student loans can't be canceled while also examining
the proposals on the table and for that we bring in
beth Akers she's the senior fellow at the American
Enterprise Institute, a think tank that researches
government, politics, Economics and Social welfare.
Thank you for being here. Thanks for having me. So I
know that you have said that forgiving student deb
would backfire and create more debt only a few years
later. Can you explain that nobody wants more debt Yeah,
exactly. So I think we all agree that something needs
to be done that the trend that we're on is problema
if we're to cancel debt today. My concern is that it
sends the messages to the students of tomorrow that the
government is going to come in and wipe away all your
debt periodically, maybe three years from now, five
years from now. And what happens is when people believe
that to be true, they're gonna change the way that they
pay for college, decide how much to spend for college
and how much they're willing to borrow. And I believe
it's gonna push prices up over time. And very quickly,
we're gonna be back in the very same spot which is
gonna put political pressure on legislators and the
White House again to act. We need a more fundamental
solution to what's happening here. I know that there's
also a conversation around this being a fairness issue
if the government were to pay off the debt. Now, you'd
see that as if some taxpayers will be paying the de
owed by other taxpayers. Can you explain a little bit
more about that Yeah. So there's, there's a couple of
fairness issues. First, we've got people who felt like,
hey, I paid for school and I didn't get this. I'm not
that sympathetic to them becaus I feel like we make
innovations all the time that make life better for
people if this were a good policy, I'd say, you know,
life's not fair, but where it's not fair. And I think
it's problematic is that when we look at who benefits
from a loan cancelation policy, It's not the people who
are the neediest in our society and our economy, it's
actually people who are quite well off. We know that
the top 40% of the income distribution holds about
of student debt. Yes, these people have big debts. They
also tend to have high incomes. Education is an
investment. And for these people, it's very likely
gonna pay huge dividends over the long run to my mind,
these are not the people that we want to be shelling
out taxpayer dollars to support I know some people say
canceling student loans would help address the racial
wealth disparity and on that you wrote attempting to
fix the racial wealth gap through loan cancelation
would be akin to fixing gender pay disparity by giving
a tax break to every female ceo, what about making
college free, like it is in many other countries. I
mean, do you support that idea Well, first of all, the
idea of addressing racial wealth inequality through the
student loan system is a little bit silly. Um Black and
brown borrowers are a minority of debt holders. They
hold a relatively small share of the outstanding
balance. So the idea that wiping it away is the best
way to help them while also giving huge giveaways to a
lot of well off white students. It just doesn't make
lot of sense. So now the question of free college, o
course, other countries have this and it might lower
the barrier so that more low income students believ
they can go to college, even though right now a lot of
them are already going for free because of the programs
through the state and federal aid. They give them a lot
of cash. I'm not a huge fan of making college free or
socializing the higher ed sector because I think what
we have today is a market where institutions, co
and universities competing against each other, makes
our system of higher education the best in the world.
And I fear that if we have a government takeover of t
industry will lose that. I think there are better ways
to message and make low income students appreciate
there are benefits available to them so that college is
within their financial reach. You've proposed a
compromise regarding canceling small amounts of debt
and reforming the system. Can you explain more about
that Yeah. So a lot of people don't realize that th
is already an avenue for borrowers who are in trouble
to have their loans forgiven. They can also make
reduced monthly payments if they're in a period of
having low earnings relative to how much they borrowed.
The program doesn't work that well. It needs radical
reform through legislation, but there's not a lot of
people talking about doing that, but that's the number
one thing that needs to happen. What I've said is okay
if politically we need to have some cancelation happen
because that's what's a priority for the Democratic
Party then do that. But let's use it as a chip to get
the broader reform of the student loan safety net that
we really critically need. What that means is put
everybody on a repayment program that allows them to
pay instead of a month a fixed monthly payment like yo
would on a mortgage or a car loan just to pay a
percentage of your income. So we're paying your student
loans become something like a tax. My bottom line
question for you on student debt, how should we tackle
this problem And if you can sum that up in 30-45
seconds for our viewer, you know, we need to stop
people from taking on loans that are going to be
unaffordable. Often we know that people are taking on
liabilities for themselves. Tha don't make any sense.
We need to stop that on the front end and we need to
make sure that borrowers who do get in trouble on the
back end have a reliable way that is not overwhelmingly
difficult to navigate to have that debt taken away from
them. Higher education is a critical mechanism for
social mobility in our economy and it needs to work
well, Beth Akers we appreciate you joining us on the Y
and sharing your insight. Thank you. Thank you. So,