October is known as the busiest month in college counseling offices, so it’s always nice when something comes along in the fall that lifts our spirits, and gives us something to cheer about.
For millions of students—and more than a few counselors—that happy news has come in the form of forgiveness of student loans. Debt forgiveness made its debut just a few weeks ago, with promises of forgiveness of up to $20,000 in debt for some students. Better still, the website that takes applications for forgiveness is working like a charm; users say the form is concise, easy to follow, and free of technical hiccups. This is why applications have easily gone into the millions in a brief period of time—when someone wants to forgive your debt, and makes it easy to do so, the result is a triumph.
It's clear the forgiveness program has not come without its detractors, including states with concerns about the implication of debt forgiveness to their economies, and the lamentations of those who took second and third jobs to pay for college without going into debt. This last group is easy to understand, and as someone who did exactly that to make sure his kids left college debt free, it’s fair to say I may have rethought my strategy, had I known my loans weren’t really loans at all. On the other hand, those who found a way to stay debt free found it, while those who had no such options are now deciding how to spend the money they’re no longer paying back. The economic plusses of that, for all of us, should not be ignored.
Something else that shouldn’t be ignored is the possible effect this program could have on collegebound students and their families. It would be easy to have this program shape the “paying for college” strategy for the Class of 2023 and beyond. If debt forgiveness happened once, it could happen again—especially if this program leads to spending that boosts the other parts of the nation’s economy.
While it may be reasonable to think that, it isn’t wise. When my kids were very young, there was a consensus among many families—interesting enough, largely among dads—that “something would happen” to make college more affordable, and ease the burden on families. It was never clear what that “something” was going to be, but when it came time for that generation to head to university, no relief appeared. Some of those students are undoubtedly experiencing some relief now, but they still had to put together a college payment plan where loan forgiveness wasn’t part of the formula.
High school seniors and their families would do well to take this same approach. Loan forgiveness is certainly adored by our current president, but the other party isn’t exactly running to the idea with open arms. Future efforts at loan forgiveness would have to run a political path that is rocky and unpredictable. If hoping for the best leaves students with more debt than they can truly manage, the goals and plans of this generation would be in even more peril than those of the current generation before loan forgiveness was introduced—and their path was fairly dangerous.
Loan forgiveness has the potential to benefit millions of students and our national economy, but since the jury is still out, it’s wise for collegebound students to stick to the script—keep your borrowing at a minimum, and plan wisely for life after college. Later applicants may have more data to work with, but this group doesn’t. Don’t betray your future.
The term Loan forgiveness is a misnomer. Be honest, this is debt redistribution.
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