Friday’s Supreme Court decision to throw out President Biden’s $430 billion student-loan-forgiveness program pleased fiscal conservatives. But the larger political—and social—question around student loans isn’t going away. To answer it, conservatives will need a plan. And as with family policy, this is an area where the Hungarian experience can help.
Thus far, Republicans have turned to gloating rather than making alternative proposals. Reacting to the high-court ruling, Sen. Tim Scott of South Carolina stated: “If you take out a loan, you pay it back.” Since the pandemic, repayments on student loans have been suspended. Come Sept. 1, repayments will begin again. When that happens, typical Republican responses are bound to appear callous in the minds of voters.
Just as conservatives have begun looking to Hungary’s family-support programs for inspiration, there is another Hungarian example that bears consideration: Hungary’s program to suspend, reduce, and forgive student debt for new mothers.
“A mother expecting her first child can request a three-year suspension of repayment.”
Under the policy, a mother expecting her first child can request a three-year suspension of repayment, with an interest subsidy so that the amount owed doesn’t increase. Upon the birth of her second child, half the mother’s remaining student loan balance is forgiven. And after having a third child, all the remaining debt is wiped away.
Hungary’s student-loan-reduction program is explicitly designed to encourage family formation. “Easing the burden of loan repayment,” the program states, “is a uniquely Hungarian discount that also helps bring forward the time of having a child, as couples often postpone having their first child, contrary to their previous plans, precisely because they do not yet have financial independence.”
Beginning in January 2023, the program added an additional element. A mother under age 30 who has a child during university or within two years of graduation will have the entirety of her student debt forgiven. Hungary’s program provides the same subsidy for those who adopt a child, and also if a child is stillborn. The loan benefit isn’t dependent on marriage and applies to the mother only, but in cases where the father must be the primary caregiver, the benefit would apply to his student loans, instead.
A similar program in the United States would allow Republicans to tackle a number of related issues—the crushing load of student debt, delays in childbearing, and the lack of connection between benefit programs and socially conservative goals. For conservatives who say they want to encourage the young to have families, tying student-loan relief directly to family formation is a compelling proposal.
The student-loan crisis in the United States is also causing young people to put off family formation. Earlier this year, Fortune magazine highlighted the fact that “Millennials aren’t having kids because they have too much student debt.” A 2015 study led by Michael Nau concluded that “student loans delay fertility for women, particularly at very high levels of debt.” A second study mentioned by Fortune found that women who had ever taken on student debt were much less likely to have children by age 40.
Linking student-loan forgiveness to a conservative social goal would also be politically astute. After last year’s Dobbs decision, abortion became a far more motivating issue for left-wing than for right-wing voters. Before 2022, 9 out of 10 voters citing abortion as a motivation to vote voted Republican; this year, abortion pushed 8 of 10 voters to the left. To motivate socially conservative voters to go to the polls, Republicans must come up with proposals that positively benefit families.
Between 2006 and 2023, the total outstanding amount of student loans in the United States ballooned to more than $1.6 trillion, from about $400 billion. The reasons are complicated. As the United States shifted more toward a “knowledge economy,” the premium on higher-education degrees rose, and the share of blue-collar jobs not requiring university degrees shrank. At the same time, the mean age at first birth rose to 27.3 by 2021, up from 22.7 in 1980. A program tying student loans to childbirth is a straightforward way of addressing this problem.
Republicans have typically sought to sidestep the role of student debt in preventing family formation. In a report for the US Congress’s Joint Economic Committee in 2021, Patrick T. Brown observed that declines in fertility predated the student-debt explosion, and thus suggested that large-scale student-debt-relief programs couldn’t be expected to generate a corresponding rise in family formation.
But this type of argument misses the point. Linking student-debt forgiveness to family formation doesn’t require a strong thesis about the role that student debt has played in causing people to delay family formation. Rather, it is primarily a matter of linking relief to a praiseworthy and desirable behavior.
To be sure, it isn’t student debt alone that has caused the collapse in birth rates in the United States. But by the same token, it stands to reason that a young person looking at the financial obstacles to family formation would count student debt alongside other things, such as rising housing and cost-of-living expenses.
Sadly, it is often the libertarian Republican mentality that is standing in the way of new proposals on this front. “Don’t take on student debt if you’re not ready to pay it back!” and “Don’t start a family if you’re not able to shoulder the financial burdens!” are two counterproductive but all-too-common GOP talking points. But the reality is that without material support and incentives, family formation will continue to decline while despair proliferates.
From an electoral standpoint, failing to compete for the votes of young people is extremely risky for Republicans. In the 2022 election, voters between ages 25 and 39, constituting a fifth of the electorate, broke for Democrats by a 10-point margin (53 to 43). Support for Democrats was even stronger among those who completed university (50 to 47) and those with a postgraduate degree (58 to 39).
In adapting the Hungarian program to the American context, we have to take into consideration the high price tag of American universities, which does make debt reduction more pressing, but also a higher-order benefit. For conservatives to make a student-debt reduction proposal, it should tie relief to broader social goods, while also bringing progressive universities to heel.
What might such a proposal look like? In the United States, the average monthly student loan repayment is more than $500. Over the 20 years usually required for repayment, around 40 percent represents interest payments. Given the American system’s other disincentives to marry, any student-loan reduction plan should be firmly tied to family structure. Married mothers of one and two children could enjoy a subsidized reduction of half or all of the interest portion of their monthly payments. Halving and zeroing-out the principal balance could, in turn, be tied to raising a third and fourth child in the context of marriage.
Could such a proposal be funded in the United States? Conservatives have often talked about taxing university endowments. Instead, as a part of a larger “reset” of the university system, universities could be required to pay into a national fund that partly finances the reduction in interest payments and, for married mothers of three or more children, debt cancellation. State or national legislation discouraging DEI-tilted education could, at the same time, incline universities to make corresponding cuts.
In the absence of a compelling Republican plan, it is certain that a Democratic student-loan cancellation program of some sort will eventually materialize. What Republicans need is not to imitate or copy the details of Hungary’s plan, but rather to adopt the family-policy mentality—evaluating every proposal and every piece of legislation from the standpoint of whether it benefits the family. Linking student-loan forgiveness to childbearing would be a strong step in this direction.