Loans and Such

I’ll say at the outset I’m opposed to the concept of student loan forgiveness. Part of a loan is learning responsibility for the debt you undertake – primarily the responsibility to repay it. There are few lessons learned in cancelling all or some student loan debt.

That being said, I’m less opposed to focused cancellation of some student loan debt for low-income holders of student loan debt. I’m not heartless. Tragedy can and does strike and circumstances may well encourage the use of limited, specific partial loan forgiveness.

What troubles me is I’ve heard no discussion beyond forgiveness amounts $10,000 or $50,000 of student loan debt (or, as the hard-core proponents would prefer, elimination of all current student loan debt to the overall tune of close to $2 trillion dollars) and possibly the scope of who might qualify. But there’s so much else to think about.

For instance, low-income borrowers who qualify for debt forgiveness at some level – what does that mean? Were they low-income when they initially borrowed the money? Is there going to be some level of scrutiny of student loan processes for low-income borrowers who may well have difficulty repaying in the future? Will that result in lower amounts of loan money directed to low-income borrowers, or more stringent requirements from applicants? That seems quite contradictory to stated goals (which I disagree with) of encouraging essentially universal college education.

Is forgiveness considered based only on current low-income status? For how long? And of what nature? Is prolonged unemployment one form of defining low-income status? Might there be more of an exchange than an outright elimination of debt? Could borrowers desiring some level of forgiveness provide volunteer hours in exchange (particularly if they aren’t working currently)? How does one quantify low-income status? Are we creating incentives for borrowers to lower their earnings right after university to qualify for future forgiveness programs? Is that even possible?

Are defaulters on their loan payments eligible for partial forgiveness? Under what circumstances and rationale? What do we teach to potential student loan applicants in this process?

So many questions. So little reported discussion about them. But if we don’t examine the system as a whole to determine how to avoid problems in the future, this won’t end up being just a one-time buy-off of voters debt forgiveness offer to young people. We’re simply setting the stage for continued, future cancellations of loan debt. Debt, by the way, that is (as I’m sure we all remember) not simply abstract government debt, but debt funded by our tax dollars. It isn’t being eliminated magically – just repayment by the borrower is being eliminated. The rest of us are still on the hook for it, as will be innumerable future generations.

So consider carefully the ramifications of any student loan debt forgiveness program, no matter how limited in amount or recipients. It will still prove to be a useful precedent for future, additional programs.