The idea of granting student-loan debtors forgiveness has a nice sound, but would be bad public policy. It also would be an insult to those many who do as they should, which is repay the loans. And it would be a further insult to the taxpayers, who were assured this program would help students without hurting taxpayers — because the students would pay the loans back.
Advocates for debt forgiveness have been turning over every rock they could find, looking for excuses to justify giving students free passes on their loans. They are trying to blame private, for-profit colleges, which they say oversold their services to unqualified students. They are trying to blame the bad economy for not providing jobs for graduates. They are trying to blame banks which granted the loans for trying to collect them, as they are legally entitled to do. They are trying to blame state colleges for raising tuitions, thereby increasing how much students had to borrow in order to enter and stay in school.
But they have forgotten the real culprits in the matter of overdue student loans: The non-paying students themselves.
Surely, those students had to know that if they took out student loans, they would have to pay them back. Many, if not most, students and former students are doing just that. But many others are victims of problems they created themselves.
They dropped out of school, lowering the value of whatever education they did have when it came to job-seeking. Some of these folks had majored in subjects they weren’t equipped to handle. Others spent all their loan funds on beer and other student fun. Others majored in subjects where no job prospects existed on graduation.
Student loan terms were made tough on purpose when they were formulated: For example, they can’t be discharged in bankruptcy.
Perhaps payment terms could be extended in real hardship cases, and interest rates adjusted, but forgiveness wouldn’t please the taxpayers who would be left paying the bill.