Welfare For The Well-To-Do

Promoted from the diaries by streiff. Promotion does not imply endorsement.

Like most of the Democrats seeking their party’s 2020 presidential nomination, Senator Elizabeth Warren (D-MA) is touting the forgiving of college student loan debt.


Here are the numbers¹:

  • $1.56 trillion in total U.S. student loan debt
  • 44.7 million Americans with student loan debt
  • 11.5% of student loans are 90 days or more delinquent or are in default
  • Average monthly student loan payment (among those not in deferment): $393
  • Median monthly student loan payment (among those not in deferment): $222

But student loan debt is hardly the only kind of debt outstanding in our country.

  • Compared to $1.56 trillion in student loan debt, Americans have $10.3 trillion in total mortgage debt
  • Average mortgage balance: $148,0602; Average student loan balance: $34,900
  • Share of mortgages with a delinquency rate of 30 days or more: 3%

If Senator Warren wants to help people with their debts, wouldn’t she do more by helping with their home mortgages?

Student loan debt is, of course, only incurred by college students. Research done by Georgetown University found that, on average, college graduates earn $1 million more than those who do not earn collegiate degrees over the course their lifetimes. A recent study by the Pew Research Center found that the median yearly income gap between college degree earners and high school graduates is around $17,500.


Thus, “forgiving” up to $50,000 in student loan debt would be a huge benefit to people who will be earning an extra million dollars over their lifetimes, transferring that debt to the taxpayers in general, and about two-thirds of adult Americans do not have college degrees. Senator Warren’s plan would, in effect, transfer the debt of people who will earn much more than average onto taxpayers, the majority of whom will earn much less.

Although somewhat circumstantial, the evidence makes it hard to argue that colleges promote income equality. About one-third of adult Americans have college degrees now, compared with about 10 percent in 1970. As the proportion of college-educated adults rose sharply, measured income inequality increased noticeably as well. Moreover, some impressive research confirms that those attending elite private schools that disproportionately train America’s future leaders (and affluent Americans) come predominantly from relatively affluent families. One can argue the rich have created academic gated communities for their kids, allowing them to perpetuate family economic affluence. Preferential college admission for “legacies” (alumni children) reinforces this. Politically powerful, the ruling elites have conferred all sorts of tax and subsidy advantages on these so-called “private” schools.

Of course, what college students pay for their educations is not the total cost:


Tuition and fees vary from college to college. The average cost of tuition and fees for the 2018–2019 school year was $35,676 at private colleges, $9,716 for state residents at public colleges and $21,629 for out-of-state students at state schools, according to data reported to U.S. News in an annual survey. When it comes to costs, the average tuition and fees to attend an in-state public college is a third of the average sticker price charged at a private institution.

Though the numbers vary widely by state, one thing is clear: the states and federal government are already paying the majority of the educational costs for students at public universities. This money comes from the taxpayers, the majority of whom have not been graduated from college.

Yet Senator Warren would have the states and federal government pay an even larger share, by forgiving student loan debt.

The Distinguished Gentlewoman from Massachusetts, whom I most certainly hope completes her full term in the Senate, wants to increase taxes, though she claims she would do so only on the top producers. A wealthy woman, and formerly a college professor herself, she sees the world through the tunnel vision of government and the academy. The convenience store clerks, the taxi drivers, the garbage collectors and dump truck drivers, those are people she doesn’t see, not in any real sense, and not as the people who would be saddled with the student loan debt she would transfer from the people who will earn more money through their lifetimes, the people who will one day be the bosses of those who don’t go to college.


I absolutely support the right of people to try to go to college, but I do not believe that we should saddle the working men and women of America with even more costs to send their eventual supervisors to college.
¹ – (Data via the U.S. Federal Reserve, herehere and here, and the Federal Reserve Bank of New York, here and here.)
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