CHEYENNE – While more than a third of Wyomingites who borrowed federal student loans would have their debt completely wiped out by President Joe Biden’s loan forgiveness plan, Republicans in the state remain critical of the initiative and are weighing alternatives.
Many voiced their concerns with the Wyoming Tribune Eagle this past week that it would be irresponsible spending, discriminatory and could lead to an increase in inflation. They want to find other ways to support Wyoming students through financial literacy classes, encouraging career and technical education, and pointing them toward state scholarship programs.
Forgiving loans for those who have already taken them out is not on the GOP agenda.
“The Biden loan forgiveness plan does not magically make these loans disappear, nor will it bring down the cost of higher education,” said Gov. Mark Gordon in a statement. “Instead, this new and poorly thought-through government handout transfers the debt from borrowers to hardworking taxpayers, some of whom already diligently paid off their loans or chose to forgo higher education. This, among the many other fiscal policy disasters this White House has created, will only exacerbate inflation and continue to increase the costs of everyday goods.”
Biden announced Aug. 24 that $10,000 in student loan relief would be provided to Americans who earn under $125,000 a year, or $250,000 for married couples or heads of households. He said up to $20,000 would be canceled for Pell grant recipients. There will be a final student loan pause extended through Dec. 31, and individuals with undergraduate loans can cap their repayments at 5% of their monthly income.
Biden said nearly 45% of borrowers, or close to 20 million people, would have their debt completely erased. Wyomingites would have a large percentage of its federal student loan borrowers’ debt canceled in the nation if the White House follows through with the announcement.
“While Wyoming boasts one of the most affordable post-secondary education systems in the country, half of those who attended colleges and trade schools have student debt,” Rep. Cathy Connolly, D-Laramie, told the WTE. “The Biden administration’s move to forgive a portion of student debt is a welcomed and bold gesture.”
She said since the Biden administration has already forgiven loan debt to Wyoming businesses, it makes sense to similarly forgive the debt of the state’s most valuable resource, its people. Connolly said this lets people prioritize meeting today’s bills and savings for the future – and pumps needed money into the Wyoming economy.
Some Republicans say it’s a misguided policy decision, and the challenges with student debt have to do with mismatching the number of academic programs with the actual needs for them in the job market.
Sen. Brian Boner, R-Douglas, said he believes the nation needs to focus on teaching useful skills in the career and technical field, instead of “doubling down on a failed policy.”
“We have been looking for ways to address this by pushing more career technical education,” he said. “Not only do you spend less time in school, but you also are going to have a useful skill set once you get out of school.”
Boner recommends programs such as Wyoming Works, or educating students on more affordable higher education choices such as community college, trade school or joining the military. The state senator said serving in the military was how he paid for school.
He wants to see reforms on how loans are given out.
“No other type of loan is treated this way, where you effectively get an 18-year-old kid to agree to such a large amount of debt with no ability to really pay it back,” Boner said. “I wish we would treat student loans more like every other type of loan, where there’s a little bit more discernment involved, and that way we can prevent these situations from happening in the future.”
Gov. Gordon backs improving financial literacy, so borrowers have a better understanding of loans’ financial terms.
Michael Pearlman, Gordon’s director of communications, said Wyoming subsidizes higher education in some ways other states do not. He mentioned the Hathaway Scholarship and the new Wyoming’s Tomorrow Scholarship, which was signed into law earlier this year.
Scholarship availability was cited by Rep. Landon Brown, R-Cheyenne.
He said there’s a place for solutions to the cost of higher education at the state level, and Wyoming has “already done an amazing job at this point of making college very closely affordable.” He said there’s personal responsibility to apply for scholarships, because local colleges are practically begging every year for people to apply.
“Every single year that I’m in the Legislature, I continue to see new and improved ways for college to become more affordable,” he said. “I do think this state has done a very good job, and it’s even in our Constitution to be as nearly free as possible.”
The amount of student loan debt Wyomingites have is 20% lower than the national average, according to the U.S. Department of Education’s data, which Rep. Mike Yin, D-Jackson, applauded. He said he’s glad that the state has an education system that allows debt burdens to be lower, and he’s supports Biden’s initiative.
“If you’re someone who has student debt, it means you aren’t able to buy a house, or you aren’t able to start a business,” he said. “Now those Wyoming citizens are going to be able to take those opportunities and take those risks that they haven’t been able to.”
Yin wants to address the underlying issues in higher education costs. He said $10,000 to $20,000 doesn’t solve the problem of ballooning costs.
For anyone who criticizes the student debt plan, or argues it might contribute to inflation, Yin said he would question whether the tax cuts under former President Donald Trump’s administration were seen in the same light.
Critics recognize how the student loan relief plan will benefit borrowers, saying they are concerned with the economic repercussions and moral ambiguity.
They warned there is no real plan to pay for the student loan forgiveness, or any real estimation of the cost. Some worry about inflation from higher spending by those who otherwise would use the money to repay student loans.
“This will be a multi-million dollar program, and to my knowledge they have no disclosed how the program will be paid for,” Sen. Stephan Pappas, R-Cheyenne, said in a statement. “My fear is that this will just add to our already huge national debt, which is already more than $30 trillion. We must quit spending like we have.”
Wyoming Republican U.S. Sens. Cynthia Lummis and John Barrasso voiced the same concerns. Lummis sent a statement to WTE, saying that according to the Penn Wharton model, it’s a reckless decision that will add $300 billion to the national debt.
Barrasso is a co-sponsor of the Debt Cancellation Accountability Act. It would require the U.S. Department of Education to obtain a congressional appropriation to pay for any federal student loan debt.
Pappas sees the program as discriminatory, because people who have already paid their loans have no ability to participate. He noted that once program funds are expended, it may be expected in the future, and this could further discriminate against students.
“And what about parents and students who took out personal loans or took it out of their savings? Will they get any relief?” he said. “If we want to be fair, there should be accommodation for those borrowers.”
Rep. Bill Henderson, R-Cheyenne, is among those worried about inflation. He said this may lead to higher fees and tuition.
Jacob Channel, Student Loan Hero senior economist and former Sheridan resident, said inflation is a possibility. He said because federal borrowers have had a pause on their student loan payments for the past two years, the extra money is already being spent or saved. This change, he expects, won’t have as big an impact.