In late February, the US Supreme Court heard oral arguments in two cases related to President Joe Biden’s loan forgiveness program. In the court sessions, the justices spent most of the time sparring over whether the executive branch should have the authority to forgive student loans during a national emergency and whether Americans who could not access the full amount of debt relief had standing to sue.
More interesting to me, however, as I read about the case, are the questions two conservative justices brought up regarding the “fairness” of forgiving loans for college debt holders when those who chose not to go to college did not benefit from Biden’s executive action. My new book, The Education Myth: How Human Capital Trumped Social Democracy helps to provide the historical context to understand why the question of fairness between college and non-college graduates has become so pronounced, and in many ways, such a central division in American politics today.
Both Justice John Roberts and Justice Neil Gorsuch made a major issue of the divide between college and non-college graduates. Here’s Justice Roberts: “You know, you have two situations, both two kids come out of high school, they can’t afford college, one takes a loan, and the other says, I’m going to, you know, try my hand at setting up a lawn care service, and he takes out a bank loan for that. At the end of four years, we know statistically that the person with the college degree is going to do significantly better over the course of life than the person without. And then along comes the government and tells that person: you don’t have to pay your loan. Nobody’s telling the person who is trying to set up the lawn service business that he doesn’t have to pay his loan. He still does, even though his tax dollars are going to support the forgiveness of the loan for the college graduate, who’s now going to make a lot more than him over the course of his lifetime.”
And then, Justice Gorsuch: what “is missing [in the discussion of the executive action] is costs to other persons in terms of fairness. For example, people who have paid their loans, people who plan their lives around not seeking loans and people who are not eligible for loans in the first place, and half a trillion dollars is being diverted to one group of favored persons over others.”
Of course there are many federal expenditures that reward certain Americans over others. Every year millions of American homebuyers can deduct mortgage interest from their tax burden while millions of renters cannot. Millions of parents receive tax credits for childcare, while childless adults do not. The list goes on and on.
One difference is that an executive order meant that Congress did not act in this particular case, and that’s an important distinction. But it also seems like the question of fairness has a lot to do with the groups of people being compared: those who go to college and those who don’t. Why would forgiving student loans, in particular, be subject to the level of scrutiny Justices Roberts and Gorsuch subjected it to?
The answer to this question, as I point out in The Education Myth, is that from the 1960s until very recently the principle that that investment in education should be the primary path to economic opportunity was virtually a consensus position. The consequences of this consensus divided working Americans by whether or not they had college degrees.
In the early 1960s, Chicago school economists led by Theodore Schultz and Gary Becker began arguing that the American economy grew more prosperous because of investment in “human capital,” a term that elided the exploitative labor relationship that actually exists under capitalism. Though the Great Society led to some important reforms, it also drew on the concept of human capital to emphasize education and job training as the solution to poverty at the expense of other interventions like public investment in directly creating jobs. Importantly, the Higher Education Act of 1965 even put some of the burden for human capital investment on the individual, helping to foreground the system of student loans we have today.
Though legislators and activists in the 1970s, from Sen. Hubert Humphrey to Coretta Scott King, sought a federal jobs guarantee, the growing professional class was becoming increasingly prominent in the Democratic Party. Some of them wanted the party to move away from guarantees for all working people. Jimmy Carter was, in many ways, their president, and he sought to limit the role of the federal government in alleviating economic insecurity while also raising the importance of human capital by making the Department of Education a cabinet-level entity.
Though Ronald Reagan sought to eliminate that department, his own education secretary’s report, the widely-read “A Nation at Risk,” made the case that new generations of workers needed a better education system—not enhanced labor rights or government policy to save blue-collar jobs. Both George Bushes and Bill Clinton furthered the “education myth” too: the next twenty years brought the bi-partisan development of market-based education reform, trade deals that harmed the livelihoods of manufacturing workers, and policies, like the Personal Responsibility and Work Opportunity Act (1996), that took an axe to social safety programs.
As I conclude in the book, the last fifteen years or so have featured challenges to this consensus from both the left and the right. On the left, insurgent labor unions like the Chicago Teachers Union and political candidates like Bernie Sanders have pushed for significant labor reform, public investment in jobs, housing, and other social services, and an education system that does more than promise training for the supposed needs of employers. On the right, reactionary populists like Donald Trump, and my home state’s Scott Walker, have mobilized the resentment many non-college graduates feel toward a political system that has offered them very little but lectures about the importance of getting the right education or job training in order to succeed in a global marketplace.
The findings of The Education Myth, then, are reflected, in two ways, in the questions the conservative justices asked during oral arguments on President Biden’s loan forgiveness action. First, Chief Justice Roberts demonstrated the continued resonance of the “education myth” itself: that taking out loans for an education is truly the best path to economic success. In this, Roberts indeed refers to a myth. Right off the top, his assumption that loan holders almost universally benefit from their loans ignores the fact that about 40% of Americans who hold student debt don’t even finish their degree. But even for college graduates, as Philip Brown, Hugh Lauder and Sin Yi Cheung document in The Death of Human Capital? Its Failed Promise and How to Renew It in an Age of Disruption, the college wage premium is deeply skewed toward the top ten percent of earners who graduate college. For many college graduates, particularly from non-elite institutions, the economic benefits of a college degree are limited.
Second, Justice Gorsuch helps us to understand the political problem posed by the growing resentment of those left out of the society the education myth helped create: that a “half a trillion dollars” has been “diverted”—on to top of all the other ways they have already been favored—to America’s college graduates.
The answer to this growing political problem shouldn’t be a false choice between helping college graduates or helping non-college graduates. We shouldn’t argue that everyone should go to college or force loanholders to pay exorbitant loans because those who started lawn care businesses are disadvantaged. The answer is to stop dividing people. As Humphrey and King argued in the 1970s, we need to ensure every working American has the economic security and social dignity they deserve. Forgive student loans—all of them, for everyone—but also ensure that regardless of whether one goes to college or not, they will have access to a good job, a safe place to live, universal healthcare, and an excellent education.