because your income is low, you’re not making any monthly payments. The $10,000 doesn’t increase. The interest doesn’t pile up on top of the principal. And that’s one of the things that people have really struggled with. There’s been a huge move into income based loan repayment already that’s happened over the last 10 to 15 years. A lot of those programs were put in place in the late Bush administration and during the Obama administration. But what people have really struggled with is you can make your payments as you’re supposed to and your balance goes up. Because, I mean, the whole point of these things is to limit your payment to a percent of your income, which is presumably less than you would be paying under the standard by ten years in your out program. Under the same program, there’s no accumulation. So you don’t see that balance getting bigger over time, which I think is another big plus for people. So, you know, if that program is implemented successfully, I think that that will be a big win. But Biden cannot fix the underlying problems by himself. There needs to be a big picture legislative solution that really restructures our relationship with between the federal government and state governments. And that’s another thing we haven’t talked about. Another kind of contributing factor to this whole problem is that, you know, a lot of state governments have pulled their money out of their higher education systems and driven tuition up, not all of them. And I think it’s important to say that there are some you know, there are some good states and some bad states out there. You know, if you’re in California, the majority of people who go to a community college in California don’t pay tuition at all. That’s always been the case and continues to be the case. And there are still, you know, a number of states that have kept higher education pretty affordable, but a lot of the other ones have not. And and there needs to be some way to not allow states to just free ride on the federal loan system. That needs to be kind of part of the negotiation. But that’s got to be, you know, a big picture sort of like Obamacare level policy effort to really restructure the whole thing all at once if it’s going to work. 

 

Brian Beutler: And if it does, I know I said that the last question was the last question, but this one’s really the last question. If you get there, how does the new right wing meddling in pedagogy where they say these are these are state schools, so we get to decide what you’re allowed to learn at them, and it turns out you’re only allowed to learn that whatever, like the slavery was a vocational program or you’re not allowed to learn about the real race history of the United States is a you know, a grand settlement on higher education that pencils out really nicely. That involves like a free public four year college. Is it is it viable? Can can it survive if that’s the direction that the other major political party in the United States decides it wants to go, that every public institution that takes public money has to toe an ideologically right wing line or we’re going to shut it down or take over its board or whatever. 

 

Kevin Carey: Yeah. I mean, I think there are two two big threats to this. One is the ongoing realignment of the electorate along educational and party identification lines. You know, where even as late as the, you know, the second Obama administration in 2012, Barack Obama only won college educated voters by a fairly small number. There historically has not been much of a statistical correlation between your party I.D. and your education level. That has changed dramatically in the last ten years, and it’s continuing to do so. Essentially, most of the political realignment that’s happened has been college educated Republicans becoming Democrats and non-college educated Democrats becoming Republicans. That’s just a real threat to all of us because it puts higher education in peril of just becoming, you know, an interest group of one party. And I think that’s one of the reasons that the loan forgiveness has been opposed so steadfastly by Republicans in Congress. They just sort of see it as a payoff to the Biden administration, the people who elected Biden to put them in office. And they don’t really see themselves in that policy at all. I do think that is related to the the new appetite that a lot of that well, I shouldn’t say a lot, but some Republicans have for the kind of pedagogical meddling that you’re talking about right now, August 2023. I honestly don’t know whether, like DeSantis ism is the beginning of our awful future or just the the tail end of one soon to be forgotten American politicians, you know, overreach in trying to, you know, build a national campaign around anti-woke-ism. More and more. I think it might be the latter. Right. You know, I just know what he’s doing in Florida, what Ron DeSantis is doing in Florida, you know, at the new school there is unprecedented, but it’s also a a a very unusually small and powerless public institution. And it’s not a coincidence that he’s chosen this little place to try to do this, whereas you don’t see like Greg Abbott in Texas going to UT-Austin and saying, yeah, you know, I’ll tell you, I’m in charge now and I’m going to tell you what you can teach and what you can’t teach. Those are big, powerful institutions that have a lot of constituencies, a lot of alumni. They are not as easily pushed around, I hope. And and so so it seems very unlikely to me that I think even doing that at the state level is less likely to happen. It’s like more likely or not, it’s just going to fizzle out is what I think. I really hope to not be proven wrong about that. 

 

Brian Beutler: Your lips to God’s ears. Kevin. 

 

Kevin Carey: Yeah. 

 

Brian Beutler: Kevin Carey, thank you for spending so much of your time with us this week. I really appreciate it. This was really enlightening. 

 

Kevin Carey: Yeah, thanks for having me here. Really enjoyed the conversation. 

 

Brian Beutler: [music plays] Hey, PD listeners wanted to let you know that next week’s episode will be our last after nearly four years of making first Rubicon and then Positively Dreadful here at Crooked. The last episode will be Friday, September 8th. So stay tuned for what’s next. You can follow me @brianbeutler on Twitter slash X or wherever you follow me for the latest updates. And our final episode will be a mailbag. So get your questions ready and we’ll let you know where to send them. [music plays] Positively Dreadful is a Crooked media production. Our producer is Emma Illick-Frank. Our other producer is Saul Rubin. Evan Sutton mixes and edits the show each week. Our theme music is by Vasilis Fotopoulos.

 

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