This article was originally published at ValuesandCapitalism.com on May 21, 2012.
If you are like most college students, you have already accrued a considerable amount of student loan debt. College is expensive, and without student loans many would simply be unable to obtain a college education.
But over the past few months, many have begun to question the efficacy of borrowing so much money—even for a purpose as worthy as education. Recently, the Chicago Tribune reported that student loan debt reached $870 billion—surpassing both car and credit card debt—and is projected to climb rapidly over the next few years.
Thus, it is understandable that The Fairness for Struggling Students Act (FSSA) has become high on the agenda for many government and education officials. The FSSA would allow student loan debt from private lenders to be wiped out in bankruptcy proceedings. Seen as a remedy for a growing economic problem, the Act has found support among many in government and academic circles.
But the reality is: The FSSA is an unjust bill that should warrant no support from respectable students, no matter how indebted they are.
First, no one is entitled to a college education. Despite what many progressives preach, education is not a right, but a privilege. But by forcing private banks to forgive loans for those who prove unable to repay them, government asserts that college is a right and need not be paid for.
This entitlement culture is bad for morals and ruinous for the economy. Telling students that they have a right to go to college even if they cannot ultimately pay for it only perpetuates this sort of selfish attitude.
Second, defaulting on loans is a privilege, and forcing lenders to forgive bankrupt lendees is a coercive affront to property rights.
If an individual is able to lend money to needy individuals, it is only because that individual was able to save or acquire enough money to be able to do so while maintaining an acceptable quality of life. Such saving requires much diligence and thrift—behaviors that should be encouraged and expected of all people.
But when the government forces lenders to forgive lendees, they spit in the face of those who empower the less fortunate.
Banks are not evil. When they grant loans, they are doing lendees a favor—allowing them to use money now and not pay until later. But by forcing banks to forgive the loans of those who cannot repay them, the FSSA disadvantages banks and discourages further lending.
Third, the FSSA will only encourage the increasing indebtedness of America’s youth and will do nothing to discourage underqualified students from acquiring student loans.
It sounds harsh, but the fact is: a sizeable amount of college students simply should not be at college (AEI scholar Charles Murray is right!). This is not because college should be reserved only for the intelligent. It is because college, for many, is simply a bad investment that hurts them more than it helps—especially when paid for by student loans. College is expensive, and if one does not possess the natural talent necessary to do well, then the expense can often outweigh the cost. If this is the case, there is no justification for going to college.
But for decades, the government has encouraged maximum college attendance by making student loans unbelievably easy to obtain. Thus, many who would otherwise not go to college are empowered to enroll, despite the fact that they do not possess the skill necessary to do well. By forcing banks to forgive the debts of those unable to pay, the government only gives underqualified students more incentive to go into debt.
If you really care about your fellow students, you will not support any measure that lets them off the hook when unable to pay college debt, or any bill that forces owners of money to forgive lendees who promised to pay them back. Acquiring debt entails the responsibility to repay it—seeking government’s help to fight against your lender is no less than theft.