LW - Against Student Debt Cancellation From All Sides of the Political Compass by Maxwell Tabarrok

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Welcome to The Nonlinear Library, where we use Text-to-Speech software to convert the best writing from the Rationalist and EA communities into audio. This is: Against Student Debt Cancellation From All Sides of the Political Compass, published by Maxwell Tabarrok on May 14, 2024 on LessWrong.
A stance against student debt cancellation doesn't rely on the assumptions of any single ideology. Strong cases against student debt cancellation can be made based on the fundamental values of any section of the political compass. In no particular order, here are some arguments against student debt cancellation from the perspectives of many disparate ideologies.
Equity and Fairness
Student debt cancellation is a massive subsidy to an already prosperous and privileged population. American college graduates have
nearly double the income of high school graduates. African Americans are
far underrepresented among degree holders compared to their overall population share.
Within the group of college graduates debt cancellation increases equity, but you can't get around the fact that
72% of African Americans have no student debt because they never went to college. The tax base for debt cancellation will mostly come from rich white college graduates, but most of the money will go to … rich white college graduates.
Taxing the rich to give to the slightly-less-rich doesn't have the same Robin Hood ring but might still slightly improve equity and fairness relative to the status quo, except for the fact that it will trade off with far more important programs. Student debt cancellation will cost several hundred billion dollars at least, perhaps up to a trillion dollars or around
4% of GDP. That's more than defense spending, R&D spending, more than Medicaid and Medicare, and almost as much as social security spending.
A trillion-dollar transfer from the top 10% to the top 20% doesn't move the needle much on equity but it does move the needle a lot on budgetary and political constraints. We should be spending these resources on those truly in need, not the people who already have the immense privilege on an American college degree.
Effective Altruism
The effective altruist critique of student debt cancellations is similar to the one based on equity and fairness, but with much more focus on global interventions as an alternative way to spend the money.
Grading student debt cancellation on impact, tractability, and neglectedness, it scores very poorly. Mostly because of tiny impact compared to the most effective charitable interventions. Giving tens of thousands of dollars to people who already have high incomes, live in the most prosperous country on earth, and face little risk of death from poverty or disease is so wasteful that it borders on criminal on some views of moral obligations.
It is letting tens of millions of children drown (or die from malaria) because you don't want to get your suit wet saving them.
Saving a life costs $5,000, cancelling student debt costs $500 billion, you do the math.
Student Debt Crisis
If what you really care about is stemming the ill-effects of large and growing student debt, debt cancellation is a terrible policy. If you want people to consume less of something, the last thing you should do is subsidize people who consume that thing.
But that's exactly what debt cancellation does: It is a massive subsidy on student debt. Going forward, the legal precedent and political one-upmanship will make future cancellations more likely, so students will be willing to take more debt, study less remunerative majors, and universities will raise their prices in response.
Helping those who are already saddled with student debt by pushing future generations further into it is not the right way out of this problem.
Fiscal Conservativism
Student debt cancellation is expensive. Several hundred billion dollars has already been spent and several hundred billion more are proposed. This will mostly be financed through debt, especially si...