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Should We Wipe Out Student Loan Debt?

May 9th, 2022 by Kenneth Abrahams

If you read this blog with any regularity, you know we often tackle subjects that most public relations or marketing firms would tell us are taboo. Subjects that they tell us have no business being published by an entertainment/speaker company. Perhaps they are right, but that has never stopped us before, nor will it now.

We are a company with a significant college and university client base, and because of that, we interact with a lot of college students on a regular basis. There has been a lot of talk about the crushing burden that student loan debt is heaping on the backs of recent and not so recent college graduates. During his campaign, President Biden pledged to address this problem and committed to a loan debt forgiveness program. Lately, that notion has expectedly received a lot of opposition from elected Republican officials and conservatives in the country, but it has surprisingly come under scrutiny by some Democrats as well.

This has been a huge topic of debate between my eldest son and I over the past several months. His position at the beginning of this discussion (and I hope that I am stating it correctly) was that many people have been misled by these academic institutions who have claimed that a college education is essentially a guarantee of a significantly brighter financial future. Getting the degree will almost certainly assure you of a job that will allow you to pay off whatever debt you have incurred and still make a nice living. There is a lot of research that suggest that the colleges have in fact sold students a bill of goods along with running a bait and switch con game. Many students do get better paying jobs than those that don’t attend college but with their loans they have far less money left in their paychecks. Often, forcing them to get a second job, or as it is now being called, a side hustle. Many of my clients, who have their master’s degrees, also wait tables, or have other jobs on the side simply to make ends meet.

My struggle with this whole issue comes down to fairness as well as personal responsibility. How can we release millions of people from their debts after requiring generations before them to repay their loans in full or face the consequences? Where is the fairness in that? Even Alexandria Ocasio-Cortez, who is a huge proponent, acknowledges that it is unfair but believes that it serves the greater good to the point that we shouldn’t worry about whether it is fair or not. I am not sure that I can get on board with that. She has stated "That (debt relief being unfair) doesn't make it bad. I am sure there are certainly other things that student loan borrowers' taxes pay for. We can do good things and reject the scarcity mindset that says doing something good for someone else comes at the cost of something for ourselves."

Even educated, well-meaning, parents struggle to navigate the confusing labyrinth of the application and financial aid processes. At a recent college accepted students’ day, the line to meet with the Financial Aid office staff was out the door. When I packed up my equipment and left the school, 30 minutes after the event had officially ended, the line was still very long. We also forget that it is even more confusing for students whose parents never went to college and/or a household where English is not the first language of the family. Many people don’t understand the scope of assistance available not only loans but grants and on campus jobs. Colleges also often offer large financial packages to first year students, but those packages diminish each year forcing the student to transfer, drop out, or go deeper in debt. There are a number of credible stories of students walking across the stage to receive their diploma after 4 years of undergraduate studies lugging a hefty six figure debt across the stage with them.

Some believe that much of the debt is because people did not do their homework. They didn’t ask the right questions. For example, will the aid being offered in year one be the same in year four? Are their any academic requirements such as GPA or course load in order to keep the same aid over their entire four years at a school? Can I go abroad if I am getting aid? If you have never gone to college and/or aren’t comfortable with the language, how do you even know what questions to ask? Many that are in favor of debt elimination will again point to the fact that the system isn’t clear and is in many respects predatory.

Based on the large number of students that are saddled with this debt, many must have gone in knowing the math. They simply had to have realized that they were going to come out of college with immense financial obligation. Do we simply give them a free pass? Where does personal responsibility enter into the equation? When my own kids applied to college, we sat down with them and discussed what we could contribute to their education, what their aid packages looked like, and what they would likely have accrued in debt. It absolutely impacted where they decided to go. It was the same discussion my mom had with me before we sent in that deposit check years ago.

When my son and I discuss this, he is quick to point out that most people in this country favor some sort of student debt relief, depending on the survey and the amount of relief being proposed, anywhere from 53 to 65% of Americans are in favor of debt relief. That means that 35 – 47% are opposed to providing relief or have no strong opinion on the subject. Some believe that many students wasted money and drank themselves stupid for 4 years or used money that should have been spent on education to go off on extravagant Spring break trips. As with any program like this, I am sure that there are a few that have abused their loans, but I do not believe it is more than a miniscule amount. Education is expensive, go into a college bookstore and look at the price of one textbook you will be shocked.

One thing that my son and I agree on is that there are a lot of changes that need to be made in the way this country is governed. It is very possible, if not a certainty, that many of the same people opposed to debt forgiveness had no trouble with the billions in loans/gifts that we gave financial institutions around 2008 when the housing bubble burst. A bubble that was created by greedy lenders giving money for home loans to almost anyone with a pulse. Where was the great outcry over responsibility then? We both agree that partisan politics is harming many in this country and that if there is a debt forgiveness program it should be handled on a case-by-case basis, or at the very least set up criteria for that relief.

This is a problem, along with many others, that is not going away anytime soon. It is on a laundry list of issues that as a nation we need to deal with in a well thought out non-partisan way. The question is, will we ever get there, or do we just keep believing that the person that yells the loudest wins? As for me, on this topic I am somewhere in the middle. Blanket debt forgiveness doesn’t sit well with me, but I do believe the colleges and universities need to accept some of the responsibility. For more than 20 years, reports have come out that colleges were adding too many administrators and that is from where the huge jump in the cost of a college education has come. Do we really need all those Deans, Associate Deans, VP’s and Associate or Assistant VP’s? Do they add significant value to the collegiate experience? I don’t know but I tend to believe they don’t. It is clear that something needs to be done but if we are going to forgive the debt, should we not also investigate the institutions that have at the very least, contributed to the problem?

About the author:

Ken Abrahams is the father of 2 great sons. Both are college graduates, and both have debt they are working hard to pay off. If this blog made you think, it has done its job. To reach Ken please email him at [email protected].

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