Posted by: Kristen Hicks | November 14, 2011

Forgive Student Loan Debt…Interest

A recent movement has emerged calling for forgiveness of student loans to benefit the economy. Naturally, there are plenty of skeptics of this idea citing the need for individual responsibility in decision making and insisting such a move would set a terrible example and plunge us onto the slippery slope of socialism. There’s certainly a grain of reason to these arguments, but one which disregards more recent examples of setting just such a precedence for rewarding irresponsible decisions. It’s difficult to imagine a reasonable argument for the financial industry providing more value to society at large than the decision of young people to better educate themselves.

The disastrous decisions made by the individuals making up the financial community led to such widespread consequences for individuals throughout the world that the global economy is yet far from recovering. The consequences to those individuals themselves have ranged from minimal to nonexistent. Amongst the many victims of wall street corruption are the people who did precisely what society has long recommended as the best means of improving one’s life and opportunities by seeking out higher education. Coming out of college with massive debt and into an economy where jobs are scarce and jobs that offer the kind of pay that would make loan payments manageable are exceedingly rare, the nation’s youth has been increasingly forced into a position in which traditional goals such as accruing savings, owning a home and starting a family seem like an impossibility and even getting by month to month is a considerable challenge.

I recognize asking for outright student debt forgiveness sounds extreme to many in the population, but the movement was wise to start from that position. As the recent health care debate revealed, in the current political climate, wherever one begins their argument is likely to be far from where it ends up after necessary compromises are made. That said, from where I’m sitting, the idea of forgiving student loan debt interest sounds far from radical.

Since September 2008, the government has provided trillions of dollars to financial institutions at a fraction of 1% interest. For many students. the amount they borrowed is less than the amount they owe in interest. You’d be hard pressed to convince me that Sallie Mae and the other institutions holding those loans have done anything to earn over 100% profit on them. If it’s not disastrous to the economy to let our most destructive and irresponsible members receive massive loans with virtually no interest, how could it be any worse to allow the same to those that can make an actual, positive contribution to society due to their choice to increase their knowledge and skills?

For those concerned with sending the wrong message by making such a move, I’d be very interested in hearing how rewarding a desire for knowledge and personal improvement over the desire to make huge profits off of ethically questionable trades is the wrong message to send to the country’s youth. I have yet to grasp what real value behemoth banks and Wall Street add to the lives of the majority of us to justify the preferential treatment given them by our “democracy.”

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