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Op-Ed: Loans should not be forgiven

By Roman Verzub

February 2, 2012

In his State of the Union speech, President Barack Obama spoke about the crisis of the government paying all or part of many people’s tuition. With this statement, the President put schools on notice – keep raising tuition and the federal government will not subsidize it.

“We can’t just keep subsidizing skyrocketing tuition,” he said, “we’re out of money.”

Among the many differing messages from the movement ‘dubbed Occupy Wall Street’ is that students loans need to be forgiven.

Indeed, in their declaration of occupation the movement states that students are being “held hostage with tens of thousands of dollars of debt on education.” As such, the
Occupy movement wants all student debt forgiven.

Though it is unclear how they intend to implement it, one way would of course be a government subsidy. After all, the very same declaration labels education a human right, and isn’t it the federal government’s responsibility to protect human rights?

If indeed you were to enact such a program, those with the debts would be better off, but the money would have to come from somewhere. And so, through some government wealth redistributory magic the cost will simply shift to other taxpayers, many of whom fall under “the 99%” the occupy movement claims to be fighting for in the first place.

What has happened, as Neal McCluskey and Vance Fried of the Cato Institute have noted, was that high government subsidies have “[enabled] schools to raise prices with impunity.”

If the President or the occupiers really cared about lowering the cost of college, competition and government money would have to leave the equation for most – only those in lower income brackets would qualify for them, not merely threaten to cut future spending.

The website of the Pell Grant program indeed believes in the limited scope of the Pell program, describing it as one that provides “need-based grants to low-income undergraduate and certain postbaccalaureate students to promote access to postsecondary education.”To put it simply, the program was never intended for, and should never be applied to the middle class.
Some simply cannot wrap their heads around this fact. One such person is California

Democratic Representative George Miller, who described Republican attempts to trim the program as part of a larger debt reduction as “a shameful excuse, and an attack on middle class families.”

Perhaps for Representative Miller, the Pell program is itself an excuse, to blame Republicans, all-the-while engaging in the wonderful world of class warfare behind a populist facade. Because subsidizing has lead to higher costs (and this isn’t just in education, it’s in all sorts of places) more subsidizing is not the correct solution and only leads to colleges getting richer and richer, present company I’m sure excluded, of course.

And in their requests for bailouts that they cannot show they deserve, the occupiers are really no better (and indeed no different) than the banks and corporations they’re angry with. The government is not Santa Claus and should never be – to say one bailout is better than another is quite-frankly intellectually dishonest at best.