Saturday, June 6, 2020
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Loan forgiveness gains some bipartisan support

A former US Education Department official and now a candidate for the US Senate from Georgia, who is a Republican, announced a campaign proposal last week to forgive certain student-loan debt, a plan usually championed by Democrats.

A Wayne Johnson is hoping Gov Brian Kemp will appoint him to fill the soon-vacant seat of Sen Johnny Isakson, also a Republican, who has served Georgia in Congress for two decades. Mr Johnson sent his resignation to US Education Secretary Betsy DeVos on Thursday, according to his press release.

While serving as the chief operating officer and chief strategy and transformation officer of federal student aid at the department, he oversaw the student loan program, now totaling about $1.4 trillion, and introduced several improvements, including one that made it possible to submit the FAFSA on a mobile device.

“My service in Washington taught me that we need changes in the law to save Americans from going into severe debt just to get a college education,” he said. “I have a plan that is fair, fiscally responsible, and future-oriented so that the citizens of Georgia and across America can afford a college education.”

His plan would provide students with a $50,000 grant for their college education wherever they attend, including both public and private colleges. The grants would also cover work training, professional licensing and vocational and trade schools. Those who have current debts would see the money owed reduced by up to $50,000. Those who paid their debts in the past would receive income tax credits up to $50,000. The program would be funded with a 1% tax on revenue generated by all employers including corporations and non-profit organizations. He would also seek to remove from credit bureau files all negative information related to federal student loans.

Unlike many Democratic proposals, though, Mr Johnson’s plan addresses key questions about the forgiveness plan, including: What happens next?

Plans from Senators Elizabeth Warren and Bernie Sanders, for instance, would forgive current student debt, but what happens when students continue to borrow more? Would we have to set up another loan-forgiveness plan 10 years from now?

Mr Johnson would completely restructure the federal student loan program by taking the federal government out of the business, putting it in the hands of private lenders. It has long been a wish of Republicans to get out of the business of student loans, and it’s clear to most people, on both sides of the aisle, that drastic change is needed to fix a broken student loan system.

Editorial

Setting up a grant like this might push tuition up at state colleges where the cost is lower, since those colleges know every student will get the $50,000. Admissions requirements might also shift if such a plan becomes reality. I’m generally opposed to colleges milking the system; I’d rather they raise tuition when they have to because they’re passing on increased operating costs to students. Some colleges might do this, but they’d be missing out on whatever part of that $50,000 they didn’t charge. Trustees might have something to say about that.

In the course of our history, Voxitatis has supported a few “interns” who worked for us while attending or shortly after graduating from undergraduate degree programs. For example, eStudent Loan.com lists 10 companies that help students pay for college, among them UPS, Wells Fargo, Publix, Smuckers, and Starbucks.

Employers who set up programs that can help students graduate from college debt-free, though, tend to fly under the radar of the federal government. I suppose it would have been nice to get a tax credit for some of the money I have sent directly to universities, but that wasn’t what drove me to support those students.

Paul Katula is the executive editor of the Voxitatis Research Foundation, which publishes this blog. For more information, see the About page.

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