To quote former President Ronald Reagan, “Here he goes again.” Presidential candidate Sen. Bernie Sanders (I-Vt.) recently unveiled a new proposal to forgive all student loans.
Once again, he wants to tax those who didn’t create the problem and ignore those who did—all in the spirit of irresponsible socialism and vote-getting.
On the surface, it seems like a good way to unbundle the largest category of private debt held by 40 million Americans, which totals close to $1.5 trillion. Underlying his proposed relief are significant issues that will remain unsolved, and it’s unfair to those who acted responsibly or did little to create the problem.
His stated reason is to relieve the debt of this large segment of our population. However, it’s no more than a carefully crafted vote-getting ploy. In his proposal, he’s ignoring the parents who saved for their children’s education, the students who’ve paid off their debts through hard work, the excessive spending increases by universities, and the many programs that already exist to eliminate student loan debt.
In effect, this proposal is designed to get votes and eliminate the responsibility of paying for what has been received. It’s a dangerous lesson for our youth—to receive without paying.
Responsibility
Sanders’s proposal lets our universities off the hook. They helped create this problem of out-of-balance debt. Let’s look at some of the facts.College costs are increasing faster than the national inflation average and producing more students than the market can bear. Colleges aren’t bearing their responsibility for ensuring that students can get a job that will allow them to easily pay for their student loans. There’s been no incentive for colleges to constrain costs or ensure that the students can pay off their loans.
In effect, colleges have continued to enroll students who‘ll have a diminished chance of finding a job that’ll allow them to pay off their debt, reducing their ability to live a productive life, and creating a stranglehold on their ability to achieve the American Dream.
At the same time, many parents did save to pay for their children’s education. While a much smaller group, they would be punished with the higher taxes that would be a result of this loan forgiveness. Some will say that they should pay because they can and could. But they miss the fact that these parents, who got up early to go to work with a focused interest in helping their children, worked hard. They passed on these values to their children and made their lives easier. It wasn’t luck that produced the resources for their children, but hard work.
The Solution
Instead of just haphazardly eliminating all debts to garner more political power, we need to fix the problem of earnings power versus the rise in student debt.Colleges should be tasked to ensure their students can actually pay for the cost of going to their school by capping loans to match their students’ projected earnings power. This would force schools to take on more responsibility for student loans, as opposed to not controlling costs, and should truly help students get a good start in life.
Sanders’s proposal stated we should tax Wall Street—another political move pointed at a group that Sanders believes is somehow responsible. His theory is that large banks got a handout, so shouldn’t students, too? The numbers simply don’t add up in this theory. Most banks that got the handout have long since paid back the loans given to them and with interest. Many didn’t need the loans that were forced on them, putting the money aside to give it back when allowed. The bailout for the banks is far less than the current student loan size of $1.5 trillion; at $475 billion, it’s a quarter of the student loan problem.
Today, many forgiveness programs already exist and are largely ignored. For two reasons, they are overly complicated and require personal sacrifice that’s poorly compensated. Instead of enacting a new program, we should streamline the current programs by reducing the red tape. They should become easier to understand and contain more flexibility.
Many reject service in exchange for debt forgiveness, because the current reward is out of step with the personal sacrifice. They’re asked to work for below minimum wage pay and only receive a small amount of loan forgiveness. But they serve a far greater good through providing help to feed children who are malnourished, or as doctors, nurses, or teachers working in parts of our country that need assistance.
The forms to fill out are typical of all government programs: complicated and disconnected from reality. The program could help indebted students, but the overwhelming bureaucratic red tape stymies success.
As with all of Sanders’s proposals, you have to follow the “vote-getting trail” to understand his reasons. His interest is in getting elected, not with fiscal responsibility.
There are better solutions than Sanders’s, but they require hard work and a great sense of responsibility—both valuable life lessons.
- Hold universities responsible for ensuring that students obtain jobs that match their debt, as well as reduce the skyrocketing education costs.
- Provide stronger tax credits to families that do save for their children’s education.
- Provide larger rewards for students who do serve the poor and needy.
- Reduce the unnecessary red tape in the existing loan-forgiveness programs.
- Allow local communities to identify ways that students can help and, through this effort, receive a fair reduction in debt.
As a country, we need to fix our student debt levels. It’s a bubble about to burst. But we shouldn’t do it haphazardly in a manner that’s designed to get more votes for specific politicians.
We need to solve this the old-fashioned way, through hard work, and not by letting those who didn’t work hard or helped create the mess get a free pass. We should ask our universities to work harder to ensure success. Those who need forgiveness should be properly rewarded for service to our poor and needy.
We should honor hard work, and not be dismissive to those who try to be good citizens.
