I think student loan forgiveness for all federal borrowers is a great idea. Not only is it the right thing to do, but it could pay dividends for the US economy.
Sadly, the #cancelstudentdebt movement looks dead on arrival.
Between the political and logistical issues, student loan forgiveness for all is highly unlikely. The best borrowers can hope for is a dramatically improved system with better forgiveness options.
The Student Loan Crisis is a Symptom of a Larger Problem
College is ridiculously expensive.
Many causes explain the dramatic increase in the price of higher education. What isn’t up for debate is that, by any objective standard, college is far more expensive than it used to be.
What does this have to do with fixing the student loan crisis?
Unfortunately, these two problems are directly connected. Americans need access to higher education. Without student loans, many couldn’t attend college.
If we forgive all existing federal student loans, the question becomes, what is next? Do we make college free? Will we lower the price of school? What happens to the next batch of students?
Erasing student debt today could create a more significant student loan problem in the future. Colleges would have every incentive to continue charging more money each year. Students could borrow increasingly dangerous amounts of student loans on the premise that debt cancellation happened once before, and it will probably have to happen again.
The Government Should Create a Free Option for a Four-Year Degree
Put free college in the same category as student loan forgiveness for all: something that should happen but will never happen.
In the United States, money equals political influence. For-profit colleges, banks, and lenders are making a ton of money in the current system. A free-college education ends this gravy train.
Cost is also an issue. Between free college and student loan cancellation, we are talking multiple trillions of dollars.
When was the last time the United States government spent trillions of dollars because it was the right thing to do?
Voter Support is Insufficient to Overcome the Obstacles to Student Loan Forgiveness for All
If there is one glimmer of hope for those looking for student loan forgiveness for all, it is this: most Americans are in favor of debt cancellation and free college.
Sadly, this majority isn’t enough to make a difference.
Between the cost of the program, the lobbyist money in opposition, and a vocal minority, the majority of Americans will be disappointed.
The healthcare debate is illustrative of the problem at hand. Nearly 7 in 10 voters support a public option for health insurance. Despite a large majority, it hasn’t happened. Special interests, misinformation, and a vocal opposition have prevented creating a program supported by a vast majority of Americans.
Finding a New Approach to Fix the Student Loan Crisis
If student loan forgiveness for all is unlikely to happen, advocates need to consider a new strategy to help borrowers.
Rather than focusing on the best solution, we should look for the most viable solution with the potential to do the most good.
Fortunately, other options could help borrowers without running into the same obstacles as forgiveness for all. I’ll explore these options on Thursday.