Student loans are a good promise to keep
Part of being a responsible adult, in both our professional and personal lives, is keeping the promises we make. For many people new to adulthood, taking on student loans is the first serious financial promise we make, and it’s a very good idea that we keep it, in spite of the temporary burden it may cause.
Student loan debt has become a major issue in America in recent years, with studies showing upwards of 48 million college graduates owing an average of roughly $35,000 in student loans. This issue has become a popular one among political leaders, with President Biden favoring $10,000 in loan forgiveness and Democratic leaders in the U.S. Senate favoring as much as $50,000.
With all due respect, it’s a bad idea. Forgiving student loans — money that has already been spent by college students to offset the costs of their education — sets a terrible precedent, and teaches a troubling lesson in holding to our promises.
For years now we have looked at college loans in the wrong light. Yes, $35,000 is a lot of money, but what do students get for that $35,000? A college education, the right kind of which can equip them with the skills and knowledge needed for lifelong success.
Why do people balk at paying back loans for an education that lasts a lifetime, yet not for entering into multi-year loans for a new car? The former is often actually much more valuable than the latter — a new car will last you a few years and then you will need a new one, while the right college education lasts forever. But we get blinded by the numbers because we don’t consider what the right college education truly is: an investment.
College tuition and the loans that help to pay it are investments in every student’s individual future, and they only last for a relatively short-term period of time (five to 10 years). While it’s true that not all college majors can be deemed “sound investments” — nebulous areas such as peace studies, disruption or popular culture (all actual majors at four-year universities) don’t prepare young people for careers the way majors in engineering, business, communications, economics or even English can.
Student debt is what we often refer to as “good debt,” any debt which brings a financially favorable return, much like a mortgage on a home. Borrowing money against a sensible college education certainly falls into that category — by paying the loan off, students build up credit, and are taught a strong lesson in how debt works and how to manage finances. When combined with the know-how and education gained from the right college experience, it’s a significant return on a relatively short-term loan.
Politicians pander to their constituents and to recent college graduates by floating the idea of student loan forgiveness before even the first payment is made. But what kind of message does that send to the millions of people who have already paid off their student loans—who have, in effect, kept their promise? And why are we teaching people it’s OK to go back on a promise just because they think it’s too difficult to keep? It sets people up to fail later in life, thinking they can be bailed out time and again rather than facing debt themselves.
The other argument comes amid the backdrop of the COVID-19 pandemic: “Times are hard right now and people need assistance.” But are they any harder than during the Great Recession a decade ago? Or other times of economic decline? There’s always an excuse to justify such a move, but it’s really just an easy way to score political points, and it ignores any sense of responsibility.
When you take on a debt, you create more fiscal accountability. Businesses know this, homeowners know this and college graduates should be taught this. It’s not at all a bad thing. In a free market such as ours, honoring your debts builds credibility and standing, while failing to do so only sets you up for a much harsher reality.
It may seem difficult at the outset, but paying student loans is short-term, it’s manageable and, most important, it’s making good on an important promise. And there aren’t many better lessons young adults can be taught than the value of keeping your promises.
In a free market such as ours, honoring your debts builds credibility and standing, while failing to do so only sets you up for a much harsher reality.