The issue of student loan cancellation has attracted a lot of attention. While there are many people who are supporting the idea of the implementation of the tax, there are those who argue that it has a number of effects to the economy and equality of taxpayers. This article will focus on the five main reasons why student loan cancellation should not be allowed and a counter argument to each of them to give fair views on this topic.
1. Argument: It’s unfair to those who have already paid off their loans.
Perhaps the most familiar rationale against student loan cancellation is that it is unjust to those who have cleared their student loan balance. These people claim that they struggled to pay their loans and those who benefitted from canceling the loans are taking a toll on those who saved when paying for their loans.
Rebuttal:
While this concern is quite valid, it is equally crucial to appreciate that student loan cancellation is not a way of offering a favor to some people while denying others. Rather, it is a reaction to a chronic problem that concerns millions of borrowers across the United States. Even if some people have already cleared their loans, it does not mean that others should also continue to drown in unpayable debts especially, since many of them experience economic difficulties due to increasing tuition fees and decreasing wages. Furthermore, loan cancellation would bring about other macro-economic advantages that are beneficial to all the people such as those who have cleared their loans, through boosting consumption and enhancing economic growth.
2. Argument: It Will Increase Inflation
Another common argument people use is that forgiving student loans would lead to inflation rates soaring. Skepticism has it that the policy makers were putting more cash into the economy without any corresponding increase in productivity which critics argue would lead to inflation, something that other sectors are already experiencing.
Rebuttal:
While it’s true that increasing disposable income can spur demand, the impact of student loan cancellation on inflation is likely to be minimal. The amount of money that would be freed up by loan forgiveness pales in comparison to the trillions of dollars injected into the economy through other government spending programs. Additionally, many borrowers would use the extra income to pay down other debts, save for the future, or invest, rather than immediately spending it all, which would mitigate inflationary risks. Economists also point out that targeted debt relief for lower-income individuals is more likely to stabilize their finances rather than cause widespread inflationary pressure.
3. Argument: It’s a Burden on Taxpayers
Critics argue that student loan forgiveness unfairly shifts the financial burden to taxpayers, many of whom never took out student loans or have already paid theirs off. Opponents believe it’s unjust to ask the general public to foot the bill for debts incurred by individuals.
Rebuttal:
While taxpayers would bear some of the costs of student loan cancellation, it’s crucial to consider the broader economic benefits that can arise from such policies. Canceling student debt would enable millions of borrowers to free up income for home purchases, small business creation, and other investments that boost the economy, potentially leading to increased tax revenues over time. Moreover, many taxpayers are already footing the bill for ineffective student loan repayment programs that fail to address the root of the crisis. Forgiving loans would provide a more immediate solution and could reduce government expenditures on future defaults, administrative costs, and extended repayment plans.
4. Argument: It Doesn’t Address the Root Cause of Rising Education Costs
Many critics argue that student loan cancellation is a temporary fix that fails to address the underlying issue of skyrocketing college tuition and fees. Without reforms to the higher education system, they believe that canceling student debt will only encourage future students to take on even more loans, perpetuating the cycle.
Rebuttal:
While loan cancellation doesn’t directly address the root cause of rising education costs, it’s an important first step in relieving the financial pressure on millions of borrowers who are already struggling. Addressing the student loan crisis and reforming the higher education system aren’t mutually exclusive efforts—they can happen concurrently. Canceling current student debt can provide immediate relief, while policymakers work on long-term solutions to control tuition costs, such as increasing public funding for higher education, regulating tuition hikes, and offering more grant-based aid to future students. Loan cancellation can be part of a broader strategy for education reform.
5. Argument: It Will Create Moral Hazard
Opponents often claim that student loan forgiveness creates a “moral hazard,” encouraging future students to borrow more than they can afford, assuming their loans will also be forgiven. This concern is based on the idea that people will behave recklessly if they believe they won’t face the consequences of their actions.
Rebuttal:
The moral hazard argument oversimplifies the complex reasons why people take out student loans. Most students don’t borrow recklessly but out of necessity, given the rising costs of higher education. Moreover, any loan forgiveness program can be designed with safeguards to prevent future abuse, such as limiting forgiveness amounts or tying relief to income-driven repayment plans. It’s also worth noting that many of those advocating for loan cancellation are doing so in tandem with broader educational reforms, which would reduce the need for large student loans in the first place. Ultimately, forgiving student debt is about correcting a system that has placed undue burdens on individuals, not encouraging irresponsible behavior.
Bottom line
While there are valid concerns about student loan cancellation, many of these arguments overlook the larger context of the student debt crisis and the potential benefits of forgiveness. By addressing these concerns with thoughtful rebuttals, it’s clear that canceling student debt could provide substantial economic relief and create opportunities for millions of borrowers without causing significant harm to the economy or taxpayers. As the debate continues, it’s essential to focus on both short-term relief and long-term solutions to prevent future generations from facing the same burdens.