Public radio from Western Michigan University 102.1 NPR News | 89.9 Classical WMUK
Play Live Radio
Next Up:
0:00 0:00
Available On Air Stations
We are currently experiencing technical issues with Classical WMUK 89.9-FM. Many listeners will not be able to receive the signal. We apologize and are working to restore the station to full power. 102.1-FM HD-2 and the streams through our website and app are still available

Evaluating criticism of the student loan debt forgiveness plan


Is President Biden's student loan debt forgiveness plan fair to people who already paid off their loans or likely to increase inflation? A Kalamazoo researcher says no.

For many of the 43 million Americans with federal student loan debt, President Biden’s plan to forgive up to $20,000 of it is great news. Critics complain that it excludes people who already worked to pay off their loans and military veterans who served to avoid going into debt. Some fear it will drive-up inflation, others say it fails to address the high cost of a college.

“Why has the rise in college costs been so much higher than the inflation rate? The answer is decline in public support, decline in state funding,” said Michelle Miller-Adams, who studies the underlining problem that caused the student debt crises – the exorbitant cost of higher education.

Miller-Adams is a senior researcher with the Upjohn Institute in Kalamazoo. Along with college costs, she also studies state and local tuition-free college programs, often called “promise programs,” like the Kalamazoo Promise.

Miller-Adams said Biden’s plan is fair. The plan forgives between $10,000 and $20,000 dollars of student loan debt for borrowers making less than $125,000 a year. She said previous generations benefited from state support of higher education. That support has dropped, and without it, the pay burden has increased for students and families.

“The really important thing to know, is that you did get the government's help in affording to go to college.”

Miller-Adams said most baby-boomers and gen-Xers paid only a quarter of the total cost for higher education; state government paid the rest. Over the last 30-years, that ratio reversed.

“Public money helped us, but it helped us by holding tuition down. So, it is not analogous to say, ‘oh, I paid for my education, you should pay for yours,’ because the cost of that education has gone up so much,” said Miller-Adams.

She gave other examples. Pell Grants, for instance, have never been adjusted for inflation, so they don’t cover as much of an education as they used too. That encourages lower income students to take out more loans and carry more debt. And it’s not just for tuition. Housing has gone up faster than inflation too, adding more burden that isn’t subsidized by the state the way it once was.

“When you have a high student loan debt burden," Miller-Adams said, " you're going to put off things like buying a house, starting a family, perhaps moving jobs. If we make it even marginally easier for students to do those things, that's going to be very good for the economy."

Portrait of author Michelle Miller Adams. She is standing in a hallway, wearing a blue patterned dress and smiling
Courtesy photo
Michelle Miller-Adams

Another criticism of Biden’s plan is that it will add to inflation. Miller-Adams disagrees.

“I think it's important to understand that the federal government is not writing $10,000 and $20,000 checks and giving these to people. And this is why the argument that this is going to fuel inflation is kind of misguided,” said Miller-Adams. “This is a reduction in your loan balance. The amount of money you're having to pay every month to service your loan is going to go down modestly.”

Miller-Adams said a decrease in monthly student loan payments will be offset in January, when the “pandemic pause” on paying back student loans ends. That means there won’t be a sudden influx of new money to drive up inflation.

Miller-Adams said Biden’s plan is a help, but it’s also just a “big band aid.”

“The biggest concern for me is that it doesn't address the underlying problem, which is the rising cost of post-secondary education. So, the factors that cause the student debt crisis are unaddressed.”

Miller-Adams said combining debt forgiveness with a tuition-free path to higher education could make a real dent in the problem. The Kalamazoo Promise is one example. She said Biden’s 2021 tuition free community college plan, that wasn’t supported by Congress, could have lowered higher-education costs for everyone.

Leona has worked as a journalist for most of her life - in radio, print, television and as journalism instructor. She has a background in consumer news, special projects and investigative reporting.