Should We Stop Talking About Student Loan "Forgiveness"?
KEY POINTS
- Debt is often stigmatized, and this may be one reason for opposition to President Biden's student loan relief program.
- Debt is a normal, encouraged economic behavior in our society and shouldn't be discussed in moralistic terms.
- One suggestion for changing the conversation around debt is to stop calling it loan "forgiveness," which implies debt is a "bad behavior."
"Debate continues on President Biden’s student loan relief plan: the cancellation of up to $20,000 in debt for Pell Grant recipients and up to $10,000 for all others who now earn less than $125,000 per year. Critics of this proposal argue that President Biden lacks the legal authority to cancel the debt, that it funnels too much money to people who don’t really need it, or that it could increase inflation and taxes. I’m not a policy wonk, and I have no idea whether these things are true. But others have suggested a behavioral effect to student loan relief, and that’s where I can step in and call people on their nonsense.
- “It distorts incentives and encourages behavior that contributed to the ‘problem’ that it seeks to address.” (from Newsweek)
- “It discourages sacrifice and good behavior.” (from the John Locke Foundation)
- “It rewards bad behavior.” (from Forbes)
Debt has probably been stigmatized since about five minutes after the first loan in human history, and some continue to characterize debt as "bad behavior." This moralistic thinking muddies legitimate discussion about whether, why, and how we should eliminate debt. To address this issue, I offer a modest proposal: Stop calling it debt “forgiveness.”
Debt Stigma
Humans—being relatively slow, small, and weak within the animal kingdom—quickly learned that cooperation is our only means of survival and evolutionary success. Thus, we’re finely attuned to concepts of reciprocity and fairness. The Code of Hammurabi (approx. 1750 B.C.) lays out rules for loan repayment and debt relief. The Torah, Bible, and Quran all discuss debt. It’s perhaps unsurprising, then, that people who carry debt are often targets of shame and scorn.
Despite our societal expectations and economic demands that people attend college, student debt is still subject to this stigma. If you’ve been paying attention to the news, you know that people with outstanding student loans are often called irresponsible for taking on too much debt, failing to pay it back promptly, or both.
Moreover, only 41 percent of Americans support complete student debt relief, with that figure far lower among people without student loans. Yet it was reported last summer that 63 percent of Americans support free public college. Although the endgame here is the same—college degrees with zero debt—I would argue that the 22 percent of Americans who seemingly would make college free proactively but not cancel student debt retroactively is due, at least in part, to debt stigma.
And debt stigma can have far-reaching implications for well-being, with some going so far as to suggest that individuals with debt don’t deserve to live. The General Social Survey, an annual, nationally representative survey of Americans’ attitudes on all sorts of things, has often included this question: “Do you think a person has the right to end his or her own life if this person has gone bankrupt?” The fact that someone even thought this was a pertinent question tells you a lot about debt stigma, but so, too, does the fact that endorsement of this item almost doubled between 1983 and 2014 (from 6.6 percent to 12.1 percent). This fact may be the ultimate indication that debt is far too entrenched in terms of “right” and “wrong.”
Read the full available article at Psychology Today
Reflection: What are your thoughts on student debt and the student loan relief plan?
#StudentLoan #ReliefPlan #Debt #Stigma
My opinion is that it's only debt relief for the student - the debt gets passed on to tax payers. These are people who are allready struggling to take care of and provide for their own families. People who live on fixed incomes. They shouldn't be responsible for paying for someone's college debt. I mean - I get that college is expensive and I know that our doctors and lawyers and all those people need good schooling but there has to be a better way. College shouldn't be as expensive as it is. Either they could lower costs or maybe offer more scholarships
I don't see debt as really a good or bad thing - it's just a fact of life. You want to buy a house = debt. You want a new car = debt. College = debt. But if I buy a car and can't pay for it - it shouldn't be my neighbors responsibility to pay for it. Granted I realize this is probably a bad example because your car or house can be repossessed while knowledge can't
@mytwistedsoul
Thank you so much for the comment and the insight! That is a great way to look at it!
Another approach would be free education and stipends for the poor. This is how it works in many countries outside the US. People do not start their work lives with a pile of debt, they start it with curiosity and energy.
@cloudySummer
Mhhh I agrree! A really good and valid point you highlighted!
@professionalVision2624
I agree with both the other posters. College costs have gotten way out of hand for the average student and/or their families. Taxpayers should not have to shoulder the burden of debt that other people willingly and knowingly took on. I especially bristle at that idea when there's people chasing worthless degrees and others making financially unsound decisions like spending $100K+ to get a degree in a field where the salary caps out at $35K or less.
There are many other options besides taking on massive student loan debt. In-state schools and community colleges that will transfer credit being just a couple. Smaller schools. It makes much more sense for young people to stay home, attend community college for the first two years and then transfer to finish out their degree when possible. If you're doing an online degree, compare costs, see what you're actually getting for your time and money and make sure the school is accredited.
Living in the dorm isn't the most fun thing to do but if it's more affordable than the off campus apartment and it saves thousands of dollars, I say do it. Think ahead, not today. Same with school meal plans. Take advantage of free meals whenever possible.
Get a part time job. Every dollar borrowed for "living expenses" is dollars borrowed for rent, food and gas, etc. Not a sound financial decision. Also, start paying on those unsubsidized loans immediately. Just paying enough toward them to cover the interest that accumulates will save thousands of dollars down the road.
The GI bill is not what it once was but for some, it's still a valid option. I wish more people would take advantage of what the military has to offer. It's not perfect, but nothing is. It's all what you choose to make of it.
The most expensive school isn't necessarily the best school to attend. If the whole "prestige" aspect of some schools was stripped away, I'd be willing to bet that costs would drop across the board. People need to vote with their dollars.
Lastly, I'll say this: not everyone needs to or should go to college. There's nothing wrong with learning a trade in a trade school if that's where you'd rather be. Good tradespeople will always be needed, the pay is very good over time, job security is always there and there's potential for advancement or starting your own business. Trade schools are much cheaper than college, many states have apprenticeship programs for OTJT and help with tools/tuition. Bonus: There's a huge shortage of qualified tradespeople out there and it's only getting worse.
@kayleebee
What a detailed and informative answer and reflection! It's awesome that you highlight both perspectivs on student debt and it's inviting a further disucssion about the topic! Thank you for sharing!
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