Kari Stadem: Student loan forgiveness is a bad idea
In a recent article published in the West Central Tribune on student loan forgiveness, the reporter related sad stories but only gave a glancing reference to one reason why student loan forgiveness is a bad idea. I can think of at least five:
- We are consistently told that college-educated people make more money than others. Student loan forgiveness takes money from taxpayers without college educations to pay off loans for people with college educations. This is unjust.
- Many college graduates scrimped and saved for years to pay off their student loans. Now they have to pay taxes to pay off the loans of others. This is unjust.
- Many people came out of high school and chose no college, community colleges or state schools instead of the private schools they might have attended had they known it would be “free.” Now they have to pay taxes to pay off the loans of people who chose that more expensive path. This is unjust.
- We are told that forgiving these student loans will help the overall economy. But the government doesn’t have the money to forgive student loans; it will have to borrow it. If student debt is bad for the economy, how can adding to the US debt be good for it?
- If student loans are forgiven, colleges will have even less incentive to make their product affordable.
Some possible options for government action:
- Set a cap on the amount of student loans allowed per person.
- Forbid the “capitalization” fees the article talked about, at least for student loans.
- Allow student loans to be wiped out in bankruptcy; that way the banks are held accountable not to loan people too much.
In my day, only about 17% of people got a college degree, which made it the ticket to the “good life,” financially speaking. Today about 40% of people get a degree, which is why it’s not as valuable financially as it used to be. High school students, make your decisions accordingly.
Kari Stadem
Willmar
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