Currently, the federal government holds most of the U.S. student loan debt, almost $1 trillion. This is a crisis.
Graduates—especially those without jobs—are clamoring for relief. With the feds in control of the loans, it’s almost a political certainty that a substantial “plan” to aid troubled students will pop up around election time. Some of the left are even calling for massive forgiveness, but a more modest approach could include partial forgiveness for those who “serve society” in the way Washington sees fit. Teachers, nurses, social workers, and government employees could benefit at taxpayer expense under such a plan, while those pursuing careers in business or engineering would have to pay their own freight.
This is a left-wing dream. Simply mine the data of students who hold the debt and identify the groups most likely to vote for candidate X if they get some degree of debt forgiveness. Then craft a plan that offers forgiveness to be paid for—of course—with a tax of some sort on the “rich.” Market it with slogans that highlight the importance of education. A plan like this is a sure winner with many millenials and swing voters. Indeed, the ability to play politics with personal debt decisions is why the federal government should not be in the student loan business in the first place.
It should be needless to say, but there should be no student loan debt forgiveness of any kind. Contracts should be honored, and the federal government should not be seen as a vehicle for abolishing a contract when enough voters change their minds after the fact. Why should taxpayers have to shoulder the burden of students who received college loans? Moreover, how is this fair to students who tried to act responsibly by attending lower cost colleges or working more to pay a larger chunk of their own tuition?
If you want more details on this problem, see Noah Smith’s post on Bloomberg: