Education-Student Loan Debt and the Rest

5 min readSep 18, 2022


The public discussion of Biden’s student loan plan seems to be about some other country-certainly not this one.

Much of the discussion takes the point of view that Biden’s plan is a wildly-expensive and unnecessary change, since post-secondary education is functioning the way it always has. And further the plan isn’t sufficiently targeted to the poor, so there is no point in doing it.

In fact post-secondary education in this country is so broken you hardly know where to start. And the people targeted by the plan were so badly screwed by us that we have a responsibility to notice.

Let’s look at the history. The following chart is a point of departure:

It’s obvious from the chart that around 2008 something happened to the cost of college-it took off. A prime ingredient was the George Bush’s 2008 crash, which was a double whammy: states had less money to spend-so tuition went up-and students and their parents had less money to pay it. As we all learned during the Covid crisis, states have limited ability to deal with new expenses, as many are prohibited from running deficits. They need to rely on the federal government to help them out.

However the Republican Congress blocked all stimulus (remember the “balanced budget amendment”) to provoke dissatisfaction for the 2016 election. So there was no help to be had. Unsurprisingly people had to take on new levels of debt. And with Republicans continuing to sabotage the recovery, there were few jobs for these people when they graduated (or didn’t) and went immediately into arrears. Student load debt didn’t grow because students were irresponsible, it grew because government was.

Adding to that, Republicans spent years protecting fraudulent private pseudo-educational institutions because of the supposed superiority of the private sector. At such places you could earn a degree in “culinary arts”, for example, which was considered valueless in any real restaurant. Essentially all students at those institutions incurred monumental levels of debt and no skills. The worst of those have now been shut down, but Betsy DeVos did everything she could to defend them.

As a country we screwed a generation of students. From the numbers on the chart, $10 or $20 thousand seems relevant, but assuredly not profligate. As for inflation, the risk has been exaggerated by false comparison to the stimulus packages. The cost here is budgeted over decades; its current impact is minimal.

However we should be clear that this is a Band-Aid on a God-awful wound, because for the most part things have only gotten worse.

First of all, averaging over all institutions in the country gets a rather diverse mix of good and bad colleges. That’s appropriate for addressing needs of borrowers. However If you want to go to a good institution to get yourself a good job, the numbers are basically twice what’s on the chart: around $20 thousand yearly for a good public institution. For private colleges, we can be more exact since they act as a cartel: $80K. Even applying to these places can cost thousands. So much for equality of opportunity.

What’s more the public university system, instead of being strengthened, is under attack. That’s not just a matter of the well-publicized politization of education, bad as that is. Public funding in many states has been reduced to the point that public colleges are admitting out-of-state (or out-of-country) students in preference to in-state ones, because they need the extra money. That has actually become a major contributor to student loan debt! The financial situation is so dire that colleges are spending more on administrators to raise money than on education itself.

All of that sounds like a hard problem, but as with healthcare, just about every other developed country has found a way to do it. We need to strengthen the public system with necessarily more of a role for federal funding. Public education has to be first-rate and affordable-and available to everyone in every state. We’ve got to banish the preposterous model of education as a severely-limited resource with parents ready to kill to get their children into the right places! In addition we need to limit the size of loans people need to take and be rational about the payback. The Australian system, with payback based on ability to pay, is one working option.

It’s worth stating the obvious fact that with the current cost of education, the only way we’re keeping this country going is by importing foreign graduates (and telling them how much we hate their being here!). We’d have to shut down Silicon Valley otherwise. We should also be clear that when we talk about national security we’re talking not about aircraft carriers but about our national competence in key technologies.

It is also worth stressing the problem is NOT (despite rumblings from both the left and the right) that we’re sending too many people to college. Good jobs need sophisticated training. You can look at the government’s own (or anyone else’s) expectations of the jobs we’re going to need to fill. Sure there should be more specifically vocational training also, but that’s not the answer to the problem we know we’ve got.

Finally it’s worth responding to the charge that we’re not sufficiently targeting our payments to the poor. The fact is that the only route to equality of opportunity is making sure that there is a first-class system available to everyone. We used to understand that. We were the first to recognize that secondary education needed to be available to everyone. Eventually other countries caught on, because there was a big advantage to the country in doing it.

This has been proven so many times it’s ridiculous to have to state it-education is the backbone of the strength of the country. Despite some rhetoric, there’s nothing either left-wing or right-wing about this. Even Adam Smith knew it-he didn’t futz around wondering how little training poor people could get by with, he wanted universal literacy in the eighteenth century. If we want to succeed as a nation, we need to succeed at education.

Originally published at on September 18, 2022.