Why Student Loan Forgiveness Makes People Boiling Mad (2024)

The Supreme Court is expected to focus its decision in Biden v. Nebraska, the student loan forgiveness challenge, on the “major questions doctrine,” a contested and somewhat obscure rule that the court has recently embraced to limit the authority of executive agencies. But last week, the oral arguments in the case strayed into more familiar territory. Solicitor General Elizabeth Prelogar was arguing for the Department of Justice on behalf of the president’s plan when Justice Neil Gorsuch started pressing her on whether student loan forgiveness is just unfair. Gorsuch suggested that the government’s argument had overlooked the “costs to other persons in terms of fairness, for example, people who have paid their loans, people who [plan] their lives around not seeking loans.”

While the major questions doctrine is not especially intuitive for most people, Gorsuch’s fairness question resonates right away. Why these debts and not others? Why them and not me? These are rhetorical questions, and they have a rhetorical purpose: to frame student loan forgiveness as a sucker’s game.

As the debates around student debt forgiveness have unfolded over the last year, the consistent message from its opponents has been that advocates of student debt relief are playing you, specifically, for the fool. Mike Gallagher, a Republican member of Congress from Wisconsin, announced that the move was a “massive slap in the face to any student who worked to pay off their debt”; other angry commentators described it as a “middle finger” to hardworking Americans. There is an unusual physicality to these laments, a sense of personal disrespect.

Most of the outrage about loan forgiveness is coming from the right, and it is in line with longstanding conservative talking points about hardworking taxpayers being taken advantage of by the indolent poor. The principle underlying the response, though, is bipartisan. I started writing about the psychology and economics of suckers in graduate school about 15 years ago. The loan forgiveness debate lines up with the social science evidence that people are exquisitely sensitive to the threat of playing the fool. Even when the financial and political stakes are very low—even when they are literally hypothetical—people react to the prospect of being suckered with an outsized, visceral aversion.

Even when the financial and political stakes are very low—even when they are literally hypothetical—people react to the prospect of being suckered with an outsized, visceralaversion.

Behavioral researchers often study social interactions by creating little group dilemmas in a controlled setting, lab “games” that manipulate players’ cooperative and self-interested incentives. A longstanding favorite is the Public Goods game, which creates a Petri-dish version of the suckers’ dilemma. In a Public Goods game, four players each get some money, and they are invited to contribute to a communal pot; whatever the players give to the communal pot gets multiplied (usually by 1.5) and then, no matter who gives and who holds back, it is evenly redistributed among all four of them.

The game is modeled on William Forster Lloyd’s famous 1833 essay on unregulated livestock grazing on the common pasture, a setup that was eventually memorialized in the idea of the so-called “tragedy of the commons.” The incentives purport to pit individual self-interest against responsible citizenship. The best outcome for the group is universal maximum cooperation, but the best financial outcome for any one person is to be the one selfish maximizer among cooperative dupes. According to game theory, the results should be grim; no one contributes and the public good is wasted.

In real life, societies navigate these kinds of cooperative dilemmas successfully all the time, with tools like social norms and legal rules. I am a contracts professor and thus perhaps professionally committed to optimism about the utility of law for human society, but the optimistic take is also borne out in the data. Researchers have found that players are pretty inclined to cooperate, even in anonymous games with no real social consequences. In fact, what stands in their way is not necessarily greed at all—it is fear.

In the Public Goods game, as in life, the fear of playing the fool is a big deal. And when players risk feeling suckered and lose, they, too, feel the metaphorical slap in the face. One of the first research teams torun this protocolin the late 1970s offered some bewildered ruminations on the “extreme seriousness with which the subjects take the problems.” The research team noted that it was not “unusual for people to wish to leave the experimental building by the back door, to claim that they did not wish to see the ‘sons of bitches’ who double-crossed them, to become extremely angry at other subjects, or to become tearful.” One of the betrayed subjects wailed helplessly, “You have no idea how much you alienate me!”

Even in the fake society of a simple game, even with extraordinarily low stakes, people take the prospect of being a sucker as a deep insult. There is a related lab protocol usually played in pairs. The players are told to divide $10 between them, by a prescribed process. One of them is assigned to propose the division, and the other, the “receiver,” can only accept or reject. Acceptance means they get to take home the money as proposed, and rejection means both of them get nothing. In most lab protocols, the players have to make these choices without any extraneous communication, and as you might guess, the receivers almost always reject any offers lower than $3, preferring to get nothing rather than take the chump change. But two economists ran a version of the game that permitted the receivers to send a note back with their decision. One player, offered only 20 percent, wrote to his partner, “Sorry, I’m a person too. … So, since you decided you are obviously better than I am. You get nothing.”

Somehow a response like that—“you decided you are obviously better than I am”—is both predictable and also deeply puzzling. These research subjects were never going to meet face to face and had no underlying relationship, much less fiduciary obligation. The financial consequences of an uneven split were, at most, a couple of dollars of income that neither player was counting on. Nonetheless, the $2 offer was an insult that cut all the way to the receiver’s personal honor. As one research team observed, this is the instinct that leads to multiple deaths per year resulting from “hostile physical encounters” with vending machines.

Of course, even if it is the case that people hate feeling suckered, it’s not always obvious whether any particular transaction makes anyone the fool. Sometimes a political dynamic lends itself naturally to scam analogies, and other times the threat can be weaponized to make it more salient. In the student loan context, that weaponization has been mobilized from the right. Ted Cruz complained that Biden’s plan wouldpay the loans of “slacker baristas”; Lauren Boebert made aconfusing and hom*ophobic argumentabout “Karen’s daughter” who was majoring in “lesbian dance theory.”

Invoking these hypothetical coeds imposes a sucker framing for anyone who didn’t see it. Tempted to feel compassionate for working Americans saddled with debt? What if I told you they’re just college girls delaying adulthood on your dime? (The gendering, I think, was not a random choice.If politicians want you to feel bad about your own cooperative instincts, they can accuse you of being a sucker—worse still if you’re the sucker who got played by a girl.) The impulse toward compassion or mercy can be twisted into evidence of foolishness.

The present situation is not an anomaly; in the United States, redistributive policies are relentlessly hampered by claims that aid to any one “undeserving” recipient will humiliate millions of taxpaying chumps. The claim is particularly appealing to opponents of debt relief policies, from bankruptcy to mortgage modifications, who are happy to reframe the debate away from compassion or efficacy in favor of just-so stories about irresponsible borrowers. Indeed, invoking the potential for exploitation is a multipurpose approach for undermining a range of government programs, includinghousing for the homelessanduniversal health care.

In the meantime, for those of us who want to argue in favor of loan forgiveness or other social welfare interventions, it is possible to leverage the power of sucker rhetoric but to insist that the threats we should really care about are from the powerful (the creditors) rather than the weak (student debtors). In his 2023 State of the Union address, President Biden started down this path when he touted his Junk Fee Prevention Act, announcing that he would not let banks, airlines, and hotel chains charge extra fees because “Americans are tired of being played for suckers.” Same weapon, new target.

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The other approach is disarmament, cutting the fear down to size. In politics, sucker threats are often psychologically salient but morally trivial. What are our real values, and what are our affirmative goals? Not looking like a fool is one of my own goals, to be sure, but it’s not the main one, or even in the top five. Politicians who can articulate the relationship between their policies and their values may be able to advocate for a serious cost-benefit calculus rather than hypothetical outrage points.

The Supreme Court will issue its decision on debt cancellation by the end of this term, in June. Student loan forgiveness is complicated. It poses genuinely hard questions that play on competing values—is it too regressive, or too stingy, or too expensive? These are legitimate challenges without easy answers. By contrast, warnings about freeloaders and easy marks, even in the more subtle language of Gorsuch’s questioning, resonate intuitively but don’t contribute much analytically. Which social policies make a sucker of whom is an easy game to play, but it’s not that fun and it’s impossible to win.