Christian Student Loans

Don’t forget the universities | WORLD

When President Biden announced an executive order on Aug. 24 that would eliminate half a trillion dollars in student debt, the political reaction was predictably polarized. Prominent Democratic lawmakers and, (predictably) many millennials who would benefit the most from loan forgiveness applauded the move.

Yet many progressives complained that forgiving $10,000 per student was a weak trade-off and insisted that nothing less than full debt forgiveness would suffice. Conservatives, meanwhile, have almost uniformly opposed the measure, questioning the legality of such an executive order, condemning it as a cynical pre-midterm ploy to buy votes from a leaning demographic. left, and suggesting that the very idea of ​​loan forgiveness was fundamentally unfair and stupid.

The first two conservative critiques may be fair enough but may sound a bit familiar to anyone who follows contemporary politics. After all, with an increasingly dysfunctional Congress, both parties have resorted to executive orders to replace laws in recent years — a dismal development, of course. And ever since political parties have existed, there have been cynical efforts to mobilize certain blocs of voters by enacting policies that only benefit a select demographic.

So, consider this initiative on its merits – is it unfair and foolish to forgive university graduates’ debts? In principle, no. In practice, yes.

In principle, there is nothing necessarily wrong with clearing a debt. Of course, ordinarily we each have to pay what we owe, and anything less is unfair. But the scriptures themselves recognize that sometimes debt can become crippling burdens, weighing down individuals and even generations with bills they may never be able to pay. The law of Moses made many provisions, until the “year of Jubilee” (Leviticus 25), to cancel all debts every 50 years to prevent any family in Israel from falling into debt slavery at long term. Although, of course, this law no longer binds us directly, its principles have informed the evolution of Christian law, particularly bankruptcy codes. Indeed, the United States has remarkably generous bankruptcy laws, in part due to its deeply Christian heritage.

Additionally, any lender can, of course, choose of their own free will to leave a borrower partially compensated, whether simply out of pity or because they know they are unlikely to receive the full amount and he would rather get something than nothing (see Luke 16:5-7). If college graduates owe the US government money, well, the US government still has the right (in principle) to reduce their debts, if done legally.

The only way to fix the problem of long-term student loans is to have universities assume the risk when they charge exorbitant prices.

Of course, some borrowers may deserve such mercy more than others. Where some debtor students do their best to repay and fail, others continue to go into debt out of laziness or irresponsibility. Every time you erase the debts of tens of millions with the stroke of a pen, you will incite a lot of bad behavior.

However, perhaps the most considerable bad behavior encouraged is not that of students but of colleges and universities, for whom Biden’s policies are a huge and massively unfair boon. Consider: The #1 reason student debt is so oppressive in the United States — $1.6 trillion before the recent announcement — is simply because college tuition is out of control, tripling in terms adjusted for inflation over the past four decades.

Universities and their government enablers spent decades selling the lie that a college degree would help young people succeed in the workplace and that no price was too high to pay for such a breakthrough. In fact, the evidence suggests otherwise. Indeed, if the myth were true, we wouldn’t have a student loan problem since graduates would earn enough to pay off their debts. Students and their families were made to borrow against their own future.

The only way to fix the problem of long-term student loans is to have universities assume the risk when they charge exorbitant prices. Biden’s plan does the exact opposite, implicitly inviting colleges to raise tuition as much as they want because the government is there to help. As long as higher education institutions know that someone else will always foot the bill, whether it’s students or taxpayers, they’ll do what any sane businessman would do: keep raising price. Imagine what would happen to car prices if dealerships knew that the government guaranteed all car loans.

Democrats, of course, will likely never touch one of their key constituencies — university administrators — in the wallet. But any serious student loan reform will have to start here: making expensive colleges, not taxpayers, primarily responsible for financing the purchase of their product.