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Student loan debts should be repaid

By David Stringer, The Lawton Constitution

The debate over “college loan forgiveness” appears to focus on an “either/or” option, and we wonder why.

Hold off for a moment on questions as to why an individual who willingly went tens of thousands of dollars into debt discovers that money had serious strings attached. For most of us, when we buy a car or house, we understand the borrowed money will have to be paid back, over time, with interest. Reneging on that agreement has consequences in that you may lose your house, have your car repossessed, and your credit damaged, perhaps to the point of bankruptcy. Most borrowers examine the risk they’re taking when they sign the loan agreement, and the terms, including interest, are usually emphasized verbally as well as being part of the legal transaction.

So why all this talk of “forgiveness” of college debt?

First off, that debt doesn’t go away, it’s just paid by someone else. We were shocked to discover recently that colleges that have high default ratios on student loans are penalized by the various programs and have to cover that debt themselves. We know that’s not an expense Cameron University would want to incur if their students defaulted. Undoubtedly, those costs will be borne by others through some fee increase, program elimination, etc.

As you can tell, we’re not fans of this “forgiveness” thing. An “explainer” story in today’s edition outlines the various loan programs and conditions.

In fact, the loan application process includes an “entrance exam” counseling session as part of the loan process, something along the lines of “Your chosen career path will likely generate annual income of X. This loan will require payments of Y for 20 years. Is that something you’re prepared to manage and your income will support?”

And rather than just eliminate the owed amount, how about a program to allow refinancing at a lower rate; waiving interest altogether and require the principal be paid back; and there already are allowances for a military or public service (e.g. the Peace Corps or Americorps) to count toward a portion of the amount owed.

Then-candidate Biden advocated elimination of student debts less than $10,000. A segment on student loans broadcast on National Public Radio last month stated that the proposal would eliminate $320 billion in student debt and wipe out the total balance for 12 million individuals. Repaying $10,000 over a span of 10 years or more doesn’t seem that onerous to us.

Additionally, most loans were paused during the Trump administration as part of an economic incentive program at the beginning of the pandemic. No interest is accruing. That’s already a pretty sweet deal.

Finally, there already exists an Income Driven Re-payment program that includes terms such as a “zero dollar payment” which can count toward eventual debt elimination. That same NPR segment, however, reported the program is badly managed, and has few qualifiers due to the burdensome process.

We learned at a young age that nothing worthwhile is free, promises should be kept and debts should be repaid. If the programs are broken, fix them. But the solution is not having the federal government transform into some kind of giant tooth fairy, waving her wand and making debt disappear. We feel the same way about after-the-fact giveaways of any sort.