Why the Government Should Not Forgive Student Loans
Money has a way of transforming useful projects into dangerous weapons. In the US, the first evidence of this statement was observed about a decade ago when the mortgages nearly caused the economy to plunge into a depression. A similar dangerous weapon is being formed through student loans in the US. Over the years, loans from different students have been accumulating resulting into a huge debt by these students. Today, about $1.36 trillion has accumulated in the form of student loans. The most alarming fact about the whole situation is not the amount of debt that has accumulated, but the rate at which this debt continues to grow each day. A populist solution to solving this looming problem is for the government to simply forgive a part or all of the student loan debts. However, the implementation of such a solution is not as easy as it seems. One problem that develops with such a solution is that the learning institutions will keep on increasing the tuition fees, and this process will be repeated. For such a solution to work, then higher education needs to be reformed to ensure that all the colleges and institutions are accountable for every penny that the students spend on tuition fees. That said, the students should pay for their loans as agreed. This essay discusses why the students should pay their loans.
The first reason why the student should pay for their loans is that currently, there are huge student loans outstanding, and the government cannot be able to pay off all these loans. The government cannot be able to forgive all the students. The current student loans debt stands at $1.36 trillion with the prospects of even going higher than this. The biggest problem with this situation is not the current debt but the rate that the student loans are increasing. Over the past eight years, the student loans debt has doubled, a number that can be compared to the mortgage debt in 2008, that almost led the country to fall into a depression. Before reaching its highest point in 2008, the mortgage debt had been observed to double over the prior seven years, almost plunging the economy into a depression. According to numbers by the Federal Reserve, about 11.8% of students who have student loans have been officially considered as defaulters. From this trend, it is clear that the student loans debt is yet to reach its worst. More students are likely to be included the list of defaulters, and the debt is likely to go up even further. Additionally, given the high rates of defaulting to pay these loans, then the bank rates are set to rise even further, causing the student loan debts to increase. Due to the huge amounts of this debts, then government loan guarantee programs are likely to decrease in the future. As a result, the students who signed off to these loans should pay them.
Another reason why the government should pay for student loans is that if the government forgives student loans, then the tuition fees in colleges and universities are likely to go up, as well as the bank rates. Over the years, college tuition fees have taken an upward trend to the extent that most students cannot afford the fees. This increase in tuition fees has been attributed to an increased demand in the university places. Huge enrollments have been observed in schools and courses that are considered to have low graduation rates. According to a report by Young Invisibles, tuition rates in the US have increased from 36% before the 2008 recession to 50% in 2008. While the tuition fees have increased, different states have reduced their per-student spending by an average rate of 21%. Students and their families are forced to take on the obligation to pay for this increase in tuition. Most students are unable to afford the new tuition rates. As a result, they turn into loans to pay their tuition. If the government was to take up the duty of repaying these loans, then the this means that a huge number of students have defaulted. Due to the high risk of defaulting, and the high demand for the student loans, then the banks will increase their interest rates. To prevent this from happening, then the government should allow each student to pay their student loans.
Consequently, students should pay for their student loans to ensure that they take responsibility for their actions. Students need to be taught how to be responsible for their actions. One of the ways of doing this is by ensuring that students pay off their student loans. Students take on these loans voluntarily, and as such should be able to pay for them. By being given a chance to pay, these students are being nurtured how to be responsible. Additionally, the students take on these loans to be able to complete their college education. Most of the students who complete college education in most cases land good jobs. As a result, they have the resources to pay off their loans. They should, therefore, use their earnings from these good jobs to pay for the loans. Lastly, for those students that are considered irresponsible, paying off their loans does not give them a chance to develop correct life values. By letting them pay their loans, then it gives a platform for them to develop these correct life values. There should be increased awareness to students of their credit so as to allow anyone in debt to know how best to pay off the debt, and to make the payment in due time. It is, therefore, important that each student pays off their loans.
However, some people are of the idea that the government should forgive student loans. The main argument for this kind of thinking is that by forgiving student loans, then the government allows the students who have been found ineligible to take the loans a chance to get these loans. Additionally, once the students are done with school, they can use the money that they would have used to pay off these debts on other more important activities. However, this solution to student loans is not as simple as stated. If the government were to pay off the loans, then it would have to reform the entire higher education sector to ensure that schools did not keep on increasing their tuition fees and that each institution was accountable as to how the money from students was spent. Therefore, to prevent all this complexity, students should pay for their loans.
In conclusion, students should pay the loans which they agreed. Due to the increased rates of these loans, and tuition fees, the government should see how best to assist these students. The main reason why students should pay for their student loans is that going to college increases their chances of getting a well-paying job. After all, an educated population has a higher potential of earning more hence a population earning more should be able to cater for their loans. Additionally, if the government were to pay these loans, then the bank rates would go up. Lastly, by requiring that each student pays off their loans, then this instills the culture of responsibility in the students.