Wednesday, January 29, 2020

"Deserves got nothin' to do with it": Is Elizabeth Warren's student-loan forgiveness plan fair to people who played by the rules?

An Iowa man challenged Senator Elizabeth Warren about her student-loan forgiveness plan during a campaign event in Grimes, Iowa.

"I just wanted to ask one question," the man said to Warren. "My daughter is getting out of school. I've saved all my money. She doesn't have any student loans. Am I going to get my money back?" he said.

"Of course not, Warren replied.

"So you're going to pay for people who didn't save any money and those of us who did the right thing get screwed," the man said.

"No, you're not going to get screwed," Warren lamely responded.

I get the Iowa guy's point. It seems unfair to grant wholesale student-loan forgiveness to millions of people, while parents who made severe financial sacrifices to pay for their children's college education get no relief.

But let's face it. About half of all student loans are not being paid back anyway. That's right--about half.

More than a quarter of all student-loan borrowers default on their student loans within five years. Another 20 percent or so are in income-based repayment plans that are structured so that the borrowers never pay off their loans. And then there are millions of people who have their loans in forbearance or deferment, while interest piles upon the principal of their debt. 

In a way, Senator Warren's student-loan forgiveness plan is like President Jimmy Carter's decision to grant amnesty to the young men who fled to Canada to escape the draft during the Vietnam War. Critics said it was unfair for draft dodgers to suffer no penalties while millions of Americans went into the Army and more than than 50,000 Americans died in the jungles of Vietnam.

Unfortunately, huge moral quagmires have no clear-cut solutions. The Vietnam War was an enormous national tragedy, a senseless and immoral affair. Or so I believe.

Likewise, the student-loan crisis is a moral crisis. Forty-five million people are carrying student-loan debt that totals $1.6 trillion and millions of these people got little or no financial benefit from their college experience.  

The for-profit colleges raked in enormous wads of federal cash and dished out overpriced and often worthless college degrees. The law schools and business schools jacked up the prices of their professional programs simply to suck up more federal money, and a lot of that money went toward bloated salaries for college administrators.

There is no perfectly fair solution to this crisis.  As a nation, we simply must grant relief to suffering college-loan debtors.  And Senator Warren's plan is a reasonable proposal for doing that.

Personally, I would prefer for Congress to amend the Bankruptcy Code and allow insolvent debtors to discharge their student loans through bankruptcy.  That would be fairer to people like Senator Warren's critic in Grimes, Iowa.

But the student-loan catastrophe has got to be addressed head-on.  Senator Warren's plan and Senator Sanders' plan are pretty good solutions.  In my opinion, bankruptcy relief is a better solution. 

Any plan will benefit some people who do not deserve student-debt relief. But as Clint Eastwood's character said in the movie The Unforgiven, "Deserves got nothin' to do with it." 

Let's move forward to clean up the student-loan program before it totally destroys the integrity of higher education--not to mention America's middle class.


"Deserves got nothin' to do with it." 









No comments:

Post a Comment