As someone who has been paying student loans for nearly a decade there are few things I’d like more then to have them eradicated on my behalf. With that said, I understand that these loans would have to be paid with tax dollars, essentially paid by others, and there is simply no reason or justifiable argument for someone else to pay my debts from a moral standpoint. In short, student loan forgiveness is unfair, not just for the tax payers but for future generations who wont have their loans forgiven and past generations who have already paid them.
Do not use the word “Fair”…
If we did our absolute best to make student loan forgiveness fair what would that look like? I find it difficult to continue writing with out asking additional questions as that’s all this promotes, more and more questions. Simply wiping all debts clean would be astronomically more unfair then simply having those who took out the loans, of their own accord, pay them back. Why should the decisions and debts of a generation fall on the shoulders of other tax payers who may have already paid back student loans of their own?
Doctors vs ditch diggers
The first issue I see with loan forgiveness is the value of the education itself. A doctor may walk out of school with $300,000 worth of student loans, but in just a few years, they could be making over $400,000 a year. This is not a person who is struggling financially, it is part of becoming a doctor. Those who understand economics understand that the medical school debt is just part of doing business and a small hurdle in the grand scheme of things.
Is it fair to forgive $300,000 of medical school debt for the person making $400,000 a year while a ditch digger gets nothing because they lacked the confidence to even attempt higher education in fear of the debt that may be associated with it? Or perhaps the ditch digger did go to school to be the best ditch digger they could be, but their student loan debt is a mere $3,000. Why should the doctor be given $297,000 more in debt forgiveness then the ditch digger? Perhaps instead of education the ditch digger took on debt to start their own business, learning not from books but from experience. If we’re willing to pay off the doctors debt shouldn’t we be willing to pay the ditch digger’s business loans in the interest of being fair?
Savers vs spenders
Just because someone does not have student loans does not make them or their family, rich. To the contrary just because someone has student loans does not mean they are not rich and could not have simply paid them off. This comes down to priorities and choices, savers vs spenders.
For example, a mechanic could be contributing 10% of his pay every year to a 529 plan for his child’s education. As a result, he is forced to drive a beat-up old car and cannot afford a vacation, he makes the sacrifices knowing his child will get an education. Now, assume his brother is a hedge fund manager who does not even bother with a 529 plan, he drives a new BMW and goes on lavish vacations. The mechanic’s child goes to a cheap school to save money, the hedge fund manager’s child goes to a top school as they have never really been taught the meaning of a dollar. The mechanic’s child has no student loans because of the sacrifices of the father. The hedge fund manager’s child does have student loans which they could have paid in full 10x over, the hedge fund father just pays them each month for the child. Suddenly congress approves student loan forgiveness and the hedge fund manager’s child’s debt is wiped clean. The mechanic gets nothing for his years of sacrifice, his child is worse off because they do not have as “good an education” as their cousin because they were being responsible.
Shouldn’t the mechanic be entitled to those educational costs back? The hedge fund manager could have easily saved, but simply chose not to. The result, the rich hedge fund manager is rewarded for being irresponsible, their child has learned nothing and has a great education. The mechanic was punished, his taxes in part paid for the hedge fund manager’s child’s loan forgiveness. This is why student loan forgiveness is unfair, in what world does this make sense?
Today’s forgiven and tomorrows forgotten
How would you feel if today, congress decided to forgive all student loans, but you were not graduating until next year? What happens to the graduating classes of 2021, 2022, 2023? Did they just miss the cutoff? This creates a paradox and a never ending cycle of “forgiveness”. You can’t forgive this years graduating class and not next years. You would then end up with “free college” which nothing is free. Someone is going to have to pay for the facilities, the utilities, the insurance, the upkeep, teacher salaries, etc.
Simply not charging tuition is not possible, so this would have to be funded by tax payers, I’ll tell you right now there aren’t enough tax payers alive to fund every college education and please don’t think the rich are the answer, the numbers don’t add up. $1.5 trillion, the number of outstanding student loan debt, is a number you cannot even begin to wrap your head around, but I digress this is supposed to be a moral argument.
What have you learned
College is supposed to educate. If loans are forgiven it teaches a horrible lesson in terms of responsibility. There was no one forcing a student to go to a particular school. There is nothing wrong with a community college for 2 years and transferring to a state school. We must be realistic here, who’s fault is it if you have $100,000 in debt for an art major? Why should the poor choice of a student fall on anyone but the student? If you are in a hole you cannot get out of it’s time to stop digging and look for a ladder. Change your career, work extra, sacrifice, and figure it out. This is YOUR debt. The irony here is that college graduates with worthless degrees are demanding that student loans are unfair. What about paying back a loan that you took out on your own accord is unfair? Student loan forgiveness is unfair, not paying back YOUR loan.
Instead of marching around holding up signs why don't you use that time to build a blog, get a certification to advance your career, or simply go to an auction to flip some items for large profits and actually pay off the student loan. You can learn how to do auction flipping and other ways to earn extra cash without getting a part-time job HERE.
There are better options
A clean slate of forgiveness across the board is a pipe dream, it is not realistic and will never happen. So, what are some other options to help the debt burdened get out of student loan debt and on with their lives?
- Lower the interest rate. Interest rates are associated with risk. There is almost no risk when it comes to student loans so why are they 6% when mortgages are 3%? During the Covid-19 pandemic all student loans were lowered to 0%. I propose they never go back above 1%. There is no risk to justify a higher rate. It is the educated who will ensure our country continues to be prosperous. Reward them with inexpensive loans.
- Allow all payments toward student loans to be tax deductible instead of forgiving. Currently, only paid interest is tax deductible and it is capped. Reward those who actually pay off the loan, let the full payment be a tax write off. If you are on income-based repayment and only pay back $2,000 this year you only get a $2,000 tax write-off. If you had a great year and a big bonus and decide to pay down $20,000 you’ll get a great big tax write off. It motivates people to not only pay down their debt but to get out of this income-based repayment plan.
- Cap the total amount repaid. No one should pay $60,000 on a $20,000 student loan because they fell into the “income based” repayment plan. There should be a maximum cap in what you pay for your education. If you need a $20,000 student loan and 15 years from now you’ve paid $35,000 in monthly payments you should be done, regardless of your balance.
At 18 years of age you are old enough to make the decision to enlist in the armed forces, willing to fight and potentially die for your country. If you are old enough to make a decision like that you are old enough to make the decision to take on student loan debt and be held to that debt.
Student loan forgiveness is a fairy-tale politicians tell to try to earn trust and ultimately votes. In the interest of being fair, student loan forgiveness is about as unfair as it comes.