Cancelling Student Debt

We all agree that students should have the most personally fulfilling options in education, delivered affordably. Where we may differ is in the best manner of creating these circumstances.

The incoming administration has promised some cancellation of student debt, but this policy will distance us further from the ideals expressed above. Any time government “guarantees” money, the impacted market’s prices rise. The National Center for Education Statistics indisputably confirms this in its own graphs about rising tuitions since the 1960s, adjusted in current dollars. This is government itself telling us that government’s subsidies for education are making education less affordable.

Beyond the stark fact of government’s largess increasing tuition across the board, one must consider moral dimensions. There are citizens who decide that college is unworth the expense, or they opt for less costly vocational training. Government’s cancellation of student debt penalizes them for this personal decision by forcing them to pay for education anyways. In practice, this means that undereducated people earning less will subsidize those earning far more, which is unjust any way you cut it.

There is one circumstance in which government’s cancellation of debt would be somewhat more palatable. Prior to 2005, student debt was held directly by the federal entity Sallie Mae. If government were cancelling directly held student debt in the manner of a tax amnesty, that much we Libertarians could support as a relinquishment of assets created in a market where government should never have been participating in the first place. Since 2005, however, Sallie Mae is entirely privatized, meaning that cancellation of student debt represents another transfer of public wealth to politically connected private firms. It is another instance of corporate welfare in which a private firm’s risks are shared by the population at large, whereas its gains are shared with no one.

In conclusion, let’s realize that this is no exercise in lofty theory about limiting government to its proper scope. This is about flesh-and-blood students up and coming, full of optimism about their careers in the world. The more we divest government of the educational industry, the fewer distortions there will be in the same, which will give students more realistic outlooks when on loan applications they sign the dotted line.

Daniel Donnelly, Amenia

Dutchess County Libertarian Party’s Vice-Chair

December 16th, 2020, published in the Northern Dutchess News