Who's Paying Your College Loans?

Morehouse grads got a gift from a billionaire; most foreign students get a gift from America's elderly and sick

By David North on May 23, 2019

The graduation speaker at Morehouse College recently pledged to pay the college debts for all of this year's graduates. This wonderful gift carries with it an ironic reminder: most alien graduates of U.S. colleges this year effectively face 31 percent less college debt, all else being equal, than citizen graduates of the same institutions.

And who is paying for this? Not billionaire Robert Smith (the Morehouse graduation speaker) and other rich Americans; not even the average American taxpayer. The 31 percent-of-their-debt gift to the foreign college grads is provided, unwittingly, by America's sick and elderly citizens in the form of lost revenue for the Medicare and Social Security Trust funds.

This is a grim truth that the media has completely ignored, but it is the case, and the complexity of this tale (compared to the simplicity of the Morehouse story) may be one of the reasons that it has not been reported.

Here are the facts and the figures:

  • the average college debt of graduating seniors this year is about $37,000; this covers both American and foreign students (as there is no subset data on this point);
  • most alien grads have degrees in STEM (Science, Technology, Engineering and Math), and most of these will remain in the U.S. and work in the Optional Practical Training program, and it is this big subset of the alien grads that get the de facto 31 percent debt reduction;
  • an alien grad in the group just described, and his or her employer, each get a 7.65 percent break on these salaries for three years; American grads do not;
  • that tax break comes from the fact that the alien grads and their employers are excused from the usual payroll tax deductions that fund the Medicare and Social Security Trust funds, which help America's elderly and sick;
  • 7.65 percent a year that the former students save over three years, times an average salary of $50,000, comes to $11,475 or about 31 percent of the average debt of $37,000.

For more on the Optional Practical Training program – which has absolutely no legislative basis and is adored by big business – see here.