So, this has been floating around facebook, and I finally feel like interjecting.

 

There is a petition circulating from SignOn.org, to encourage lawmakers to forgive student loan debt as part of a new economic stimulus plan.

 

I have to say (though I’m sure I’m in the minority) that this is an awful idea.

 

In full disclosure, I will admit that I personally have no student loans (thanks to generous and hard-working parents, a reasonable in-state college, and KEES scholarship money.)   

 

However, David and I are now sitting on ginormous student loans thanks to his attendance at the University of Louisville Medical School.  Just like we do with all of our finances, David and I consider this debt to be a burden we both share.  Although only his name is on the loans, it is a part of our entire family’s financial plan, and we are both taking responsibilities to tackle the payments.

 

Therefore, you’d be hard press to find another family that could benefit more than we could from a loan forgiveness stimulus package.  And yet, I still think it’s an awful idea.

 

Why?

 

First and foremost, I think there is a lesson in responsibility that would be lost should the government honestly consider eliminating student loan debt.  A loan is an I.O.U.  Not an I.O.U (but let’s forget about the “O” part.) 

 

Those of us with student loans have a legal (and ethical) responsibility to make good on the promise we made when we borrowed the funds.  What kind of society are we living in when a student can borrow $100,000 for a private education, never pay a dime of principal or interest, and expect the debt to be magically wiped away with a magical congressional wand?

 

A post-high school education in this country is a luxury, not a necessity.  It is a choice, and it is a privilege.  It is a blessing in our country that any one who really wants to receive a college education (or post-graduate education for that matter) has the opportunity and resources available to do that.   That doesn’t mean one will receive their education for free, be able to attend any college one desires, or graduate without any ill financial consequences or debt.  It just means the opportunity is there, although some will inevitably have to sacrifice for it more than others.

 

By taking out student loans, you are investing in your future, believing that the education you receive will provide you with enough income to later in life make good on your loans.  That’s how loans work.  Someone lends you money today, in exchange for the return of the money (and interest) at a later date.  Loans are contracts.  Loans are promises to pay.  Loans shouldn’t be forgivable.

 

Secondly, as a taxpayer, I have a problem with the forgiveness of student loans, justified only by the fact that they are “student loans.”  Most students that borrow for college are not just borrowing money for tuition, books, and fees.  Justifiablly so, these students are borrowing money for living expenses, food, shelter, entertainment, computers, clothes, beer, concert tickets, etc… etc….

 

We live in a college town, and I see this every day.  These kids support our town through their plentiful (and sometimes frivolous) spending patterns.  David will be the first to admit that it was his borrowed money that paid for everything during medical school—beers while watching the game with the guys,  our dates, and even a trip or two now and then.  Please tell me why a taxpayer (or anyone other than David or myself for that matter) should be responsible for paying for those types of expenses?

 

And lastly, beyond the ethical dilemma I think this would cause, is an economically more important point in that I think the idea would fail as a means of a stimulus plan.  We’d be “bailing out” those with student loan debt—college graduates, lawyers, doctors–the ones in our country who need to be “bailed out” the least.  

 

I understand some college graduates are having trouble finding a job in this economy and are having difficulty making student loan payments.  I do think there could be adjustments to the system, though I won’t go into that in this post (for example, our loans are at an interest rate of 6.75%–well above the rate we pay for our mortgage or car loan).  But completely forgiving debt would not hold the millions of students responsible for a promise they made.  Nor do I think it would encourage job growth, as there would be even less of an incentive for people to find employment. 

 

If you are a graduate having trouble with your loans, consider Federal programs that qualify you for a portion (or complete) student loan forgiveness through public service.  You can find out more about these opportunities by visiting http://www.finaid.org/loans/publicservice.phtml