Should Student Loan Debt Be Forgiven?
The following is a guest submission by Andrew Finnerty, Voluntary President and co-founder of the Economics Club at Ferris State University.
I imagine you’re wondering what kind of jerk wouldn’t want his student loans forgiven – likely some rich kid whose parents paid everything or a genius who worked for scholarships. You’ll have to trust that neither is the case and my loans are so high I had to clean the vomit off my first bill to double check what I read.
Nevertheless, any effort to forgive federally backed student loan debt (SLD) is merely a bandage that distributes the bad investment (a college degree that provides no skills wanted in the market) from the unwise student onto those who invested smarter by abstaining.
In essence this leads us to two fundamental considerations: the moral objections we have to allowing others to pay for our own unwise decisions and other economic objections to the bill.
It is painful to accept when we’ve made poor decisions. We don’t have a society that fosters the important lessons of failure. Think of your parents and teachers who said going to college was the path to success. It is not that these people are stupid; it is just that they were ignorant of the unforeseeable future conditions you may be experiencing.
The decision to attend school is an economic and entrepreneurial one. It is one where an individual pursues a path anticipating a greater return for the effort put forth. Your advisers and you could not predict the economic future and the countless unseen actions occurring every minute that drive its outcomes. The first step of Economics Anonymous is to accept the fact you are powerless over Adam Smith’s invisible hand. Nothing good can occur from having an enabling tax payer chase after us as if they can control our behavior.
This leads us to economic policies that could help the future of education. First, allow SLD contracts to be like all others in the western world – dischargeable in bankruptcy. Allow the student to receive the horrible credit rating with its long term effects and the psychic profit of understanding why it got this far. The universities would like to play the victim to the state’s lack of funding, but this is merely propaganda to suppress dissent against it management style which has no interest in suppressing tuition prices. In fact, by making capital investments with state and federal money, it requires short term hikes each year.
It’s time to make the university accountable. As it stands now there are no consequences for pushing a student out the door with no skills the market wants. This doesn’t suggest the school is any better at anticipating economic activity anymore than others, but if we’re going to fund them in the millions as a public good, it would be more efficient if they at least kept track of defaulting students and used that data to curtail what programs are provided. You will never get this type of quality control without a grass roots effort of despondent alumni.