Today I saw a petition being passed around on Twitter suggesting that a way to stimulate the economy would be to forgive everyone’s student loans. The rationale being that the money that they would have been putting toward student loan payments would be spent elsewhere, generating demand, which would require more workers to create the products to fill that demand. It sounds good on the surface, because hey, who wouldn’t want a couple hundred bucks a month extra to spend?
Maybe it’s because I actually paid off my student loans, but I don’t see something like student loan forgiveness as a good thing. Not only does it punish everyone who managed to pay off their student loans on their own, but it also sends the wrong message to borrowers. By writing off their obligations when times are tough it basically tells them that the promise they made when they signed up for debt doesn’t matter.
I’m not suggesting that there shouldn’t be mercy on those who have lost their jobs and are unable to repay their debts due to hardship. Federally backed loans do have deferment options available and if someone is in a rough place, I don’t think there’s anything wrong with putting off repayment. That said, what was being suggested by the petition in question was that no one should have to repay their student loans because they’re just an inconvenience.
Instead of giving millions of people an easy way out, I think a better solution would be to educate borrowers on the ramifications of the agreement they’re signing up for. I’m not sure how that would work exactly, because I know when I signed up for my student loans at eighteen years old the future seemed like a long way off and I figured that everything would just work out over time. Luckily I wised up and realized that I had a responsibility to fulfill before I went off to indulge in the latest in gadgetry or whatever was on tap down at the local watering hole.
In addition to education about student loans, additional student aid or direct funding to the universities and colleges on the front end would be a much better solution. Instead of wiggling out of their promise after the fact, the student would be borrowing less (or ideally nothing) at the outset. It’s a lot more honest than saying “I just don’t feel like paying you back even though I utilized your service and promised to pay the price you quoted me.”
The economic problem our country faces wasn’t created overnight and the solution won’t come quickly either. Instead of looking for an easy way out, let’s look for long term solutions to while providing relief to those who need it most, not just people looking to buy a new television.