With trillions of dollars in additional handouts distributed during the first two years of the COVID-19 pandemic, you’d think Joe Biden would be ready to rein in the government spending a bit.
You’d be wrong.
This week, the Democratic president let it be known than he is seriously thinking about carrying through on a campaign pledge to wipe a considerable amount of student loan debt off the books, while also extending the moratorium on payments that has already gone on for two years.
The left wing of his party is pushing the president to go even easier on student loans than he has so far signaled. It wants not $10,000 in loan forgiveness, the figure Biden endorsed while campaigning in 2020, but at least $50,000.
Why stop there? Why not just cancel other debts as well. Car loans, credit card debt, home mortgages. If the government has decided that people shouldn’t have to pay back what they borrow, what’s so special about student loans? Debt is debt. People overburdened with high-interest credit card debt are a lot more stressed out than those with low-interest student loans.
There are both practical and philosophical problems with forgiving student loans.
Loan forgiveness rewards the imprudent and penalizes the frugal. If students go to colleges that are more pricey than their families could afford or borrow more than they should in order to have more fun while in school, they get rewarded. But the poor saps who tried to live within their means, who went to community college for the first two years, or gave up their dreams of an Ivy League school and opted for a state university, or worked weekends instead of hitting the bars, they get penalized.
And what about the folks who don’t go to college at all. Why should they help pay off the debts of those who did?
Loan forgiveness also sends a poor message to current students. It tells them to not be in any hurry to pay back their loans because if the debt gets high enough, the government will come to the rescue and write it off.
Loan forgiveness also diminishes the incentive for colleges and universities to keep their costs down. Student debt is as high as it is mainly because institutions of higher learning are too expensive, with increases perpetually outpacing the rate of inflation. Every time the state or federal government tries to come to students’ aid with more in the way of financial assistance, the schools just eat it up by jacking up tuition costs and housing fees.
Government has an obligation to help the poor, the elderly and the infirm. But it doesn’t have an obligation to help those who are perfectly capable of helping themselves.
Most of those who go to college — unless they had no business attending in the first place — are able to land jobs, particularly in this tight job market. They might have to do without some luxuries while they are paying off their loans, or they might have to work a second job, but they need to be responsible for the choices they made, including taking on student debt while in college.
If Biden and the Democrats in Congress want to do something about debt reduction, they need to concentrate on the $30 trillion the federal government owes its creditors. Writing off student debt would make that mountain of IOUs all that much higher.