Oregon Sens. Ron Wyden and Jeff Merkley are backing a plan to cancel up to $50,000 for federal student loan borrowers.

“It’s ridiculous that so many students are forced to take on back-breaking amounts of debt to go to school — especially as the coronavirus continues to upend our economy,” Merkley said in a statement. “It’s time to cancel student loan debts so we can free up Americans burdened by student debt to chase their dreams, contribute to their communities, and help us pave the way to economic recovery.”

The idea supported by Democrats is also to eliminate any tax liability from having the debt wiped out.

People who are low income or who are racial minorities would certainly benefit, but the benefit would accrue mostly to wealthier families, according to the Becker Friedman Institute for Economics at the University of Chicago. Wealthier families, after all, hold most of the federal education debt. The institute considers a simple policy of eliminating $50,000 in federal student loan debt to be a regressive policy, not a progressive one.

That it helps the rich the most is the least important matter to weigh on how much debt to kill off. This country provides plenty of fiscal breaks to the wealthy, especially “job creators.” The wealthy who benefit from this plan could turn around and use the funds to pay down business debt or improve equipment or pay more to employees.

But for generations of Americans, eliminating $50,000 of student debt would deliver significant practical benefits. Students fresh out of college pack big loan debt around that hinders their ability to own homes or even decent cars. We have folks facing retirement who still are paying on students loans.

Wyden and Merkley say they want to ensure that debt cancellation “helps close racial wealth gaps and avoids the bulk of federal student debt cancellation benefits accruing to the wealthiest borrowers.”

To get there, this plan has to look beyond merely writing off debt. The more significant matter Congress needs to address is how to prevent this from being an issue again. This should be a one-time fix. To do that, there must be mechanisms to ensure college students don’t end up taking on more debt than they can afford.

State colleges and universities, in particular because they operate with public money, should have to make sure students understand what the job market will be like in their field of study once when they leave college. State systems of higher education need to make sure their students have a clear picture of what debt means and how likely they are to pay it off in a reasonable time.

Without such mechanisms, writing off $10,000 or $50,000 would be no different than a credit card user who racks up big debt on several cards, moves that all onto a new, low-interest card, and then continues to use the old cards and get further into debt.

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