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Are there any downsides to student loan forgiveness?

If you live in North Carolina and are struggling financially, you would most likely be relieved to receive some form of forgiveness that would alleviate you of the burden of your student loan debt. You would be far from alone on this. According to the Huffington Post, student loan debt is on the rise and 11.8 percent of borrowers are currently in default. While having student loan debt forgiven is obviously helpful to you on a personal level, there may be some more widespread implications to think about.

Because so many people are in default on their loans and the fact that this type of debt is becoming so widespread, access to loans may become more difficult for students in the future. In addition, many of the loans being forgiven are guaranteed by the federal government. When outstanding balances are forgiven, the government will never collect those funds and tax paying citizens will bear the brunt of that deficit.

Also, if loans are widely forgiven, it does not give much incentive for many colleges and universities to be fiscally responsible. And if you have already worked hard and paid of some or all of your student loans, it would not be very fair for someone else to have their debt forgiven without having done the same.

One way that this area could be reformed would be for the government to only offer loans to students who are attending schools with good graduation rates. This would stop schools where very few of their students graduate from continuing to enroll large numbers of new students. The government could also consider only giving out loans for certain majors, such as those where job demand is high and a student’s chances of finding a job post-graduation would be strong.

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