The latest trend in student loan forgiveness is to shame those who took out Paycheck Protection Program loans during the coronavirus pandemic and use them as a benchmark for why their student loans should be forgiven. That’s a false comparison.
First, let’s acknowledge that the U.S. government is the world’s largest predatory financier, preying on young people and enabling a massive transfer of wealth from them to universities and their administrators. There is no question that the government’s role in student lending has disadvantaged America’s youth. This needs to be addressed and fixed.
But no one wants to get to the root of the problem. Joe Biden and the Democrats just want to do a debt anniversary — which would further enable universities to continue charging exorbitant tuition fees for degrees that don’t provide an adequate return on investment. This not only hurts college graduates just starting out in life, but also millions of taxpayers.
Student loan forgiveness is not the answer. It’s a transfer of wealth.
Progressive Democrats are now claiming that the PPP loans were “forgiven,” meaning that young people deserve to be forgiven.
This is truly apples and oranges.
There is much work to be done to ensure that young people are not stuck in five- or six-figure debt for degrees that cost less than a fraction of that amount.
Due to local and state government orders, primarily small and medium-sized businesses have been shut down, falling into the concept of eminent territory. The government cannot take your property “in the public interest” for any period of time without reasonable compensation. Through his horribly structured PPP program, small businesses often received compensation for only a fraction of what they were actually owed.
The program was structured from the beginning to allow for loan forgiveness. It turns out that if you meet certain criteria, you don’t have to pay the money back.
Some small and medium-sized enterprises did not receive loans because they did not trust the government. Some were angry because of the flimsy loan structure, even though other organizations, such as the Kennedy Center and various academic institutions, received direct relief and did not have to follow the farce of a “loan.”
Overall, this program was a disaster. While many small businesses received some of the compensation they deserved, the program was rife with fraud and funds were often not routed to the right people. The broader CARES Act and subsequent legislation spent trillions of dollars in the name of combating the pandemic emergency.
Individuals were directly inspired. Renters and students with outstanding loans had their payments suspended. It was a shameful and gratuitous act.
The government lost track of some of its spending, and not enough individuals were held accountable.
It was a scary period, made even longer by Biden’s American Rescue Plan, which added more stimulus and pushed inflation to its highest level in more than 40 years.
But the PPP disaster and the student loan disaster are two different disasters. Student loans are personal loans for self-improvement, not compensation for government interference with private property. Except for loans that are originally intended for forgiveness (such as those related to public service), student loans are not taken out with the expectation or promise of forgiveness.
Starting loan forgiveness means that people who paid loans, never went to college, or attended a cheaper college that they can afford will pay some of the costs for those with advanced degrees. It means being forced to do something. We are picking winners and losers – and, of course, some will argue that the government is already doing this. But that doesn’t mean you need to enable more features.
I’m in favor of student loan forgiveness if it allows universities that award degrees that don’t force owners to pay back loans.
I’m in favor of getting the government out of the student loan business. I am in favor of discharging these debts in bankruptcy court and allowing student loans to be properly underwritten like just about every other loan on the planet.
There is much work to be done to ensure that young people are not stuck in five- or six-figure debt for degrees that cost less than a fraction of that amount.
But these are different issues. We can hold governments accountable for messy PPP programs without shaming those who followed the rules.
We can work to solve young people’s college problems. And we can do both in a fair and reasonable way.
