Why Biden's student-loan forgiveness ignited a debate over the fairness of debt relief, according to an ethicist

• Opponents of student-loan forgiveness have often argued the relief isn't fair.
• Dr. Kate Padgett Walsh, a debt ethicist, said those people view fairness "too narrowly."

To cancel or not to cancel: that was the question.

President Joe Biden arrived at an answer at the end of August – he would cancel up to $20,000 in student debt for federal borrowers making under $125,000. His announcement followed months of debate from lawmakers and advocates on both sides of the aisle on how much student debt to cancel, and if anything should be canceled at all.

The plan was met with cries that it was "unfair."

On one side were the Democratic lawmakers who said that canceling student debt would be good for the economy, help close the racial wealth gap, and allow borrowers to recover from the pandemic. But on the other side were Republican lawmakers who claimed that canceling student debt broadly would hurt taxpayers, benefit the rich, and was an unfair policy as many Americans had already paid off the debt they agreed to take on.

While two lawsuits have so far blocked the loan forgiveness — its fate currently rests in the Supreme Court — Biden and his Education Department have long maintained that his policy is legal and the right thing to do to help millions of lower-income borrowers.

"Our student debt relief program will help borrowers most at risk of delinquency or default from the pandemic get back on their feet," Education Secretary Miguel Cardona wrote on Twitter. "@POTUS and I will keep fighting against efforts to rob middle-class families of the relief they need and deserve."

But the argument of fairness persists. Senate Minority Leader Mitch McConnell said in August that Biden's plan to cancel student debt is "astonishingly unfair."

"President Biden's student loan socialism is a slap in the face to every family who sacrificed to save for college, every graduate who paid their debt, and every American who chose a certain career path or volunteered to serve in our Armed Forces in order to avoid taking on debt," McConnell said.

Dr. Kate Padgett Walsh, an associate professor of philosophy at Iowa State University studying the ethics of debt, told Insider that when it comes to student debt, the debate surrounding fairness isn't so cut and dry.

"They're thinking about their own experience, as opposed to what someone who's 20 is dealing with today," Walsh said. "They're thinking about fairness far too narrowly because we need to think about how students get in this position. And is that fair to begin with?"

Taking on student loans is "less of a promise and more of a forced move"

The difference between now and decades ago is that college is a lot more expensive — and if students want a higher education, they often don't have any other choice but to take out a loan, Walsh said.

"This starts to look like a pretty big exception to our normal rule about holding people to their promises," Walsh said.

"Normally, the fact that when I promise something, it gives me an obligation as an individual, as a person of integrity, to follow through there. But this looks like a really exceptional case... these young people are agreeing to something, yes, but they don't really have a lot of other options," Walsh continued.

Tuition and fees at private universities have increased 134% over the past 20 years, per US News, and in-state tuition and fees climbed 175% over the same time-frame. Adjusted for inflation, going to school today is simply more expensive than it was when lawmakers like McConnell were pursuing higher education — when he was at University of Louisville in 1964, annual tuition there cost $330.

The state of the economy is different today, too, with cost of living on the rise and wages relatively stagnant. Signing on the dotted line when a student is 18 years old to take on debt is "less of a promise and more of a forced move," Walsh said, because paying for full tuition without financial aid is increasingly unattainable.

"The structure itself is not fair"

When former President Lyndon B. Johnson signed the Higher Education Act of 1965, his goal was to expand student loans to millions of Americans to give everyone an equal shot at achieving the American Dream.

But, as Insider previously reported, banks began raising interest rates on student loans shortly after the Act's passage, and the student-loan industry quickly grew to prioritize profits for lenders at the expense of borrowers, contributing to the $1.7 trillion student debt crisis the country sees today.

While Biden paused student-loan payments for the duration of the pandemic and waived interest, prior to COVID-19 many borrowers found themselves trapped in a cycle of repayment because the high interest rates were making it so they were paying off much more than they originally agreed to borrow.

"The structure itself is not fair," Walsh said. "The financing of higher education is now so broken that we need to think about these questions of fairness and justice."

"If we had a society where people don't follow through on their promises, that's bad for society," Walsh continued. "But if we look at this specific case, I think we're at a point where it's pretty clear that this is not good for society, the way we're financing higher ed." She noted how the high college costs are disincentivizing research and learning, prompting long-term negative economic impacts.

Student-loan forgiveness is a short-term solution, Walsh said — but it's not permanent and to truly create a higher education structure that's fair, the government needs to implement more sustainable fixes. Republican lawmakers that have opposed student debt introduced legislation over the past year called the REAL Reforms Act, which they said would help borrowers most in need by capping borrowing and limiting interest from accumulating.

But being more upfront with how much a college costs, along with taking measures like bolstering the maximum Pell Grant award for low-income students and increasing state investment in public universities, will help prevent student debt from continuing to spiral.

"We need to not just stick with what we have had and where things are, but what could we have? How could this be more fair?" Walsh said. "What would be the world where we don't need student-loan forgiveness? And that would be a world where students had more options and were supported publicly in trying to get an education and help become a more educated society."