3 Problems with Canceling Student Debt

There is scarcely anything that drags a person down like debt- P.T. Barnum

Bernie Sanders has proposed the canceling of 1.6T in student debt and making college education free.   Elizabeth Warren has her own plan for addressing student debt and the cost of college education.   Bernie Sanders has said, "The cost of college education today is so high that many young people are giving up their dream of going to college, while many others are graduating deeply in debt."  I believe we have a great problem with debt in this country and student loans are one of the most challenging debts because students take on these loans early in life.    While I applaud Bernie Sanders and Elizabeth Warren for wanting to do something about the problem, I believe canceling student debt is not the right answer.   Below are three reasons.

 The government can't afford to pay for it 

According to the U.S. Debt Clock the U.S National Debt per taxpayer is $182,246.   I make a good living, but it stresses me out to think that my part of the U.S. National debt is almost $200,000.   Bernie Sanders and Elizabeth Warren propose that we can cancel the student debt, and make the rich pay for it.   We do need to raise taxes, but we must find ways to decrease spending until we pay down our debt.  Our politicians are setting a bad example for U.S. Citizens and putting our nation's national security and economic future at risk by ignoring our debt and continuing deficit spending.

 "The fact that we are here today to debate raising America's debt limit is a sign of leadership failure. America has a debt problem and a failure of leadership. Americans deserve better. I, therefore, intend to oppose the effort to increase America's debt." -Barak Obama

 The current student loan system drives up education costs 

The cost of College Education has increased almost eight times faster than wages.   The government has made it too easy to borrow large sums of money which has provided universities in the United States the means to build large expensive campuses.   I believe we need to focus on ways to decrease the cost of a college education and encourage students to consider alternatives to traditional universities that will offer a better return on investment.   I suggest that we put limits on how much a student can borrow.   The amount a student can borrow should be aligned with the income potential of the career they plan to pursue.

 Canceling student debt will create bad incentives 

If students don't have to pay back their loans or pay for college they will not have an incentive to pursue careers that will offer a return on investment for a college education.   Many students with an undergraduate degree in art, history, or psychology will struggle to pay back large student loans.  School counselors and parents should guide students toward educational options that align with specific career objectives.   We need to train the next generation on how to find a career that will allow them to make a living and to avoid bad debt at all costs.

In my previous article College: Don't Waste Your Money I outlined several alternatives to borrowing money for college.   I propose that we find ways for students to pay for college.  One alternative would be the creation of tuition reimbursement programs in exchange for public service.   Another alternative would be an internship that allows a student to gain his/her degree part time while learning valuable work skills.   I believe the example of Dutch students living in nursing homes is a great model.

I would also like to see our country create ways for our aging population to be used as teachers and mentors.   Utilizing seniors as teachers may be a way to help with our challenges in paying for social security.   Dave Ramsey has great educational programs available to show people how to get out of debt and how to train kids in financial literacy.   Financial literacy needs to be taught at home and in schools.   Debt is like a crushing weight on the backs of our students and our country.  This debt needs be eliminated or a least significantly reduced