The American Association of Community Colleges has been lobbying the Biden administration for student loan relief. As the administration ponders the possibility of broad forgiveness of as much as $10,000 in student loan debts, the AACC’s policy agenda on loans contains an interesting (and unfortunate position.)
For community college graduates, the AACC favors immediate income-dependent repayment (IDR) as the default repayment plan. This would replace the traditional, 10-year fixed-payment approach that borrowers now follow. The AACC also favors forgiveness for students who cannot repay small debts over 5-8 years. Finally, it promotes loan forgiveness caps to encourage responsible borrowing.
All of this sounds great for student borrowers. But the picture is bigger than income-based repayment schedules and student loan debt forgiveness.
The problem is not how long it takes a community college graduate to repay his loans or the payment amount. It is that community college graduates often fill positions in the labor market that simply do not pay enough to earn a living wage. Instead of allowing community college students to finance their way into poverty, the AACC should lobby to rid community colleges of academic and technical training programs that lead to low-wage jobs.
Dept of Ed should not facilitate wage slavery
When the recommendation is to automatically enroll community college graduates into income-dependent repayment because the current community college default rate on student loans is 12%, the problem is not the student loan terms. If a community college credential does not allow a person to generate an additional $20 per week for 10 years, the problem is the degree, not the financing.
Caps should not be set on loan amounts. Rather, the lending decision should be based on the student’s potential income upon graduation. Right now, most short-term certificate programs generate little to no economic value when compared to a high school diploma. These programs should not be eligible for federal student loans. Period.
Public underwriting of certificates that do not allow graduates to earn enough to repay their loans is self-inflicted damage. It hurts the student, the college, and the US taxpayers by creating functionally unemployable people during a huge labor crisis.
It is as ludicrous to underwrite these programs as it is for community colleges to offer them. And the best way to get rid of these low wage certificates and degree programs is to disqualify them from Title IV funding.
Problem solved.
Photo Credit: Samantha Celera, via Flickr
