Running head: STUDENT LOAN DEBT
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Student Loan Debt: Relieve the Burden?
Liberty University
STUDENT LOAN DEBT
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Student Loan Debt: Relieve the Burden?
Should the Federal Government do more to relieve the debt burden that so many of the
country’s citizens carry? No matter one’s opinion, it is evident that loans granted as part of the
Federal Government’s subsidized loan program have generated an enormous pool of debt that
many struggle to pay on a monthly basis. Some believe that these debts should be forgiven
without repayment of any kind while others feel those who willingly accept loans to fund their
education should repay no matter the terms. This essay will examine the current state of student
loan debt and offer a feasible response.
Should the Federal Government Forgive All Student-Loan Debt?
The answer is more complicated than a simple “yes” or “no.” During the Wall Street
protests of the last decade, thousands gathered to voice their frustrations on a list of financial
topics including student-loan debt. The overwhelming majority of them were in favor of the
government forgiving student-loan debt outright with no repayment at all.
“In an informal survey of over 50 protesters in New York last Tuesday, blogger and
equity research analyst David Maris found 93 percent of them advocated student-loan
forgiveness” (Kirszner, p. 570, Vedder, para. 1).
In the article ‘Why I Defaulted on My Student Loans,’ the author claims that in order to
effect a change in the government’s system, debtors should default on their loans, refusing to
repay them whatsoever. This may seem to be a feasible solution on an individual level, however
that debt will be left for another entity to bear. The debt does not simply vanish.
“If people groaning under the weight of student loans simply said, “Enough,” then all
the pieties about debt that have become absorbed into all the pieties about higher education
might be brought into alignment with reality. Instead of guaranteeing loans, the government
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would have to guarantee a college education. There are a lot of people who could learn to live
with that, too” (Kirszner, p. 582, Siegel, para. 19).
The idea of free college for citizens and better opportunities for the less fortunate is not a
bad one in a sense. The Bible teaches caring and compassion among all of God’s children
including the poor and less fortunate, e.g. “Whoever closes his ear to the cry of the poor will
himself call out and not be answered” (Proverbs 21:13). Many would agree that it is a noble
cause to help those in need, but at what cost to the country’s economic wellbeing? What sense
would it make for the U.S. Treasury to forgive, or actually pay-off every current and former
college student’s loan while already incumbered by a tremendous deficit? Finally, what about
those who may struggle at times but manage to dutifully repay their loans?
The U.S. deficit is consistently a focused topic on news stations across the country. As it
continues to grow, many feel the country is pushed ever-closer to an economic crisis. Without
any formal knowledge of economics or finance, it should be apparent that continued borrowing
without repayment cannot be a sustainable way to function as individuals or as a nation.
Should the government write a blank check and forgive all student loan debt? The
answer is no. Although the thought of helping everyone out of “the red” in terms of financial
obligations, outright forgiveness would only add to the nation’s debt as a whole and undermine
those who work so diligently to repay what they owe.
Students seeking to borrow money from the Department of Education must understand
that they are doing so willingly. Americans live in a free society and are encouraged to further
themselves academically. The government’s efforts to help individuals along this path will
almost certainly never be perfect.
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“The funny thing was, despite what you might hear in the media these days, there was no
one standing over my shoulder forcing me to. No government official told me I had to borrow the
money. It was my decision then and it’s my debt today” (Kirszner, p. 583, Adolphsen, para. 3).
The above quote from Sam Adolphsen’s article ‘Don’t Blame the Government’ is a
logically sound statement. Although the United States should strive to make higher education
free for all citizens, it is not fiscally responsible or even possible in current times. Aspiring
students who are seeking loans to fund their education must research, fully understand, and be
willing to repay the money they borrow. The federally subsidized loan program was not enacted
with ill intent by the U.S. Government, but rather with the intent to give those considered less
fortunate an incentive to pursue higher education.
“Ultimately, students and their parents make the decision to borrow money for school.
And it’s their responsibility to pay it back. I’m tired of the whining, I’m tired of the blame game,
and I’m tired of people relying on government to bail them out. It’s your debt. Pay it yourself.”
(Kirszner, p. 584, Adolphsen, para. 15)
Should the Federal Government do More to Help?
The simple answer is yes, the Federal Government should and can do more to ease the
1.2 Trillion dollars of student-loan debt burden without handing out complete forgiveness. It is
not only a noble cause to ease the strain of repayment for students, but a solution could have
other positive effects in the economy. If debtors are relieved in a responsible manner, it is
assumed they will re-emerge into the nation’s economy, spending money on goods and services.
Income Contingent Loan Proposal
The income contingent loan is a lending system that collects repayment based on an
individual’s level of income. This system of loan repayment is believed by some to end all
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student loan defaults. Payments calibrated to one’s level of income will almost guarantee that
the installments can be made, therefore theoretically eliminating the word default from the
equation.
This income-based system of loan repayment will not solve everything that is troubling
about federally subsidized lending but offers a solid step in the right direction. A logical solution
that does not simply ask forgiveness of debt without asking who then will fulfill that obligation
and what the consequences might be for them.
“Income-contingent loans won’t solve the escalating college prices, state disinvestment
in higher education, and overall economic weakness that are driving more students into debt.
But they offer a simpler, fairer, more efficient, and more humane way of allowing students to
repay loans that aren’t disappearing from the higher-education landscape anytime soon. They
could be put in place quickly at no extra cost to the taxpayer. In a dismal fiscal environment,
there are few deals this good” (Kirszner, p. 575, Carey, para. 17)
