Staff Reports
Democrats have campaigned for years to abolish taxpayer-funded student loans. On Aug. 24, President Biden "forgave" debts up to $20,000.
Republican candidates have said little other than to reject the government gift, while Gen-Zers, Millennials, and Gen-Xers face significant debt. If Republicans lose votes over this issue and no strategy is put up, Democrats will prevail.
Student loans: what should GOP do? Bring back bankruptcy for student debt for individuals who can't repay after several years and require universities to reimburse half of discharged debt.
Schools must clean up the mess they helped create to keep government funding.
Congress and the courts have made it harder to discharge college debt in bankruptcy. Rewind.
How bad is student debt? 45 million Americans owing federal student debt. 37% of those polled by U.S. News couldn't pay their loans. 27% didn't pay. Over 15 million borrowers can't repay, and 9 million can barely afford them.
Bankruptcy would help American society and borrowers. The U.S. News study found that 37% of those with student debt postponed buying a home, 32% delayed saving for retirement, 19% delayed beginning a family, and 18% delayed getting married.
Once debt-free, college grads can have a family, buy a home, or start a business. All of these effects benefit society and promote conservatism.
Why should colleges pay student debt? Colleges benefited from the student debt situation and hid information from students and parents. Most colleges don't publish graduate wages. Colleges issue purposely unclear financial aid award letters, making it hard to understand how much a year of school costs and how much is loans. Young people making wrong choices due to lack of information isn't shocking.
Allowing people to discharge student debt in bankruptcy and making universities accountable would revolutionize higher education. If institutions had to repay student debt, they'd reform swiftly. They would downsize or abolish degree programs with few career prospects and emphasize on real-world preparation.
Colleges would be encouraged to decrease bureaucracy, costs, and job placement efforts. College debt bankruptcy with a clawback would balance college and student interests.
Biden's strategy encourages institutions' greed and profligacy and decouples price and value. Colleges are paid whether or not graduates can repay loans.
Colleges have little motivation to evaluate spending and slash tuition as they would in bankruptcy. Instead of focusing on instruction, institutions may spend excessively on projects, programs, facilities, administrators, and amenities. Colleges might provide degrees that don't qualify for loans.
Before Biden's decision, universities and students may have expected debt forgiveness. Themselves. The next disaster is imminent as long as the government remains in the student loan industry. The government doesn't assess loans like a bank would. This will continue until the next student loan crisis.
Biden's approach won't make students or businesses reassess the value of a college degree vs. vocational training or launching a business out of high school.
Republicans should support enabling student debt to be erased in bankruptcy with a clawback clause to solve the student loan crisis, change higher education, decrease tuitions, and increase conservatives' electoral chances. In bankruptcy, gambling and credit card debts are discharged. No college debt?
The preceding is a summary of an article that originally appeared on THE FEDERALIST.
