Basic Fairness and Its Lack Thereof

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Dr. Malcolm Cross

Critics of President Biden’s decision to cancel student debt claim it is unfair to make those who owe no money to pay the debts of those who do.  Arguments in favor of his decision refer to other unfair programs or the examples of those whose Paycheck Protection Program loans were forgiven.  The controversy ignores a major reason for the skyrocketing cost of higher education and what could be done to bring the costs of going to college under control.

In reality, loans of any sort can neither be cancelled nor forgiven.  They can only be transferred.  Someone must always pay the debt incurred—if not the debtor, then the lender must either swallow the costs himself or get someone other than the debtor to do so.

And therein lies the most common complaint.  Exactly how much the student debt “forgiven” (i. e. transferred) by President Biden is worth has not yet been fully determined.  A commentator on the Wall Street Journal Editorial Report television show broadcast on 8/27 offered an estimate ranging from $250 billion to $550 billion.  Another commentator on the 8/28 edition of Meet the Press said the cost could be as high as a trillion dollars.  But whatever the cost, if students are relieved of the responsibility of repaying the federally funded loans they took out for college, the taxpayers whose money financed the loans must swallow the cost.  These taxpayers include:

  • Those who’ve already paid off their loans;
  • Those who found other ways to finance their college degrees (such as working their way through college) and therefore did not take out loans for college; and
  • Those who chose not to go to college and likewise did not borrow money.

In each instance, they must now repay money they didn’t borrow, while those who really borrowed the money don’t have to pay it back.   And since college graduates typically earn more money than those who don’t graduate or don’t even go to college in the first place, yet who must still pay taxes, the debt “forgiveness” program actually requires that those who are likely to earn less must now shoulder the cost of college for those who are likely to earn more.  How fair is that?

No more unfair than other programs, say some of President Biden’s defenders.  They cite programs which give corporations tax breaks and other forms of “corporate welfare,” as well as programs creating tax cuts for the rich at the expense of the middle class.  In other words, they say that the lack of fairness of existing programs justifies the creation of yet another arguably unfair program.

President Biden and his supporters have gone to great lengths to compare the college loan programs to the Paycheck Protection Program, and to identify several wealthy Republicans in Congress whose PPP loans were forgiven.  But to win debt forgiveness, the recipient of a PPP loan must spend the money he gets from the government only on government-mandated activities—the maintenance of employees’ jobs with neither compensation cuts nor layoffs, and the payment of business expenses approved by the government.  Those who don’t meet those conditions must repay their loans—period.  But the intended beneficiaries of Biden’s student debt forgiveness program need not meet any such requirements.

Overlooked in the controversy is a major reason for the rising costs of higher education which student loans are intended to help meet—the lack of significant incentives for colleges and universities to keep costs down in the first place.  To the contrary, institutions have every reason to keep raising the costs of attending them.  Ironically, the federal student loan programs themselves are much to blame.  No matter how great the expense of attending college, the loan programs will supply the necessary money.  To get more money, colleges and universities need only raise their tuition rates and fee schedules, secure in the knowledge that federal loans will help students meet the increased expenses.  As long as the federal government supplies colleges and universities with a steady stream of funds as grants or loans, the costs of higher education will continue to increase, as well as the size of the loans to cover the attendant expenses.

One of the keys to dealing with student debt is to reduce the ease with which debt can be incurred in the first place, whether by reducing the funds available or increasing the conditions attached to the funds.  If money is less easy to come by, colleges and universities would then have to implement cost-cutting measures, such as offering more online courses or reducing bureaucratic bloat, and to complete for students by offering a better education for a lower cost.  But until such measures are developed and implemented, we should adhere to the principle that those who borrow the money should be the ones who repay it, while those who owe no funds should not be required to pay the debts of those who do.


Malcolm L. Cross has lived in Stephenville and taught politics and government at Tarleton since 1987. His political and civic activities include service on the Stephenville City Council (2000-2014) and on the Erath County Republican Executive Committee (1990 to the present).  He was Mayor Pro Tem of Stephenville from 2008 to 2014.  He is a member of St. Luke’s Episcopal Church and the Stephenville Rotary Club, and does volunteer work for the Boy Scouts of America. Views expressed in this column are his and do not reflect those of The Flash as a whole.

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