Want To Fix the Student Loan Crisis? Treat Them Like Any Other Loan.
Yesterday, President Biden announced an unprecedented move to cancel roughly $300 billion worth of student loans. Now whether or not the president has the authority to do this will be determined in the coming months, but the fact that this is being proposed shows just how ignorant Biden is when it comes to the economy.
Canceling any amount of student loans will have severe consequences on our country. Economically, a student loan cancellation will most likely make the inflation crisis in our country worse. The inflation problem we are facing was caused in part by the reckless spending of the federal government. Spending another $300 billion will add fuel to the fire.
Then there are ethical concerns with this proposal. Why is it fair for an American who didn’t go to college to have to pay with their tax dollars the tuition of someone who did? And what about those who worked hard and paid off his or her loans already, why aren’t they going to get reimbursed?
But the problem at hand isn’t just the economic and ethical ramifications of this proposal (although those are valid concerns), it’s that the entire student loan system needs to be changed.
The main reason that student loans are so tricky is that there is no collateral. Take a car payment, for example. If a person is not able to make car payments on his auto loan, the lender will repossess the vehicle. In contrast, a college graduate who is in debt and doesn’t have money to pay it back has no collateral and no assets. This is why student loans are nearly impossible to discharge during bankruptcy. Even if you’re elderly and haven’t paid off your student loans, the government will dock your social security benefits.
When a bank gives a person a loan, they have to evaluate the risk-to-reward ratio. To do this, they will look at a person’s previous performance and his potential outlook. If a person wants a small business loan, he will need to plead his case to the bank. The business owner would explain what his 5-year plan is, where the money will be going, the projected growth of the business, market value, etc.
But what do students do when they apply for a federal loan for college? Nothing. The student is practically approved sight unseen. Student loans are riskier than others because of the lack of collateral, and the government has been recklessly handing money out like it’s candy to 18-year-olds just entering adulthood.
So the simple question must be asked: why should student loans be any different than other loans?
Students enrolling in college who need a loan for tuition should have to make their case with a private credit lender. The lender will determine whether or not that student is approved for a loan. The lender will view that student’s previous performance, what degree they are seeking, and the market value of that career. Put simply: the government needs to completely stop subsidizing student loans.
Having a more rigorous process for student loan approval would force students to reevaluate their career choice, what university they are attending, what major they want, and whether they should be going to college at all.
After all, why should all degrees be treated equally? A person seeking a music theory degree should be treated much differently than a person seeking a mechanical engineering degree. A bank would be much more willing to give out a loan to a degree with more opportunities, as they should. When people get free money, they waste it. In this case, getting a federal loan enables a student to get a worthless degree.
Then there’s the simple reality that not everyone should be going to college. Higher education isn’t for people who want to “find themselves” or figure out what they want to do with their life. Students shouldn’t be wasting their time or money on college unless they believe that the degree they are seeking will benefit them.
TPUSA contributor Anthony Watson spoke to a TPUSA chapter president about this to hear a current student’s thoughts. Jacob Lee, a senior at Rider University studying Geology who has college debt, explained his opinion on the issue:
“College is not meant for everyone. That’s not an insult… it’s a huge commitment in terms of time and money… If you end up finding out you can make just as much money or have just as good of a job without a college degree, you’re going to regret it. [Student loan relief] feels like an insult to the people who already paid off their student loans. A lot of them never got any help, and they shouldn’t in general. You chose to go to college and you chose to pay the price for that.”
We’ve all seen how college campuses have turned into indoctrination centers for naive students. Universities have become too big, too biased, and overfunded. They also keep raising their tuition prices each year. But this isn’t because of “price gouging,” as the White House would want you to believe. It’s because the government keeps handing out federal loans and Pell Grants to students. Canceling student loans will only make tuition more expensive; when student loans are forgiven, universities will further increase prices for future students.
But what about everyone who already has student loan debt? The only solution is a simple one: individuals should be responsible for their debt.
Of course, businesses should also do their fair share by easing job requirements to not be so dependent on college degrees. We’ve seen how indoctrinating and useless universities are becoming, why should we still be stubborn about applicants having a degree? If someone is qualified, hire them. Stop making college degrees a litmus test for someone’s potential.