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The Misguidedness of Forgiving Student Loans

January 18, 2021

Want to hear a universally bad idea? Many of the most liberal Democrats want to give away $1.6 trillion in outstanding student loans.

The average student loan debt is $35,000. President-elect Joseph Biden wants to forgive $10,000 of every student loan. Senator Chuck Schumer wants to forgive up to $50,000 of all loan balances. Senator Bernie Sanders and others want to forgive it all.

First off, these loans wouldn’t be forgiven, they’d be cancelled. Cancelling requires the federal government to borrow money to pay back the institutions that made the loans, including the government itself. So, taxpayers will pay the student loans.

Second, most Americans, especially those with low incomes, don’t have student loan debt because they didn’t go to college. According to the National Center for Education Statistics, just 35 percent of high school graduates complete four years of college.

How is it fair for people without college debt to pay for student loans willingly taken out by others? What about people who already paid their loans?

Liberal politicians don’t ask such questions.

Consider that 47 percent of student loan debt is owed by graduate students. Many of them pursue advanced degrees that help land well-paying jobs – think doctors, attorneys, and engineers. They’ll be able to repay.

Also consider how 64 percent of federal student loan dollars went to students of “selective institutions” (private schools) with high tuitions. Many of these students are from affluent families who can repay. In contrast, undergraduates at “non-selective institutions” like public colleges and two-year trade programs account for about 10 percent of student loan borrowing in recent years.

Alas, most student loan debt belongs to those with greater financial security. Forgiving students loans will help well-off Americans, not those who could really use it.

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