It is time to celebrate! The United States government is about to forgive all student loan debt. Over 400,000 people have signed the petition, and that is almost 0.13% of the U.S. population! There is no way the government can say no to a protest with SO many signatures on a piece of paper. Well, let us not get ahead of ourselves. Sorry to anyone that went on a shopping spree after assuming they no longer had to pay back that $80,000 in debt they accumulated by being a good student for the past decade. Despite the best efforts of Occupy Wall Street protesters, it does not appear student loans will be forgiven anytime in the foreseeable future. However, that does not mean it is not a topic that warrants at least a little discussion.
To say the least, there are quite a few individuals that would be extremely interested in the concept of forgiving all student loan debt. Student loan debt is now estimated to be in excess of $875 million dollars, and is growing at a rate of $2,853.88 per second. These stats can be combined with several other shocking statistics to paint a very grim picture for college graduates. Take for instance the fact that the unemployment rate for college graduates under the age of 25 is over 9 percent. These statistics alone are enough to initiate a debate on forgiving student loans.
The main argument for forgiving student loans is the idea that student loan forgiveness would stimulate the economy and pull the nation out of the current recession. Proponents of the act argue that if the government can bail out big corporations, then surely it should be able to bail out its loyal citizens. I am not so sure I agree. Please do not misunderstand my opinion. I have a pile of student loan debt and would be beyond ecstatic if I woke up tomorrow and it was suddenly gone. However, it is not the government’s responsibility to bail us out of a situation that we each individually have gotten ourselves into. In hindsight, I probably did not need the full loan amounts that I took, but as an 18 year-old student when I was told to sign on the line to receive a couple thousand dollars worth of refund checks, I asked for the pen. Knowing what I do now I would most likely make a different decision on the amount I was borrowing. I could blame this on a failure by secondary education to properly prepare me, or on my parents for not providing proper guidance, but I will just call it a life lesson and learning experience and move on. The argument in favor of forgiving student loans is just another thing that adds to the deep rooted problems of our society. We live amongst a generation of entitlement where everyone feels they are owed something and are always looking for someone/something else to bail them out or make their life easier. Here is an idea, try being accountable for your actions and taking control of your own life. Get a job and make a student loan payment instead of crying about how the government should forgive the loan.
Of course, I am not alone in my feelings that forgiving student loans is a ridiculous idea. Justin Wolfers argues that if the government is going to simply give millions upon millions of dollars away, interests could be better served in other ways. Instead of forgiving one student’s $50,000 worth of debt, $1,000 stimulus checks could be given to 50 impoverished families. The argument is that this would stimulate the economy in a much grander fashion than putting $300 back into the pocket of a middle class individual because they no longer have to make a loan 
payment. Additionally, forgiving student loans now would set up generations of entitlement for decades to come. It would, quite simply, start a cycle that everyone would expect from here on out. It honestly would provide a significant privilege to the already privileged. While there are positives to forgiving student loan debt, especially on an individual basis, the negatives far outweigh these positives.
I encourage all of you to read the comments at the end of the Wolfers article, as there are several interesting points made arguing for and against the idea of student loan forgiveness. Again, I would be quite ecstatic to no longer have to worry about student loan debt, but my individual happiness is not what is best for the future state of this country and higher education.
I agree, we ask 18 year-olds to sign up for debt that they really don't comprehend. I work with first year students who really think they will make $75,000 in their first year after graduation. I have (no joke) worked with students who didn't know you had to pay back loans after school. Yikes!
ReplyDeleteIf we bail out student loans, what are we teaching our graduates about debt? I think we have an obligation to teach students about the reality of debt. The lessons for taking care of individual debt will translate to how we take care of national and corporate debt: don't buy what you can't afford, take responsibility for your decisions, you can't have everything you want, etc etc.
The amount of debt students incur is staggering. This also says something about the need for people to be prepared for college. Going into debt is a good investment for some, but not necessarily for everybody. A more honest look at how debt works and how you actually pay it off is necessary for our students' future, and for our nation's future.
Thank you for your post. Last week I was in Vail, CO for a 3 day CAFAA (financial aid) conference. Like most students affairs national organizations, CAFAA is critical for financial aid professionals. They provide federal updates for professionals, lobby the federal government on important issues, etc. At this particular conference, they had a national representative attend and give updates that were going on at the national level.
ReplyDeleteOne of the last pieces this particular representative covered was the topic covered in this blog. While most folks working in financial aid know the reality of loan forgiveness, the representative reiterated that loan forgiveness, no matter the amount of signatures, was most likely not going to happen. Mostly likely, was like, 99% sure that there would not be any conversations at the federal level of student loan forgiveness. I believe, given the financial crisis this country is in (specifically higher education), there is no way this will happen. While loan dept is a serious issue, erasing all debt is not going to teach students or institutions fiscal responsibility.
I have to admit, seeing the Occupation spread and more and more student populations getting involved I, myself, am at times trepidatious. Things are the worst they've been since the Great Depression (some argue they are even worse - we just have more advanced infrastructure now so it isn't as visible).
ReplyDeleteA common argument in everyday discussions about the economic crisis is the irresponsibility of certain corporations. We hear it said that they were wrong to take so much advantage of the system -- yet this would be exactly the same case - only much more widespread. This is the problem with an entitlement mindset - it inevitably gives way to bold-faced hypocrisy.
We can attempt to better inform incoming students about the reality of debt OR we can look for creative solutions to helping students pay for college. But to completely "wish away" the debt? This would, indeed, set a dangerous precedent for entire generations of citizens.
One thing we like to forget or overlook in our scholarly treatment of some issues is that life has consequences. And that consequences exist for a reason - to teach us about the causality inherent in our world. These are the most important lessons to learn and, for many of them, there exists only one way to learn them.
Great Post - thanks!
David Dorr
I agree. I will never understand how some believe they are entitled enough to think they should not have to pay off the debt they have from their education. Higher education is optional, so is taking out loans. I agree with the others about the need for schools, parents, financial aid counselors (some do this already) to do a better job of educating students about the benefits, consequences and the differences between loans, scholarships and grants. My brother worked at a university in Colorado (I will not disclose which one) in the Financial Aid Office and he absolutely hated it because he often overheard his coworkers on the phone giving young students false information about their loans.
ReplyDeleteAs practitioners we need to ensure our students know the ins and outs of their financial aid decisions and how that will impact them down the road. I know a lot of students understand they must pay back their loans but I also know a lot of students who do not understand exactly how much more they will end up paying back after interest. I can see the frustration and attempts to get loan forgiveness but I believe that in life we all make choices and must deal with the consequences.