Forgiving and Forgetting: How Biden’s Student Loan Forgiveness Can Remind Us of the Value of the Philanthropic Sector

President Biden recently announced a plan to forgive $10,000 to $20,000 in federal student loans for tens of millions of individuals across the country. According to an analysis released this week, the Congressional Budget Office projects the plan will cost the government about $400 billion, and experts say it will provide the most relief to college-educated households in the top 70th percentile of the income bracket. But the problems plaguing our higher-education system will not be solved by student-loan forgiveness, or a doubling of the Pell Grant or even free-college tuition. Tackling them will require solutions that are more creative and better aligned with how prices work than how federal bureaucracy functions.

Charitable giving, mobilized by a vibrant philanthropic sector, is engineered to be one part of providing quality educational options and broad access to the American Dream for the people who need it the most.

When it comes to higher education, the role of the federal government has grown stronger and more expansive over time, culminating in a cabinet-level Department of Education, created in 1979, that routinely issues regulations governing which institutions may receive federal student aid funds. Today, the federal government oversees a student financial aid portfolio of $1.59 trillion and continues to influence higher education finances and operations. As the role of government has expanded to include heavy-handed portfolio management, the average price of tuition, fees and room and board for an undergraduate degree increased 169% between 1980-2020. Now, we find ourselves looking to the government to solve the very problem it created.

But historically, the American government has recognized the effectiveness of many philanthropic solutions to complex social issues, creating a long tradition of federal, state and local governments adopting and expanding projects incubated by nonprofits. A famous early example of this is the Carnegie family building then donating over 1,500 public libraries across the United States to increase access to education. The library buildings were functional rather than ornate, an idea that was adopted by local governments seeking to replicate the idea for their own public libraries.

Recently we saw philanthropy step up to fill the gap during the COVID-19 pandemic when students, particularly low-income women with children, were overcome by financial hardships. In response, we saw the Petros family, committed to investing in their local community, make a $500,000 gift to Cuyahoga Community College of Ohio.

Private philanthropy also continues to show interest in supporting nimble and timely educational opportunities that launch successful careers. In response to the lingering impact of the pandemic on the health care and education workforce, the Leonard and Helen Stulman Foundation provided scholarships to train nursing assistants and geriatric nursing assistants at Community College of Baltimore County, Maryland. And Central Piedmont Community College in North Carolina is benefiting from two grants totaling $500,000 from the PNC Foundation to expand training for pre-K teachers.

In the midst of all of this talk of debt forgiveness, we should not forget that problem solving is better found among our neighbors than from an executive branch agency. Whether individual donations or targeted donations from charitable organizations, philanthropy can help provide a better path forward than a debt cancellation that will increase costs for numerous Americans to pay off in taxes.

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