The student loan forgiveness debate has reached a fever pitch in the United States. President Joe Biden appears poised to forgive $10,000 of federal student debt per borrower. Other leaders want to see $50,000 forgiven per borrower.
Combine that with the millions of borrowers working towards Public Service Loan Forgiveness or IDR forgiveness, and you have a lot of federal debt potentially about to be erased.
Perhaps unsurprisingly, there has been some vocal opposition to helping student loan borrowers. Some of the rhetoric has gotten quite ugly.
This tense climate led a reader to reach out to me for guidance on student loan guilt. Is student loan forgiveness stealing? Is it potentially wrong to use these programs?
The Ethics of Student Loan Forgiveness
I don’t claim to be a moral or ethical authority, but I do have a decade of experience helping borrowers with student loans, and I always try to do the right thing.
I’ve heard from people who worried that they couldn’t put food on the table because of student loans, and I’ve heard from people who had their finances devastated by student debt.
These harsh realities are the driving force behind student loan reforms. To those morally opposed to forgiveness, I’d ask this question, how could it be wrong to help people burdened with unaffordable debt?
Our government provides food free of charge to hungry people. We give massive corporations money in the hope that it creates more jobs. During the pandemic, checks were issued to all Americans. Sometimes these programs help everyone. Other times, government programs only help certain groups of people.
If you pay your taxes, how could it be wrong to utilize the services provided by those tax dollars?
That Feeling in Your Gut
Just because everyone is doing it doesn’t make it right.
Most people reading this will think it is perfectly fine to utilize student loan relief programs. I don’t have any hesitation in working toward loan forgiveness. However, some people will. Some people have that feeling in their gut they cannot ignore.
If you feel any guilt, I’d encourage you to consider two things:
What is the source of my guilt?
Many people feel compelled to share their opinions on the topics of the day over social media. Instead of using tools like Facebook to ask questions or learn more, people use Facebook to cast judgments on others.
Sadly, the Facebook algorithm prioritizes engagement over polite discussion. Polarizing and hateful topics get pushed to the top of news feeds because these topics get more likes, shares, and comments. If people spend hours arguing on Facebook, the advertising profits on Facebook go up.
If you are a Facebook or Twitter user with a network of people who don’t have student loans, you might be especially likely to see hateful or toxic comments about borrowers. One or two comments might not make a difference, but being repeatedly exposed to hostility towards borrowers could make you think less of yourself as a borrower.
How could I handle this guilt productively?
If your guilt defies logic and you find it to be unshakable, try to find a productive outlet for the guilt.
Suppose you are about to have a lot of student debt forgiven, and you don’t feel good about it.
Before selling your car or making a rash judgment, think about the good that student loan forgiveness can do in your life. If you are retired, it might mean you can stay retired. This means more time with family and friends or volunteering in your community.
If the money is the issue, think about the good you can do with that money. Because of government programs designed to make student debt manageable, I can donate money each month to my local food bank. Each dollar provides five meals to hungry families in my community. If I unnecessarily spent extra money on my student loans, I wouldn’t be able to afford these donations.
If you have a problem with student loan forgiveness, find a charity or worthy cause to receive the funds that you think you don’t deserve.
Making Sense of Student Loan Forgiveness
The Federal Tax Code of the United States is many thousands of pages long.
Why so complicated?
Our tax law is written to encourage some behavior, discourage other behavior, and help people struggling. We put an extra tax on tobacco because of the harm of smoking. We offer large tax incentives on things like building a new factory or buying an electric car, and we offer tax relief to people struggling to make ends meet.
Student loan debt isn’t any different. The federal student loan program was first created in response to the launch of Sputnik. The federal government decided they wanted more scientists and engineers, so they made it easier to get a college education.
A college education provides an average net benefit of $355,000 to the federal government. On average, people with college degrees pay more in taxes, and they utilize government benefit programs less.
By making student loans available, manageable, and forgivable, the government incentivizes higher education. These programs help individual borrowers and the country as a whole.
As a society, we agree to play by the rules created by our government. Utilizing student loan forgiveness programs isn’t any different than taking a tax deduction or accepting a stimulus check.