What is the purpose of student debt forgiveness? Which problem does it attempt to solve, and how does it go about solving it?


  1. What is the problem?

A student in debt is a person in debt like any other. Therefore, any argument in favor of relieving them of their debt should apply equally well to any other person in debt. So why is there a focus on students specifically? How are they any different?

In fact, one might even argue that students are better off than others in debt: students actually have a degree that will plausibly ensure significant future income, hence helping them in paying off their debt. On the other hand, a person with no degree who is struggling with debt is in a worse position and less likely to successfully pay off that debt, hence surely they are more in need of debt forgiveness than a student? Alexandria Ocasio-Cortez recently said she is still paying off her debt, but her salary is 6-figures. I don't think that debt is a big problem for her.

From a different perspective, one may further argue that a student is in debt out of their own volition: they knew exactly what they were getting into from the onset. This is in contrast to a poor home-owner who is in debt because of the financial crisis, or some such. Thus, from an ethical perspective, surely relieving such home-owners from debt is more fair.

  1. How exactly does debt forgiveness solve the problem?

Another question that I wish to ask is, how exactly does debt forgiveness solve the problem it purports to exist? A student is in debt because education is expensive. Let's say you take the millions of people who currently have student debt and you wipe the state clean. Aren't you just going to end up millions of students in debt a few years later anyways, as a new generation of people go through college?

So you'll end up with the same problem a few years later. And then what? Another round of debt-forgiveness? That doesn't seem financially feasible. So if student debt is a problem, wouldn't a more permanent solution that targets the expensive tuitions and fees at colleges be a more logical approach?

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Student debt is overwhelmingly issued by the government and is not dischargable via bankruptcy. It is issued to people without collateral or current income. It is rather unique in these attributes. Also, it is given to people in promise that it will increase income, but it doesn't do anything to verify that their degrees actually will increase income. For example, Alexandria Ocasio-Cortez has an economics degree, which apparently qualified her to be a waitress/bartender for less than minimum wage.

I say this as someone who also has an economics degree. Which may explain why my entire work career has been based on my computer science education (no formal degree).

People who favor student debt forgiveness like Ocasio-Cortez and Bernie Sanders also favor free college. So their proposal is to forgive all current debt and going forward not offer any more.

Someone with no degree and no income is unlikely to have high debt. Why? Because they can't borrow. Other than student loans, borrowing is gated by income and assets. Beyond that, all other debt is subject to bankruptcy.

All that said, I agree that student loan forgiveness and free college are subsidies for the well-to-do. In some cases, the very well-to-do. It's a bad policy. But it's not bad for the reasons that you state. Student loans are different from other loans. Further, they do offer a permanent solution; it's just that the attention goes to the more immediate solution. Presumably they offer that because people who owe now pay more attention than people who may owe in the future. Also, current debtors can vote. Future debtors may be too young.

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    It's less of a subsidy for the well to do when you include the requisite tax increases to pay for it. The theory is that the middle class see approximately no difference in net income. – Caleth Jul 1 '19 at 15:47

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