Home Pay off Working-class Latinos bail out the wealthy with Biden’s student loan repayment

Working-class Latinos bail out the wealthy with Biden’s student loan repayment

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For many Latinos, earning an undergraduate degree is a dream come true (about 21% have one). But several million Latinos across our country have taken a different path. Instead, they started their own business, got certified in their trade, or started a career, all without a college degree.

Both paths have merit and can be celebrated. But President Joe Biden’s plan to cancel by executive order about half a trillion dollars in student loan debt for people earning up to $125,000 a year and couples earning up to a quarter of a million dollars is bad economics, bad politics and bad politics. . It’s also incredibly unfair.

Let’s start with injustice.

It is irresponsible and disrespectful to force working-class Americans – many of whom have not attended college – to pay the debts of high-income, college-educated Americans.

Our community sees this scheme for what it is: a scheme to transfer money from far less well-to-do to more well-to-do and a blatant attempt to secure the base ahead of a critical election.

Biden’s plan will reduce some of the debt of those earning up to $125,000 a year.
Getty Images/EyeEm

In practice, Biden’s executive order means that many Latinos — including those working in services, commerce and retail who are battling inflation while trying to save money to send their own children in college – will pay college bills for doctors, lawyers, and other wealthy people. professionals.

professor at Harvard Law School Laurence Tribe took to Twitter to thank the president for bailing out his alumni, some of the wealthiest and most privileged people in the country. The loans of these high-powered lawyers will be paid for with the taxpayers’ money of waitresses, truckers, nurses, farmhands and millions of other ordinary Americans.

And these lawyers will earn even more money as their careers progress. When you consider the value of law and medical degrees, for example, the Brookings Institution finds that “student debt is concentrated among very wealthy households, and loan forgiveness is regressive whether measured by income , level of education or wealth”.

Hispanic households only owe about 6% of student loan debt. In other words, loan forgiveness is regressive and unfair not only to taxpayers, but also to the borrowers themselves, as it is more likely to benefit high-income, highly educated, and highly indebted borrowers than low-income, low-debt borrowers.

And ultimately, this cynical ploy will do nothing to make college more affordable for whites, blacks, Latinos, Asians, or anyone else. This will compound the problem by showing schools that they can continue to inflate costs knowing that the taxpayer ultimately be forced to foot the bill.

Just a few weeks ago, the administration bragged about taking steps to reduce the annual federal deficit by a trillion dollars. This adds another half trillion to the debt, eliminating any potential deficit reduction from the so-called Inflation Reduction Act, and will make inflation worse.

President Joe Biden speaks at a rally for the Democratic National Committee on August 25.
Biden speaks at a rally for the Democratic National Committee on August 25.
Alex Brandon/AP

There is also a question of whether the president actually has the power to take this action. The order will almost certainly be challenged in court as a usurpation of legislative power by the executive.

And to top it off, the plan risks proving politically of dubious value. While those who directly benefit from it will of course be grateful, half of all student debt is held by the 13% of Americans with advanced degrees.

There are many more people who have taken out loans to start a small business, buy a truck or van to supplement their self-employment, or use for one of the hundreds of other purposes that Biden’s plan doesn’t offer. no help. These people are unlikely to be happy being forced to pay other people’s bills on top of their own, especially when many of these people are much better off.

Instead of playing politics with debt relief, we need real reforms to fix a broken system. Instead of bailing out the rich, policymakers should overhaul a student aid structure that has led to skyrocketing tuition fees. The goal should be to make college truly affordable.

Simply erasing hundreds of billions of dollars in debt from the ledger is unfair to students (and parents) who have worked hard, saved, and deferred gratification to fund their education. This is bad economic policy. And this is a dangerous precedent for the future.

Daniel Garza is president of L’Initiative LIBRE.