Student debt: Fairness is the issue

The drumbeat for abolishing student debt is growing as students and former students feel the financial crunch of poor employment and increasing inflation.

Forty five million (45,000,000) Americans owe $1.6 trillion ($1,600,000,000) for federal student loans. But there is a lot of hidden debt acquired from private sources that is impossible to calculate. We know it is big.

Twenty four percent have student debt, leaving 76% without student debt.

The political facts tell us that 24% will be eager to get rid of debt but the 76%, having no dog in the fight, will be less supportive. So if student debt is going to be erased, those in debt will have to offer a plan that will be fair to everyone still paying debt and those who have already paid their debt.

What about those who paid

In North Dakota, around 100,000 have student debt of around $30,000 in federal and private obligations The only good news is that this is 20% less than the national average of $37,000. North Dakota’s outstanding debt is $3.2 billion ($3,200,000,000). Average total monthly payment is a little over $200 per month.

Here is the breakdown by loan bracket, according to Student Loan Hero: 35 percent owe less than $10,000; 21 percent owe $10,000 - $20,000; 27 percent owe $20,000 - $40,000; and 9 percent owe $40,000 - $60,000.

It should be obvious that the student debt problem is complex. There is a wide range of debt between $10,000 and $100,000. Forgiving all student debt will benefit some more than others.

Even more serious is the large number of former students who have painfully paid all of their debt. A blanket forgiveness would be finger in their eyes. This will be seen as unjust to a degree that many North Dakotas and Americans will not support it.

Finding fault

Naturally, we will want to see who is responsible for this mess. That is a part of the public dialogue on the subject. Most people opposing debt forgiveness blame the students for poor financial management.

“They contracted for the debt; now let them pay it.”

Those arguing for payment will have to explain how circumstances have changed from the time the contracts were made and the present situation. For what reason are we changing the rules at this time? This question requires an answer.

Let’s say we can find good reasons for helping solve the debt problem. After all, the students didn’t get so heavily into debt by themselves. They had a lot of help.

Easy loans

First, student loans got too easy so students were getting loans instead of working in the summer or handling a job and school together. Students didn’t restrain themselves, renting private apartments instead of dorm rooms, eating out instead of peanut butter sandwiches, traveling on junkets, especially spring breaks to Florida, and driving better cars than the university faculty.

The North Dakota legislature is also at fault, permitting a regular increase in tuition from $1,000 a semester to $6,000. The only way some students could acquire a college education was to borrow money. Legislators (and colleges) knew that students, if pushed, could borrow money. So they pushed and students borrowed.

There is more than enough blame to go around.

Equal treatment for all

If we are intent on reducing student debt, it seems the plan must give those who have already paid the same treatment as those who will be getting debt erased. In other words, if a plan granted forgiveness for half of the existing debt, it must also give rebates to those who already paid.

The solution requires fairness.