By Kate Robinson
As college seniors across the country prepare for graduation in May, the age-old debate about student loan forgiveness is once again taking center stage. And now, with a new president in office who has more than once pushed for making this a reality, it is worth noting the unendurable damage this policy would impose on our country.
Part of President Biden’s plan to help stimulate the economy includes canceling $10,000 of student loans per each borrower. He positions this as a moderate idea, especially compared to progressives, such as senators Elizabeth Warren and Chuck Schumer, who support a cancellation of up to $50,000 in the form of an executive order by the president. But when there are approximately “45 million student loan borrowers who collectively owe $1.7 trillion,” President Biden’s plan is anything but moderate.
When the president wants to simply “cancel” student debt, the loan still needs to be paid back, so he is just shifting the debt to another citizen to pay off. That is not fair. The strength of our economy relies on the fundamental principle of borrowing and lending. This process allows individuals to make investments that will lead to growth and has been the foundation of our country’s economic success for centuries. Should the government (and its citizens) attempt to disrupt this process, there will be consequences, such as higher taxes.
If all the Biden administration wants to do is help Americans in debt, it should come up with a plan to cancel the $9.6 trillion of mortgage loans, or credit card debt, that Americans are carrying.
Maybe this plan is just a way for the president to appeal to the younger generation; however, in doing so, he completely disregards two key disadvantages of student-loan forgiveness.
First is the overall small economic impact that his proposal offers. According to The Committee For a Responsible Federal Budget, student loan cancellation is “an ineffective form of stimulus [for the economy].” If a person were to get his or her debt cancelled, he or she would only get the monthly interest and principal payments back, not a full check with the total loan owed.
The Committee claims that the amount given back to the borrower is typically between $200 and $300 per month. This is not only a small portion of total loan forgiveness, but it is also hardly enough to make a significant difference in someone’s life for the long term.
Moreover, his plan adds fuel to the fire of never-ending increases in college tuition. Student loan forgiveness, at least under President Biden, essentially becomes free college for nearly 15 million loan borrowers. A person receives money from the bank and never has to give it back. The government seems to believe that this is necessary in order to incentivize people to attend college, but what it is failing to realize is that colleges and universities also benefit with higher tuition.
In other words, “free” college increases the demand to attend, which allows schools to increase tuition. Then, because cost is so high, people are forced to take out bigger loans, eventually causing taxes to go up (assuming a majority cannot pay back the money). It is a never-ending cycle that will only continue to spiral out of control.
I absolutely support students taking out loans for college if necessary. But I am not in favor of people borrowing money and stealing fellow citizens’ hard-earned dollars only to be let off the hook with no penalty.
We are a capitalist society, and nothing comes free. Someone is going to be tasked with paying for a stranger’s higher education, and it will likely be the person who worked hard to get a stable job, has smart money habits, or, worse, paid off his or her own student loans independently. How is it fair to punish those who obey the rules of our economy?
Unfortunately, student loan debt is a problem, mostly self-inflicted. Our secondary education system should shoulder some of the blame, too. The curriculum is weak in teaching students how to properly manage a budget or save money, and high school teachers and counselors excessively push students to attend college, even though there are many other options, like trade school, workforce, or military.
There are so many better ways to fix the broken cycle than to simply bail students out. And I should think all new graduates, as future taxpayers, would agree.
Ms. Robinson is a freshman at Chapman University majoring in Strategic & Corporate Communication. She writes an opinion column for The Hesperian.