One of the policies Democrats want to adopt is the cancellation of student debt. It is a bad idea that should not be adopted.
One of the ideas championed by many candidates for the 2020 Democratic presidential nomination as well as other Democratic politicians is that the federal government should abolish or at least reduce the debt incurred by students who borrow money. money to pay for their tuition and other expenses. The most progressive Democrats wanted total debt relief. Even Joe Biden, who presents himself as a moderate centrist, has advocated the forgiveness of debt of up to $ 10,000 for each student. Given the likelihood of the GOP taking over Congress in 2022, Democrats will push for debt cancellation ahead of next year’s election.
The main reason put forward by proponents of debt cancellation is that it would stimulate growth in the economy. Total student debt is about $ 1.6 trillion, and it’s climbing. Economists supporting debt cancellation say releasing debtors from the obligation to repay their loans will give them an extra injection of money to save and / or spend as they see fit. This could lead to an increase in gross domestic product of up to $ 108 billion per year.
Corn Washington post Columnist George Will reported the following exchange between a Democratic presidential candidate and a citizen critical of his debt forgiveness proposal:
A drama of Joe Biden’s fledgling presidency was announced 13 months ago in Iowa when a rival for the Democratic presidential nomination, Senator Elizabeth Warren of Massachusetts, answered a question. Its directory “a program for every problem” included up to $ 50,000 cashback for indebted students or former students from households earning less than $ 100,000, decreasing to zero for households of $ 250,000. An Iowan said to him:
“My daughter is coming out of school. I saved all my money [so that] she does not have a student loan. Will I get my money back? ”
Warren: “Of course not.”
Iowan: “So you’re going to pay for people who didn’t save money, and those of us who did the right thing get fucked?” “
But wait! There is more!
Not only would this Iowan get nothing himself, but he would also have to help pay off the canceled debt for potential Democrats’ beneficiaries: after all, federal funds loaned to students come from taxpayers. If the loans are not repaid, the taxpayers keep the bag.
And it’s getting worse and worse. About a third of adults over 25 have a university degree of at least 4 years. They will earn, on average, about $ 1 million more in their lifetime than those without a college degree. So, any taxpayer funded college loan program is one that takes money from a lot of those without degrees to fund the education of those who pursue and earn such degrees. Advocates of debt cancellation also argue that with principle and interest, amounts owed to the government could become onerous. But Will reports that the average student debt is around $ 28,500, which could be repaid if repaid at a monthly rate of $ 181.00 over 20 years. Surely at least some of the extra income that will go to those who graduate can be used to pay off their debts? Otherwise, to require taxpayers without a degree to help finance those who pursue education is to take from those who earn less and give from those who earn more. This is the kind of policy the Sheriff of Nottingham could approve, but Robin Hood not.
None of this is to say that the cost of a college education isn’t too expensive, sometimes outrageously. But rather than taking money from the less rich and giving it to the future rich, we should recognize that the ease with which federal aid is given to students encourages colleges and universities to admit more students to get their degree. money, while increasing the costs of going to school because the federal government will indirectly pay the costs by lending more money to students. The bureaucratic bloat also contributes to the costs of higher education. As a fun activity, check out the number of Vice Presidents, Associate Vice Presidents, Assistant Vice Presidents, Deans, Associate Deans, etc., etc., etc. at a university near you.
Anyone who believes in rational and responsible public finances – a class that may be made up of normal citizens but not necessarily Democratic and Republican lawmakers – should hope that one day federal student loan programs will be better controlled and that the red tape in l higher education will be reduced. . But until then, we have to adhere to the principle that if you borrow money, you have to pay it back. Credit card companies, mortgage companies, banks and other lenders are pretty funny wanting their money back, with interest. As soon as those who borrow money understand this basic principle, everyone will be better off. It is certainly a good principle for college students to learn as well.
Malcolm L. Cross has lived in Stephenville and has taught politics and government at Tarleton since 1987. His political and civic activities include serving on the Stephenville City Council (2000-2014) and the Republican Erath County Executive Committee (1990 to These days). He served as Pro Tem Mayor of Stephenville from 2008 to 2014. He is a member of St. Luke’s Episcopal Church and the Stephenville Rotary Club, and volunteers with the Boy Scouts of America. The opinions expressed in this column are his own and do not reflect those of The Flash as a whole..