It would be difficult to come up with a more destructive policy assumption than the idea that public services should be subject to income caps. Yet even folks who consider themselves progressive -- whom I would typically expect to be supporters of public services -- fall into the trap.
Support for it is taken as a marker of being Very Serious, but it’s actually a poison pill. So, in recognition that you don’t beat something with nothing, I’ll propose a different version for Very Serious People. Interested parties are free to run with it.
Here’s a partial list of public services for which no income caps are applied:
In every case, we extend protection even to the wealthiest. We don’t deny police protection to rich people on the grounds that they’re financially able to hire private security. (In fact, a case could easily be made that the wealthy get far more police protection, to the extent that they have more property to protect. And that’s without even addressing disparate rates of police violence by race and income.) The fact that we don’t is part of the reason that police protection continues to get political support.
Several presidential candidates have floated their versions of free college and/or loan forgiveness. Leaving aside the Democrats’ weird inattention to the Senate, without which none of these plans matter, they tend to assume that any household with an income over a surprisingly low level doesn’t need help paying for education. Here in New Jersey, for instance, the current household income cap for free community college is $45,000 per year. That’s in one of the most expensive states in the country. The legislature has proposed raising the cap to $65,000, which is better, but still shy of the median household income of the state.
It’s a far cry from a universal benefit; in many parts of the state, it’s a far cry from a common one. To many families -- and voters -- it comes as a false promise. “What do you mean I’m ineligible? I’m struggling!” That breeds the sort of cynicism that tends to destroy programs from within. Income caps invariably erode support for the programs to which they’re applied, because they rest on false assumptions about how hard it is to get by. And experience suggests that they rarely, if ever, move up with inflation.
To the extent that loan forgiveness and free college are the questions at hand, and both political will and funding are limited (for all practical purposes), I hereby float an alternate proposal. Any candidate of any party who wants to run with it is welcome to it. It has a few pillars:
- Set both forgiveness and tuition vouchers at the level of public college tuition in a given year. (Cap it at, say, in-state tuition at the public flagship university for a given year.) That way, students who attend(ed) public colleges get forgiveness or a waiver; colleges that charge more than public options are on the hook for the premium. In other words, if State U costs x and Private U costs 4x, the voucher or forgiveness plan leaves 3x uncovered for students who went to Private U. If a private college finds a way to provide quality at a competitive price -- I’m thinking here of SNHU’s College for America as an example -- then more power to them. This should pass constitutional muster, since it neither privileges sectarian colleges nor punishes them. It simply holds them to the same standards as everybody else. In that sense, it’s like the Pell Grant, but anchored to reality.
- Only apply it to graduates. This is in recognition that incentives matter. The real student loan crisis isn’t among graduates; it’s among dropouts. Offer dropouts with debt the option of returning for free, completing and having the debt forgiven. That way, money spent on (written off by) wiping out debts isn’t just gone; it’s put toward improving the educational level of the country. This will almost certainly involve increasing operating funding to public colleges to handle the new demand; that’s a feature, not a bug.
- Exempt loan forgiveness from “earned income” for tax purposes. Otherwise, you wind up hitting a lot of vulnerable people with huge tax bills at vulnerable moments.
Some argue that forgiving loans now would be unfair to people, like myself, who’ve already paid theirs off. It strikes me as weird that the argument is treated respectfully. Imagine applying it to vaccines: “No fair that you didn’t get smallpox! In my day, we got smallpox and liked it!” Giving the next generation a better shot than the last one had is called progress, and it’s a good thing. Healthy societies pay it forward; declining societies eat their young. I want the next generation to do better than mine did. Given the climate issues with which they’re saddled, that’s unlikely. Freeing them from student loans strikes me as the least we can do.
Given a smaller working-age population, investing in its productivity has gone from “nice” to “necessary.” My wife’s nephew works at a car dealership in Minnesota; he reports that the buyers who are the most difficult to underwrite are lawyers, doctors, and engineers. Their student debt is so high that finding ways to help them finance cars is harder than it should be. Anyone who wants to claim that loan forgiveness is an unearned windfall for the effete elite are invited to imagine the impact on the automobile industry if educated young folks were suddenly able to buy. (They’re also invited to talk to our nursing grads at the local hospitals. They’re hard-working, valuable, and middle class. They are neither effete nor elite. They work hard, support their families, and do good in the world. We should get out of their way.)
Combining loan forgiveness for grads of public colleges with free public college going forward gets the incentives right. It challenges the private and for-profit sectors, compelling them to compete on quality. (That’s especially true if forgiveness is capped at the level of public colleges.) If, say, SNHU’s College for America or something similar comes along and does a good job, I say, welcome. Folks who’ve dropped out would be incentivized to go back and finish, thereby improving the educational level of the citizenry and the productivity of the workforce. With a shrinking prime-age workforce, that’s crucial. And it would force higher-cost providers to prove their value. Those who can, are welcome. Those who can’t, well, that’s where we have to be Very Serious.