NEWS

Could ‘Microcredentials’ Change Higher Education?



President Joe Biden on Wednesday announced another $9 billion in student debt relief through improvements to existing programs, a move that will affect 125,000 Americans, and which he touted as leading to economic improvement.

Wednesday’s announcement focuses on three programs: one for borrowers who have worked in public service for more than a decade; another for those who paid down their loans continuously for 20 years, and who now get credit for past payments and forgiveness on the balance; and another effort targeted at disabled borrowers.

The announcement comes just days after the expiration of a three-year pandemic pause on repayments, which affected 40 million Americans. Biden’s original, larger, loan forgiveness plan was struck down by the Supreme Court earlier this year after six Republican-led states sued.

“This kind of relief is life-changing for individuals and their families, but it’s good for our economy, as well,” Biden said. “By freeing millions of Americans from the crushing burden of student debt, it means they can go and get their lives in order.”

In all, the Biden administration says it has now canceled $127 billion worth of debt for nearly 3.6 million Americans.

But Biden’s political opponents say loan forgiveness amounts to a “student loan bailout for the wealthy.” On Wednesday, the head of the Republican National Committee also criticized the plan for only helping a small group.

“He is trying to save face by canceling debt for a few while families struggle to afford Bidenomics,” chairwoman Ronna McDaniel said in a statement. “Biden’s desperate vote grabs won’t cover for sky-high inflation and failed economic policies.”

Democrats in national and state offices on Wednesday expressed support for the initiative.

Yet advocacy groups that support loan forgiveness have highlighted that the millions of Americans who now have to start repaying their loans after the end of the three-year break — and who don’t benefit from any of the programs Biden announced Wednesday — are now “drowning in pursuit of the American Dream.”

“Make no mistake: This is a racial equity issue,” said Taifa Smith Butler, president of the advocacy group Demos. “Because of America’s long history of systemic racism, Black and brown Americans — many of whom were the first in the family to go to college — have had less access to familial wealth and thus were more likely to borrow money for an education.

“When we consider this in tandem with the Supreme Court’s recent decision to end affirmative action, the future of equitable access to post-secondary education is bleak.”

Looking abroad

Researchers who study international student loan programs say there are better alternatives.

A study of student loan repayment plans in 14 countries, including the U.S., concluded that repayment systems adjusted to borrowers’ incomes — instead of the U.S.’s standard, fixed repayment plans — are less risky.

“Currently, there are at least 12 million U.S. former student loan defaulters (just about all of them hugely disadvantaged) labeled as credit risks,” said the researchers at the Washington-based Brookings Institution. “In other countries with similar time-based repayment approaches, student loan default rates range from 40% to 70%.”

But in Australia, the U.K., New Zealand and Hungary, where repayments are based on income, “there is no hardship nor default,” said researchers Bruce Chapman and Lorraine Dearden.

At the conservative Heritage Foundation, researchers generally oppose Biden’s loan forgiveness initiatives and criticize government subsidies for four-year institutions.

Researcher Adam Kissel, who studies education policy, said the issue goes much deeper to how much U.S. universities charge, how they are structured and how they operate.

“We in the United States have dramatically increased access, but at a terrible cost of having tens of millions of students who have not finished college but have debt,” he said. “To fix the student loan problem, we need to rethink the easy money for student loans that enables colleges to raise tuition to unsustainable levels.”

U.S. universities charge among the highest tuition rates in the world.

On Wednesday, Biden said his administration would try to do more through the Higher Education Act to ease other borrowers’ burdens. And he leveled a shot at his political opponents, noting their acceptance of pandemic-era bailouts.

“Some of the same elected Republicans who are members of Congress who were strongly opposed to giving relief to students got hundreds of thousands of dollars of relief for themselves to keep their businesses open,” he said.

“Several members of Congress got over a million dollars, and all those loans were forgiven. The hypocrisy of this, I find stunning. I supported that program, and I support the student debt program.”

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