Prelude to the Problems:  I am not against college.  However, I do question the value for many families of spending over $120,000 for anyone to get a college degree.  There must be a cost benefit analysis done before entering school and there should be considerable financial education required before tens or hundreds of thousands of dollars of loans are issued to someone who cannot smoke or drink legally and whose brain is not finished developing.

Now, let’s get into it.

The Problems:

1.     Fairness:  How do you tell a father who worked two jobs and saved for his daughter’s education so she didn’t have to take out student loan debt, that the guy across the street, who saved nothing for his daughter and they took out the maximum loans available, that his neighbor’s loans will be forgiven and he as the taxpayer gets to pay for them?  What about the students who took out loans but lived frugally for many years to repay their loans while others paid no attention to their debt?  What about the student who decided to go to a small state school instead of the expensive liberal arts college so he wouldn’t have to take out debt?  It is impossible to create a forgiveness program that will not lead a lot of people to be angry that many people making bad decisions are bailed out by those who made better decisions.

2.     Who decides who can repay and how much?  Are we just going to forgive all loans?  What about the dentists and doctors who can easily repay their loans?  What about master’s degree programs that have a very low rate of loan default?  Someone has to decide who gets relief and how much and why and that is an impossible task to differentiate who should pay what and why and no matter what the decision, everyone except those receiving the most benefit will be angry.

3.     How do we pay for it?  Sure, tax the rich sounds good, but we could take all the money from all the rich people and the Federal deficit would still be trillions.  The Federal government is currently running a deficit of $1 Trillion per year, with over $20 Trillion on the books and an estimated $100 Trillion if you include all the future payments owed for Social Security and Medicare.  Last year government receipts were about $4 Trillion, so we need to cut 20% of government spending just to get to even. 

4.     How do we decide who gets to go to college going forward?  Taxpayers are not going to continue to pay for everyone who wants to go to college after a bailout.  If all loans are going to be repaid, then college is now free, which means I am signing up again and taking out the maximum amount of loans and I plan to stay in college until I can retire.  I’ll just keep getting more PhD’s in different subjects.  Where does this infinite amount of money come from?  Instead, we will have to decide who gets to go to college and for how long and what degrees?  How will that not create additional inequality.

5.     It Fixes Nothing!  Student Loan Forgiveness is a band aid patch of a symptom instead of addressing the cause.  The entire education system needs an overhaul.  According to Pew Research, 94% of parents believe their child will become a college graduate.  About 33% of high school freshman will graduate with a 4-year degree but our entire education system is setup for college preparation.  The entire education system is failing 66% of students who will not go to college, giving them few life skills and few technical skills to create a life for themselves.  Paying for college for everyone will not solve this problem, so the entire system needs to change and forgiving student loans will not change the system, it will just allow to continue and so we can expect the same results continue.  If government takes over paying for everyone then refer to question #4.

Watch my Youtube video on this!

I’m also open to answering your questions via email! Hit me up at dave@keepyours.org.