The latest benefit scheme making the rounds in time for the elections is student loan forgiveness. Given the great debt burden on graduates, candidates are piling on the bandwagon to find a platform from which to show how benevolent they can be with taxpayers’ money.
Student debt now stands at $1.46 trillion with an additional $79 billion registered in 2018. This debt hits young people right at the time when they need money to get started. Thus, many claim that college loans delay adulthood decisions, diminishes home ownership and stifles small business creation.
The liberal solution is to erase the debt. Some proposals now circulating will forgive up to $50,000 of loan obligations affecting tens of millions of Americans.
There are three reasons why loan forgiveness schemes are wrong and should not be implemented.
Not a Matter of Injustice
First, inside the broken logic of the schemes is the idea that the loans are somehow an injustice that imposes itself upon poor students. It is not fair that young people, especially poor young people are burdened with such debts. The loans also seem to target poor minorities while the rich are not affected. Big government needs to right this “great wrong.”
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This is a Marxist interpretation of student loans. Marxists turn the loans into instruments used by financial institutions to oppress the poor who need education to get ahead. It is a fatalistic vision that equates failure to obtain a loan with poverty and failure. The poor are forced into a situation beyond their control.
The reality is that no one forces students to take out these loans. When the student signs the agreement, they know that they are committing themselves to repayment. There is also a wide world of alternative options (including scholarships and online courses) open to all high school graduates that can minimize the expenses that a college education entails. Students have an obligation to choose the options they can afford without jeopardizing their future.
Thus, there is no injustice committed since students freely agree to repay the loan. The money is due to the lender as a matter of justice. To defraud the lender of repayment–often the taxpayer—is an act of injustice on the part of the student.
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The Formation of Character and Financial Divorce
A second reason why student loan forgiveness is wrong involves the nature of education. The object of education should not only be the acquisition of knowledge, career advancement or good test results.
Real education forms character and teaches the student about the reality of life with all its limitations, vicissitudes and foibles. The student should develop adult skills to survive in a world that is often cruel and unforgiving. They should cultivate their God-given talents to help sanctify themselves and those around them.
When students take out loans, they make adult decisions that have serious consequences. When all loans can be forgiven, the loans cease to become loans. They become play-loans made to children who do not wish to assume responsibility. Loan forgiveness is financial divorce that sends a message to borrowers that if they do not like the loans, they can simply walk away from them.
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Education fails when students do not become mature adults. It fails when students abandon reality and do not face life’s crosses. To what purpose do student get a diploma if they cannot exercise the responsibilities that it entails?
A Wrong-Headed Vision
Finally, student loan forgiveness perpetuates a wrong-headed vision of government as a provider. Forgiveness advocates claim it will supercharge the economy by freeing up money for home purchases, family projects and small business creation. They forget that the same loans supposedly stimulate the university system in much the same way.
Student loan forgiveness sends a message to all high school graduates that they must attend college to get ahead—and expect government aid in the end. It discourages anyone who pursues more technical or manual skills more suited to their proclivities.
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This mistaken concept of an eventually “free” college education encourages students to spend without restraint in anticipation of future relief. It encourages universities to spend at will and build new facilities for expanding enrollments thus increasing tuition costs. At the same time, many universities lower their standards to accommodate the one-size-fits-all education for everyone—even those, now financially enabled, who are not suited for such studies.
Debt forgiveness is not the foundation for better education but a socialistic system of mediocrity. It will not stimulate the economy since real economic growth presupposes responsibility, duty and planning. Above all, student loan forgiveness teaches graduates a wrong vision of life.