Is Student Loan Debt Forgiveness a Good Idea?

Student loan debt has reached an all-time high, putting a heavy burden on many recent graduates. This has led some to propose and support student debt forgiveness as a way to alleviate the problem. Professor Daniel Lin argues that forgiving student loans would do little to address student debt in any meaningful way. Student debt forgiveness:

–          Would provide only a temporary solution to help currently indebted students

–          Would not address the underlying problem

–          Would not prevent future debt problems

–          Would not reduce pressure for rising tuitions

–          Would benefit one of the more privileged groups in the country

–          Would only add to the already enormous national debt

Professor Lin suggests that instead of forgiving student debt, student loans should be dischargeable in bankruptcy. This would encourage lenders to be more careful about the recipients of student loans, causing interest rates to rise and fewer loans to be given out. While these may sound like bad things for borrowers, such outcomes would actually provide important incentives to students. Students would be encouraged to consider how they will repay their loans before they amass more debt than they can handle. As an added benefit, such reforms would also put greater pressure on colleges to control their costs. Making student loans dischargeable in bankruptcy would actually address the fundamental causes of student debt and rising tuition costs.


  1. mikeknightofdawn

    The trick to the current student loan system is that government-backed student loans cannot be discharged in bankruptcy, so it becomes a millstone around students’ necks.

    If federally backed student loans were not widely available and firms could compete, it would likely cause students to think more about whether the debt is worth the degree they hope to attain, and it may influence choices of majors, and eventually majors that contribute less to society might die off entirely.

  2. Ravensburger3

    Now I am sorry if I am incorrect as I am not an economist, but I would think that the no bankruptcy for student loans was an incentive to get loaners to be more trusting to students, increasing supply. Since there is little they can do to prove that they are trustworthy, I would suspect that you would see less loans being giving out due to a decrease in the amount of loaners to students, as it wouldn’t be very stable. This would have the negative effect of inequality of who is being educated. I’m not saying this is a worse outcome, just a possible side effect that should be considered.

  3. TasteT

    I think a lot more people than just the wealthy would benefit from a student loan write off, but it would be a quick fix that would not be sustainable. As far as helping students pick a career that is worth their loan, I think that  there should something a program  that the student can do during high school  or after graduation that may show them the work it entails to complete their college life and also a glimpse of possible life after college that the might lead, may change some  minds as to what choices to make. Like Mike Knight of Dawn said "it may influence choices of majors, and eventually majors that contribute less to society might die off entirely."

  4. savannawillis

    I agree that student loans are not the ideal alternative to paying for school. However, as a working student the cost of universities that provide the bachelors degree needed to hopefully achieve a well paying job in the desired feel have become borderline ridiculous. Cutting costs down at the source would seem to be a more efficient way to eliminate the amount of young people in debt for acquiring an education. 

  5. taschrant

    That was a good proposal in the video.

  6. Slade Sumners

    great video

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