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Student loans shouldn’t be all forgiven

President-elect Joe Biden campaigned in part on behalf of canceling hundreds of billions of dollars of student debt, starting with a $10,000 write-off for all 43 million Americans with federal loans.

But as an article in last Tuesday’s Wall Street Journal pointed out, tough choices loom regarding the proposal. Meanwhile, there are many families across the United States who believe that, because they sacrificed financially on behalf of their children’s higher education, others should not now get the proverbial free ride that was not available to them.

That position is not unreasonable.

Even without that thinking lurking amid the forgiveness issue, there is the reality that it is the taxpayers who will be saddled with the bill for that generous gesture.

It was taxpayer money that originated, or guaranteed, the federal loans to the students in the first place.

Rightly or wrongly, many taxpayers embrace the view that, with Biden’s plan, taxpayers would in essence be “hit” a second time to wipe away a pay-back responsibility that the beneficiaries of the money should feel a strong obligation to repay.

After all, the education made possible by the money in question is aimed ultimately at enhancing the lives, productiveness and financial well-being of the beneficiaries.

Indeed, the country benefits from that productiveness and the skills developed through higher education, but the loan recipients generally benefit in a bigger way — for the rest of their lives — and should feel grateful and a sense of indebtedness, obligation and responsibility for having been accorded the financial foundation to pursue their dreams.

Accepting at least some repayment responsibility can have the effect of building stronger appreciation for the opportunities that the loan money made available to them.

However, there is another important side to the issue — one that squares with Biden’s thinking — that must not be ignored.

As the Journal noted, “Many economists say that canceling at least some debt would boost the U.S. economy by reducing borrowers’ bills, leaving them with more money to spend on homes and cars, or even starting businesses.”

However, opponents express a legitimate concern that cancellation of the debt would help disproportionately upper-income households since, in dollar terms, most student debt is owed by upper-income households.

Federal Reserve data show that the top 40% of families by income owe slightly more than half of all student debt.

Thus, the student-debt-cancellation issue is much more complex than what many people realize or acknowledge. Some advocates even propose forgiving most or all of the $1.6 trillion in student loan debt “out there.”

Concerned Americans understand there are many more serious needs facing the nation than providing a handout to young people who presumably will — or should — have the financial capacity to meet their repayment obligation over time.

On Jan. 20, the issue will be in Biden’s lap. His administration will have to decide how broad or targeted to make debt reductions, if he in fact opts for such a course of action.

It is important that he not botch the issue in an unnecessary, damaging way.

Loan recipients need to keep in mind these words from President John F. Kennedy: “Ask not what your country can do for you, ask what you can do for your country.”

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