Reasons I oppose blanket forgiveness of student debt.
1. It generally devalues contracts, especially in the very impressionable young. Debt that was agreed to, including terms, is regarded as not in fact an obligation.
2. The promotion of forgiveness of debt as a possibility suggests to current debtors not to pay down their debt in the present. On the basis of “if its going to be forgiven, why give money away now?”
3. The forgiveness of debt is so material that it likely is not within the president’s emergency or discretionary powers constitutionally, but would require legislation.
4. The language accompanying the forgiveness of debt describes it itself as a system reform, but that is false. There is no reform legislation proposed. It’s a one-time thing, applying to those that are in the position to take advantage of a benefit that does not apply to all.
5. If reform of cost and public relationship to education is not completed legislatively and the same egregious costs remain, future student debt will again increase, and another large blanket forgiveness will be necessary again in 10 years.
6. The forgiveness of debt applies only to college-bound population. While there are many poor people seeking to achieve education as a means out of poverty, the beneficiaries are still primarily the affluent, and particularly weighted to those that attended expensive elite private colleges.
7. Among the wealthy, the original interest rates applied to those with excellent credit ratings were low, lower than prevailing investment returns. Some wealthy delayed paying down low-interest debt and instead invested funds that could have been paid down.
8. The promotion of forgiveness of debt itself is a means of buying votes (corrupt, cynical). The invocation of racial component is partially true (more accurately a class condition), but also a cynical effort to promote rage.
9. There are very good alternative means to honorably fulfill students’ debt obligations. Specifically, it is possible for the federal government to retroactively recompute cumulative interest since inception based on moderate interest rate. And, the federal government could subsidize repayment on an hourly or matching basis for socially needed professions. At last resort, the federal government could establish a substantive civilian service corps, of which a portion of compensation would be directed toward repayment of student debt.
10. For those that have dropped out, the federal government could invest further in their education until they do have a degree or other means of improving their standard of living.
11. It is necessary for the federal government to pursue restoration of regional economies, so that there is decent employment universally suitable to support families meeting their needs.
12. Those individuals that are concerned about the social impact of existing student debt, could organize funds toward paying down individuals’ or general student debt. As a charitable organization, those donations would be tax deductible, resulting in effective federal subsidy for the repayment.
One similar impact of the promise of debt forgiveness, is that private charitable purpose is also handicapped or discouraged.
Summary: What looks progressive isn’t. It hinders community investment in students’ lives rather than enhances.
Richard Witty lives in Greenfield and is a retired CPA and finance executive for regional not-for-profit organizations.