Opinion | Why the Student Debt Pause Became a Political Trap

You lend a friend $1,000 and tell him to pay you back when he gets back on his feet. Of course, he says. A year goes by, then two, then three. He seems to be back on his feet, but the money isn’t back in your pocket. And now if you ask what happened to your thousand bucks, you seem like the bad guy.

I think this psychology explains at least a small part of the anger that many student borrowers are feeling now that the Biden administration’s plan to wipe out $400 billion in student debt appears at risk of being stopped by the Supreme Court.

Payments on federal student loans have been paused since the early days of the pandemic, nearly three years ago. Debtors have gotten out of the habit of making monthly payments. Some who incurred debts after the pause began never even started paying back what they owe. Any sense that they were getting a special break has faded, replaced by the stronger sense that someone is trying to take something away from them.

“Once you get used to something, it’s hard to switch,” Maria Douneva, a behavioral scientist and corporate trainer in Berlin, told me. “People get used to new situations quite quickly, and that becomes the new default. For a while it was normal that you had to pay back your debts. Then the new normal became that you don’t.”

This isn’t the whole story, of course. There are other reasons that people who incurred student loans believe they should be forgiven in part or entirely. Some feel they didn’t get their money’s worth from the college courses they took. Others say they simply can’t afford to pay off their student loans.

Ending the payment pause with no debt relief “would be just disastrous” for borrowers, Ella Azoulay, the research and policy analyst for the Student Borrower Protection Center, a nonprofit group, told me. Some would become delinquent and spoil their credit ratings, and others would have to forgo buying a car or a house or getting married, she said.

“The heart of it is unfairness,” Azoulay said. “The promise of higher education is broken when only low- and mid-income people have to take on debt to access it.”

Kristin McGuire, the executive director of another pro-debt-relief group, the Young Invincibles, said a loss at the Supreme Court would create “a debt cliff for millions.” I asked her if she and borrowers she knew had been socking away money in case they had to pay back everything they owe. “People have been taking care of basic needs,” she said. “They’ve been using the money for things they need to live safely and healthily.”

These are valid points. But with the unemployment rate at a 54-year low, it’s getting hard to argue that debtors remain uniquely incapable of paying back what they owe. Many surely do need relief, but maybe not everyone earning up to $125,000 a year ($250,000 for married couples), as in the Biden plan. You can also ask, as Chief Justice John Roberts did, why it’s fair for student loans to be forgiven but not, say, a loan to an 18-year-old who didn’t go to college but instead borrowed to start a lawn service. As I wrote last year, the root of the problem is that many colleges aren’t worth the money. Until ineffective colleges are closed or fixed, the debt cycle will repeat.

The case that habituation plays a role in attitudes toward debt was made in September 2021 by Richard Cordray, the chief operating officer of the Education Department’s Federal Student Aid office. He has strong credentials as a consumer advocate, having served as director of the Consumer Financial Protection Bureau. He’s leading the Biden administration’s effort to “put the needs of students and borrowers ahead of special interests,” as Education Secretary Miguel Cardona put it last week.

But he’s also aware that the pause has changed how debtors think. As The Times recounted in a recent news story, Cordray said that getting borrowers to resume payments after such a long timeout would be a “psychological hurdle.” More than 17 months have passed since he said that, and borrowers have become even more accustomed to not paying.

The Readers Write

Your newsletter on tech skills made me think of mathematics, in which I have a doctorate. A technology-driven society requires a work force that has math skills. But if you look closely, those skills fall into two categories. The first comprises people who, given a problem already formulated in mathematical terms, can find its solution. The second comprises people who can take a new problem, describe key features of it mathematically and use that to analyze the problem in a precise fashion. They do not have to be stellar. They need to work well in teams, see things in new ways and quickly come up to speed on techniques that seem to be required. Unfortunately our math education is based on memorizing procedures, despite decades of trying to improve.

Burt Furuta
Honolulu, Hawaii

Thanks for your enlightening article on natural hydrogen. In 1989 I co-founded the Hydrogen Association in Hamburg, Germany, and ever since have promoted the use of H₂ for all thinkable areas of our daily life: cars, steel and cement production, ships and airplanes. I drive Toyota’s hydrogen-powered Mirai. The long-term goal of our company, F. Laeisz, is to change our ships from heavy fuel to ammonia. Generating clean hydrogen from rocks is a dramatic game changer.

Nikolaus W. Schües
Hamburg, Germany

Quote of the Day

“So who is us? The answer is, the American work force, the American people, but not particularly the American corporation.”

— Robert Reich, “Who Is Us?” The Harvard Business Review (January-February 1990)

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