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Student Loan Forgiveness – A Follow Up

Student Loan Forgiveness – A Follow Up

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Last week, I quickly posted an article about the student loan forgiveness proposal from President Biden. I posted nine issues that represented my first thoughts about the proposal. Here are my observations as additional articles and responses have been published.

Issue 1 asked the question as to what taxpayers and voters who repaid their college loans think about this loan forgiveness proposal. My observation from tweets, blogs, and articles was that the comments were overwhelmingly against it, but there were exceptions. In my opinion, the most interesting comments related to people who made their final loan payments in the previous year who were given advice how to apply for loan forgiveness by reinstating their loans. While that process may work for a handful of people, it likely doesn’t work for many more people who repaid their loans prior to the Covid pandemic.

Issue 2 was a derivative of Issue 1. I asked what people thought about this who made choices like attending lower cost and less prestigious institutions, working multiple jobs during college, and reducing their social activities including vacations. I didn’t see as many articles or tweets about this as I did Issue 1, but my personal conversations with people who read my article reflected an overwhelming opposition to the proposal.

In Issue 3, I asked what low-cost institutions think about this proposal. I didn’t see any articles that reflected an official position from any institution. I believe this is due to the uncertainty of the proposal being enacted as well as the issue that many of this year’s students signed loan agreements and there are not proposals for forgiveness going forward. And the expectations of this year’s freshman class were Issue 4. I didn’t see any articles from reporters who rushed to interview them, but I read many articles from people who expressed the same concern/issue.

I asked in Issue 5 when does the Biden administration plan to bring a proposal to Congress to fix financial aid if it’s broken. Thus far, there have been no proposals that I have read. In fact, Kevin Carey asked the same question more than a year and a half ago in this New York Times opinion piece.

Changing Public Service Loan forgiveness to a program based on earnings was my recommendation in Issue 6. I didn’t read recommended changes to this program but given that many think tanks and policy organizations are non-profits, I didn’t expect to see many comments since their employees are eligible. I still believe that there should be income limitations since there are drastically different salaries for teachers and soldiers than lawyers and non-profit executives.

I used the recommendation to reduce monthly payments to five percent of revenues to form Issue 7, is the Executive Branch allowed to make changes like this that could cost hundreds of billions of dollars without going through Congress? There were many who asked the same question. I found an article that asks the same question and appears to be neutral in its commentary and questions. The bottom line is that lawsuits are likely.

With Issue 8, I asked if the loan forgiveness program has a waiver for taxation. Apparently, the American Rescue Plan has a provision that exempts student loan forgiveness through 2025 from federal taxation. However, there are at least 13 states that do not conform to federal taxation regulations and could tax the loan forgiveness.

My last issue, Issue 9, asked why students who never completed a course or a semester should have their loans waived, particularly if they received cash in excess of their tuition and fees and dropped out as soon as they received that cash payment. Unfortunately, there were no articles that I read about this. With the Biden Administration’s reset on student defaults, it’s likely that many scofflaws will get away with this and could potentially reinitiate their previous activities.

There were several opinion pieces that asked why high-cost institutions should benefit from loan forgiveness. Several of my issues related to that. It’s tough for me to ignore this. In addition to my recent book review where the author asked a similar question, I found this CNBC article from May to provide an excellent overview as to how the situation evolved over time. A 2019 Harvard Business Review article written by the University of Toledo’s President Emeritus suggested that there are ways for universities to reduce costs. Based on this recent news piece from a television station in Boston, there are many college leaders who are non-repentant in acknowledging that their cost of a degree is too high.

We need a national bi-partisan discussion. I doubt that we will see that any time in the future given the polarization in both major political parties. Leaving this issue to the courts will only resolve whether these proposed actions are legal. Whoever loses the lawsuit will likely appeal. Meanwhile, most colleges will continue to increase their tuition and ignore the loan balances of their graduates or their ability to repay these loans. It’s clear to me that the refrain of “graduate from college and you’ll earn more” will be replaced more by a “buyer beware” refrain for colleges that are unable to demonstrate a clear return on investment for all students.

Wally Boston Dr. Wallace E. Boston was appointed President and Chief Executive Officer of American Public University System (APUS) and its parent company, American Public Education, Inc. (APEI) in July 2004. He joined APUS as its Executive Vice President in 2002. In September 2019, Dr. Boston retired as CEO of APEI and retired as APUS President in August 2020. Dr. Boston guided APUS through its successful initial accreditation with the Higher Learning Commission of the North Central Association in 2006 and ten-year reaccreditation in 2011. In November 2007, he led APEI to an initial public offering on the NASDAQ Exchange. For four years from 2009 through 2012, APEI was ranked in Forbes' Top 10 list of America's Best Small Public Companies. During his tenure as president, APUS grew to over 85,000 students, 200 degree and certificate programs, and approximately 100,000 alumni. While serving as APEI CEO and APUS President, Dr. Boston was a board member of APEI, APUS, Hondros College of Nursing, and Fidelis, Inc. Dr. Boston was appointed to the National Advisory Committee on Institutional Quality and Integrity by the U.S. Secretary of Education in 2019. He also serves as a member of the Board of Advisors of the National Institute for Learning Outcomes Assessment (NILOA), as a Trustee of The American College of Financial Services, as a member of the board of Our Community Salutes - USA, and as a member and chair of the board of New Horizons Worldwide. He has authored and co-authored papers on the topic of online post-secondary student retention, and is a frequent speaker on the impact of technology on higher education. Dr. Boston is a past Treasurer of the Board of Trustees of the McDonogh School, a private K-12 school in Baltimore. In his career prior to APEI and APUS, Dr. Boston served as either CFO, COO, or CEO of Meridian Healthcare, Manor Healthcare, Neighborcare Pharmacies, and Sun Healthcare Group. Dr. Boston is a Certified Public Accountant, Certified Management Accountant, and Chartered Global Management Accountant. He earned an A.B. degree in History from Duke University, an MBA in Marketing and Accounting from Tulane University’s Freeman School of Business Administration, and a Doctorate in Higher Education Management from the University of Pennsylvania’s Graduate School of Education. In 2008, the Board of Trustees of APUS awarded him a Doctorate in Business Administration, honoris causa, and, in April 2017, also bestowed him with the title President Emeritus. In August 2020, the Board of Trustees of APUS appointed him Trustee Emeritus. In November 2020, the Board of Trustees announced that the APUS School of Business would be renamed the Dr. Wallace E Boston School of Business in recognition of Dr. Boston's service to the university. Dr. Boston lives with his family in Austin, Texas.

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