Writing Off Student Debt
President Biden’s plan to forgive student debt is clear: most students will get a $10,000 debt reduction, while lower-income students will be eligible to double the amount (an element that went unmentioned inmost reports). Biden’s August giveaway adds half a trillion dollars to the federal government’s debt deficit by some estimates. It’s easy to be generous with other people’s money.
Conservatives raise the issues of cost, value, inflation and economic impact. Liberals were happy with the move but disappointed by the amount forgiven. In their unreal world, the government is all about giving away “free stuff,” and the more, the better.
One central theme on both sides of the debate is fairness. Conservatives validly argue that forgiving student debtors is not fair to those who worked hard and paid off their debts. Students (and parents) entered into valid contracts for the amount forwarded. They have a legal and moral obligation to meet the terms of the agreement, regardless of the terms. Paying debts is a part of the real world. Conservatives point out that the new generations can learn valuable lessons by honoring their obligations.
The left also thinks the issue is about fairness -- of a different sort. Liberals argue that many students were victims of circumstances beyond their control. Unlike rich children, poor students were forced to borrow if they were to go to college. Many were taken in by slick college marketers who promised them everything and failed to deliver. Millions incurred great debt yet failed to receive degrees (as if the two were related). Yet others graduated into a depressed labor market that could not absorb their gender studies or whatever degrees.
Out of fairness, the liberals argue, these students deserve a second chance. Let their debts be forgiven, and they will be unburdened. They will thus contribute more positively to the economy. The total cost of several hundred billion dollars is not that much to invest, especially when spread over a decade. As economist Paul Krugman casually notes, “At most, then, we’re talking about tens of billions a year in a $25 trillion economy. That’s basically a rounding error.”
The Real Issue is Socialism
There are two things wrong with the progressive way of thinking.
The first is that the Left is misrepresenting the debate, again. For leftists, it is not really about fairness or “rounding errors.” They are actively imposing the repugnant ideology of socialism upon the nation. That’s the real issue.
The student relief scheme follows the Marxist boilerplate. Addressing graduate debtors creates an underdog class in conflict with paying or more affluent graduates. By extending forgiveness, the graduates who signed the loan forms are made conscious of their “oppression.” They can be encouraged to demand their rights and engage in class struggle.
It matters little that graduate debtors have never considered themselves a vocal and organized minority. They have quietly paid their monthly payments for decades and got on with their lives despite all difficulties. Even today, no formal network exists that represents or radicalizes them.
However, the socialist strategy is to turn all debtors, regardless of their economic conditions, into an abstract and nonexistent disenfranchised “community.” They are offered an easy way out as victims of circumstances beyond their control. Those who oppose the move will be considered heartless “oppressors.” The grateful graduates will repay the bribe by voting liberal.
Making Future Student Debt Irrelevant
The second problem with the debt forgiveness scheme is that it will make all future student debt irrelevant. If questionable student loan practices still exist, then present loans are extended under the same conditions as in generations past. These programs will be mass-producing “victims of circumstances beyond their control.”
The logic of the student forgiveness mania leads to the inescapable conclusion that present loans will have to be forgiven in the future. In the name of fairness, it will be unfair to future debtors if they do not receive the same benefits as those receiving today’s forgiveness package. In short, the Left sees all loans as “tools of oppression” that should not be taken seriously. Liberals’ moral hazard message to new students is, “Borrow with abandon since you can expect the government to pay for an ever greater share of your debt.”
The Real Solution: Rejecting Socialism
Meanwhile, the real problem with student debt is not addressed. Real reform would involve making the right decisions before signing the loan agreement. Thus, parents and educators need to direct young people to make wiser choices about college -- including alternatives to the university. It would involve getting rid of so many worthless (and woke) degrees without utility to the nation. Real education would teach valuable life lessons, like honoring obligations, valuing effort and making sacrifices.
Real education would teach students to perceive and reject the socialism found in President Biden’s student relief scheme -- and reject Marxist “rounding errors.”
Image: Mike Rastiello