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.