The republican majority supreme court has now decided two important cases we’ve previously reported on; Biden’s student debt forgiveness and affirmative action for college decisions. The results were as predicted, both ideas were struck down, but the question comes to, where do we go from here?
While borrowers, democrats, and Secretary of Education Miguel Cardona all seem pretty upset at the conclusion of the student loan forgiveness question, there seems to be a bit of light at the end of the tunnel. Biden has started announcing pieces of his plan for a “ramp up” to student loan payments and the results are genuinely interesting.
The first thing is that no missed payments in the first year will be reported to credit agencies. It is hard to overstate what a good decision this is. Many young people are no longer in the habit of paying back student loans and expecting everyone to be perfect immediately was always going to be foolish. Tanking the creditworthiness of hundreds of thousands of borrowers could have the same sort of domino effect that the failure of second and third mortgages did on the 2008 economy.
The best, and biggest key to this plan is that it requires no participation or buy or from borrowers. We have talked extensively that the biggest problem with most means-tested or application driven plans is getting the people who need it most to actually sign up and engage with the system. By simply not reporting missed payments to credit agencies, the administration is essentially giving every borrower a full year before not engaging has consequences.
The second good thing is the income driven repayment plan. Details about this haven’t come out yet, but there is some reason to be hopeful. If you remember back to the initial announcement, the $10k to $20k in forgiveness was not bad, but it was not what we at E3D News were excited about. The part of the plan that had a real chance to help people was the way they were structuring the repayment plan.
First, there is a cap of 5% of your income to student loan payments, which is great, and a straightforward calculation. More importantly, if a borrower made these payments, they wouldn’t be charged interest on the principal. Quite often with income driven repayment plans the problem was that while the borrower made regular payments, the interest would keep accruing, ballooning the balance of the loan far beyond the original principal. This could potentially saddle a borrower with debt for their entire lifetime if their income never grew fast enough to start paying the full payment. With a plan in place to not charge interest on the principal, the result is an actual path to being debt free.
There are also some indications that if payments are made consistently, there could be debt forgiveness down the line. The original plan contained this too, but it might be unwise to count too heavily on this in the future. With Biden’s ability to forgive debt en masse struck down, it is possible that any attempts at forgiveness will be attacked by Republicans. And if there is an administration change in 2024 or a party change in 2028, all of this could be wiped out.
But what about affirmative action? Is that gone completely from admission decisions?
It bears repeating that the largest school system, the University of California / California State University systems are already barred from using race to choose students and have been since the mid 90s. California isn’t the only state which restricted public institutions from using race to make admission decisions, but none of that has applied to private institutions until now.
So what happens at Harvard, Yale, or Stanford? Well, there already seems to be some loopholes. Harvard has made it clear that they “might” still consider race. The specifics behind the Supreme Court’s ruling say that it is still acceptable to consider race “provided that the prospective student explains how it has impacted their life”, which basically means that they mention it in their essay. So while this isn’t quite as easy as simply checking a box on an application, any student who mentions that they belong to a minority racial group in their essay will likely get a stronger look over.
And this will be communicated (not always by Harvard directly, but by admissions counselors or other students) up and down the line. While this means that a semi-anonymous minority student who doesn’t have a support infrastructure telling them how to get into Harvard might have a harder time getting in because they don’t know to include race in their essay, there is a good chance they weren’t going to get in anyways. No one gets into Harvard by accident, and there have always been checkboxes that have mattered far more than race.
Such as being a legacy. And the affirmative action ruling has shined a light on the fact that there are plenty of other ways that Harvard and all Universities, public and private, make decisions on admissions. The one of the most dubious fairness is legacies. Because of the ruling, there has now been a civil rights complaint about legacy admissions at Harvard, partially because it undoubtedly favors white, upper class applicants.
But while Harvard can act very affronted at the Supreme Court’s decision on affirmative action, the steps they would take to protect legacy admissions go far beyond that. It is the difference between Bob Chapek criticizing the “Don’t Say Gay” bill that Desantis put out, and the all out legal war that Disney has launched against Desantis since he stripped them of their ability to govern the land around Disney World. Harvard is technically an educational institution, but by the revenue numbers, it is primarily a way to funnel money into a very large hedge fund. And the best way to get people to donate consistently is to turn it into an identity, ensuring that they are attending the same institution as their father and his father, etc.
It is very unlikely the Supreme Court will challenge legacy admissions, and if a lower court does it will be appealed so quickly by some of the highest priced lawyers on the planet until it is before a judge who went to Harvard. And that probably won’t take long.
So if Harvard, Yale, and the other Ivy’s get to continue to claim that they take race into consideration, did this ruling have an actual impact? Yep. And it did so in an area that is under examined and actually pretty important. The workhorse of the higher ed system is the many state colleges across the country. They receive many tens of thousands of applications every year and can’t diligently read each essay to code whether one discusses how race affected them, and many don’t want to for political reasons.
While 4.0 students with tons of extracurriculars might not see an effect when they apply to colleges, the work that was being done to lift impoverished black families up through education has been put back a step. If black students who just earn OK grades are now turned down at the likes of UT, what happens now?
Who knows. HBCU’s are expecting more applicants since many might be turned down from other institutions and they don’t necessarily have the space to accommodate. We have seen what happens when affirmative action is turned off in California, and it is likely to be just as bad across the whole of the US. The Ivy’s will get to live in their bubble, but the average minority student could lead a meaningfully worse life because of this decision.
The court is in flux right now, and while there doesn’t seem to be enough senators and house members to make any big changes, there is growing political will to do something about the Supreme Court. It is unlikely that anything will change this year, but if the result is many more bad decisions, we could see something in the future that overturns both of these.
At least we can hope.
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