• Burnout

Cancel Student Loan Debt? Better Cancel Students First

Your dear columnist has no allies when it comes to the student loan forgiveness argument.

The people on the right who say "just leave them saddled with it" and "they should have known better" are at best naive and at worst being willfully ignorant. Economies do not function with two generations (more or less) of mass debtors, and the idea that 18 year old kids had enough foresight entering these loans borders on lunacy. Parents were lied to as well, and if you were able to see through it as a parent or were already savvy to the game, no ill is wished to you, but the often sanctimonious attitude shown toward the situation is not only unhelpful and poorly thought out, it is cruel.

Those people on the left, however, are no more helpful. Blanket forgiveness of student loans is akin to drinking a bottle of NyQuil (your dear columnist prefers the "Plus Vick's" formula), when you have a sore throat. Yes, your throat no longer hurts. No, it will not stop hurting for good. Your solution was dumb and impractical, because it did not address the reason your throat actually hurt.

The problem isn't that student loan debt exists, it's that there's so much bad student loan debt floating about. We're not talking about bailing out petroleum engineers or chemists here.

Ultimately, the problem is that if we continue to offer what are effectively subsidies for unmarketable degrees, we'll just be playing this stupid game again in a decade.

Your dear columnist, however, has a solution which is sure to make everyone both happy and uncomfortable, so it's probably on the right track.

Step 1: Bail Out Everyone

That's right. Buy up all student debt, public and private, and cancel it. Everyone, of course, means everyone, and those people who did things right get tax credits based on their previously paid off student debt figures going back to 2006, the beginning of the bank bailouts. These tax credits would essentially be treated the same way Trump Bucks were during the Rona.

You need to get states on board to do this, however, because step two doesn't work without them. It's easy enough if you tie participation into Federal Highway funding, but it's important that the flow works thusly: The state your university is located in buys up your bad debt. The Federal Government then purchases this debt from the states and cancels it.

This is important because of step two. Step 2: Tie Future State and Federal Dollars to Degree-by-Degree Viability

This step is non-negotiable, because you need it to fix the dead money issue.

Adapt the rules so that universities can only receive funding for programs which meet the following criteria: 1. 85% of the students who graduate are working directly in their field, or in a related field. Related in this case, means there has to be a specific, direct connection. You got a degree in petrol engineering but you're working for the US Geological Survey, for instance. Both rely heavily on the underlying principles of geology, and so those would count.

2. 95% of students must show that their total debt service two years post graduation is no more than 7% if their yearly gross income.

3. Teaching positions may account for no more than one-third of the total graduates "working in their field." An exemption would have to be made for elementary school teachers, for whom teaching is "the field," and is more geared toward middle school and upward, where "the field" is your subject area. That number could be flexible on a subject by subject basis, assuming the courses/subjects are offered at both a high school and middle school level.

Once you have that in place, you move on to step three.

Step 3: Require a Change in the Way Students are Recruited by Universities

Your dear columnist can't fully take credit for this because Iowahawk once wrote something pretty similar to this step some years back, but it made a lot of sense and dovetails nicely here.

Right now, universities create artificial demand by having students compete to see who can attend which university.

Instead, require universities to compete for each student by making competitive offers against each other based on the perceived value of each student to the school.

The infrastructure for this already exists through the National Merit Scholarship program, and the NCAA already showed us how it could function thanks to their transfer portal.

Universities would finally have to compete in market economics like the rest of us, and offer specific tuition incentives to specific students who they believe would be of value to their school. Trade schools and apprenticeship programs would have access to the same database and be able to make similar, competing offers.

Without fundamental change to the program itself, student loan forgiveness is as much whistling Dixie after midnight.

Don't believe it will work without serious reform to the entire American educational system, unless you believe in the Great Pumpkin too.


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©2020 by Flapper.

Keep the Faith. Hold the Line. Own the Libs.

Mathew Foldi is a Lib