One of the topics being discussed during this presidential election cycle is student loan forgiveness. This topic will ensure candidates that support this will receive votes from three groups who stand to benefit the most:
n Current and future students who hope that if the government forgives students loans once, they will do it again.
n Universities who hope that by eliminating the $1.6 trillion student debt crisis they created, they will be under less pressure to reduce tuition prices.
n Past students who are struggling to pay off their student loans.
What’s not discussed so much is who the losers are if student loans are forgiven. The answer: The taxpayers since they are the ones who funded the student loans to begin with. In other words, student loan forgiveness simply shifts the debt from the student to the taxpayer (and not the universities who already got their money).
Now, some might disagree and say the government is the loser, as if the government is some distance monolith. But the government is simply the middleman; it collects taxes and, after keeping a cut for themselves, distributes the money to society to fund social programs such as student loans.
What hasn’t been discussed at all is what lessons society will learn if student loans are paid off by the government. For instance, will society learn that:
n It’s OK to not pay back a loan, whether it be a student loan, house mortgage, or credit card debt? After all, the government will pay for it.
n It’s OK to raise prices on essential products, such as education, prescription drugs, or disaster relief supplies? After all, the government will pay for it.
n It’s OK to solicit votes by promising to give voters a greater share of government subsidies without the need to earn it? After all, the government will pay for it.
In past generations, morality was taught around the dinner table. Failing that, society looked to the academic industry for moral guidance.
But given the conflict of interest associated with student loan forgiveness, it remains to be seen whether universities will rise to the occasion ... or sit this one out.