DEAR EDITOR:

President Biden’s proposal for widespread student loan forgiveness has sparked intense debate across the nation. While on the surface, the idea seems like a relief for struggling graduates burdened by debt, a closer examination reveals potential consequences, particularly for the middle class. Its implementation may inadvertently exacerbate existing inequalities and create long-term economic challenges for middle-class Americans.

First, Moral Hazard and Fairness Concerns: Many middle-class families have sacrificed and saved diligently to afford higher education or have diligently repaid their loans. Implementing broad forgiveness could be seen as penalizing responsible behavior and rewarding those who took on excessive debt without consideration of repayment. This creates a moral hazard where individuals may be less inclined to make prudent financial decisions in the future if they believe they will be bailed out by the government.

Second, Budgetary Strain and Opportunity Costs: The cost of widespread student loan forgiveness is staggering, estimated to be in the trillions of dollars. This poses a significant burden on taxpayers, including many middle-class families. The funds used for loan forgiveness could instead be allocated to other critical areas such as healthcare, infrastructure, or education reform that benefit a broader segment of the population.

Third, Impact on Future Generations: By effectively erasing the consequences of borrowing, there is a risk of perpetuating a cycle of debt reliance rather than addressing the root causes of soaring tuition costs and inadequate financial aid. Moreover, the economic ramifications could include higher taxes or reduced government spending on programs that benefit the middle class, thereby offsetting any immediate relief gained from loan forgiveness.

Finally, Market Distortions and Inflation Concerns: Widespread loan forgiveness can create distortions in the higher education market. With the prospect of debts being forgiven, universities may have less incentive to control tuition costs or improve the quality of education. This could lead to further inflation in the already bloated higher education sector, ultimately hurting middle-class families who must bear the brunt of these rising costs. Additionally, there is a risk that injecting large sums of money into the economy through loan forgiveness could fuel inflation, eroding the purchasing power of middle-class households.

There is no “loan forgiveness” as that debt is passed on to the American taxpayer. When a person borrows money, they are expected to pay it back as per the contract they signed. This is an insult to people who went to college and paid off their loans. But what is more insulting is the people who decided not to go to college, but work, (non-skilled and skilled) be burdened with other people’s debt. The fact of the matter is that the United States government creates nothing, but takes everything.

Larry York

Warren