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Forgive us our debts?

3 weeks ago
David Surdam

A trendy idea circulating on the political left is student-loan debt forgiveness. For some graduates and non-graduates, student loans are, indeed, onerous.

The proponents are missing a fundamental ethical issue that business majors, in particular, should understand: YOU SIGNED A CONTRACT. Students and their parents sign contracts for student loans. The interest rates are often subsidized, and, in any event, given the Federal Reserve’s ongoing policy of keeping interest rates low, the terms are probably no more onerous than in the past.

Is it ethical to get legislators to write off your past debts? Many of us have been taught the prayer containing the phrase, “forgive us our debts, as we have forgiven our debtors” (sometimes “debts” is replaced by “trespasses”). In the here and now, however, honoring a contract is a fundamental requirement for ethical behavior. Assuming there was no fraud or deception involved, a contract is a contract. The alternative to honoring contracts is chaos and
wreaking havoc in the economy. Those who break contracts often face civil and sometimes criminal litigation.

Prominent Americans, such as Phineas T. Barnum (subject of The Greatest Show on Earth) and President Ulysses S. Grant even honored the debts or misdeeds of others with whom they were associated. Barnum emerged even stronger (he was a proponent of abolitionism, when such was a minority view) and would enjoy his greatest fame. Grant struggled to complete his memoirs, so he could resolve debts and secure his family’s finances. He did so, even though he was dying of throat cancer.

Student loan forgiveness is also unfair, as many parents have scrimped and saved to finance their children's education. One candidate apparently told an inquiring voter that there would be no rebates or succor for them. In other words, people who acted responsibly will be slapped in the face for their actions.

Teaching an entire generation that it is okay to skip the terms of a contract is unethical. If this generation ends up living in an economy where people feel free to abrogate the terms of contract, heaven help them.


The views and opinions expressed are those of the author and do not imply endorsement by the University of Northern Iowa.



David Surdam

David Surdam received his Ph.D. in Economics from the University of Chicago. His dissertation, "Northern Naval Superiority and the Economics of the American Civil War," was supervised by Nobel-Prize Winner, Robert Fogel. Professor Surdam has taught at the University of Chicago, Northwestern University, Loyola University of Chicago, and the University of Oregon.

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Submitted by Brandon Lehmann on
I completely agree with the authors comments about how unethical it is to "forgive our debt" as students. This makes no sense at all because if you were to forgive current students debts, then the people who have paid their debts in the past would demand a 100% refund. Everyone would go to college for "free" and there would be way more people at college than there should be. The value of the college degree would plummet because then everyone would go to college. A college degree is suppose to single out the ones who have worked hard and put a lot of time, money, and dedication into something. By forgiving our debts these core values would diminish and all the hard work would mean nothing to employers since everyone will have a degree. Like the author said, this would teach our generation and the generations to come that it is okay to not honor your word by not following through with a contract. If we are teaching our younger generation this, then the will create problems later in their life like not being held accountable for their actions and not paying their dues. The people who think they should get their debts forgiven should not be in college and should have never signed the contract.

Submitted by Austin Agan on
I agree 100% with this article. I do hold student debts, but I am against forgiving student debts. I firmly believe that student debts are forgiven, yes it gives more people the chance to attend college, but going to college is what can help the younger generation stand-out over other candidates for a position. If everyone can go for free, a college degree will become more and more like a high school degree. At that point, we would have to go get a master's degree to have that step ahead of other candidates. I agree with teaching today's youth that signing a contract and then avoiding it is unethical. It's our obligation to repay those debts. We took on those debts to study in an area of interest to place ourselves in the market for jobs in our area of interest with intentions of paying those debts back. I take this like you forgot your card or cash and went to dinner with a friend, your friend covers you, you pay them back with money or dinner some other time. You borrowed money to further your education, you should be paying it back.

Submitted by Brandon DeMaris on
I think this is something that is a real concern. Students make a decision to go to school and further their education by agreeing to a contract for loans to apply to school. Because of this action they will more than likely make more than those who did not further their education and their fore should have to pay the loans back. If we had student loan forgiveness it would teach people that you can sign whatever contract and than later find reasons to get out of it. If this happened would it create an influx of people to school and flood every career with candidates? Would this mean people would have to go back to get a masters to stand out?

Submitted by Paige Sieren on
I definitely agree with the author on this topic of student debt. Like the post mentioned, you signed into a contract when deciding to take out a loan so I do not agree with giving people the easy way out to just pay off their debt. My initial thought that came to mind after reading this was what happens to all the people who have already paid off all their student debt? I believe it takes away the significance of contracts if people will be able to get out of them easily with no intent to pay back what they signed up for. I think this topic could cause lots of further issues down the road if something like this actually happens.

Submitted by Molly Mingus on
The idea of student- loan forgiveness makes me extremely angry. For a few reasons, the first one being that my mom worked very hard to save enough money for my college education. For years she saved to be able to provide that for me, and to know that other students could have their loans forgiven without the same effort that she put in seems unfair. I also am a firm believer in hard work paying off. I worked very hard throughout college to apply for scholarships and was able to fund over two years at the university through them. I think that any student is very capable of doing this, and too many people do not take advantage of the thousands of scholarships available. This debate also makes me wonder what will happen to the value of a college degree if student loans are forgiven. Wouldn't everyone go to college if money wasn't an issue??

Submitted by Kari Coulter on
This is a very controversial topic. I don’t necessarily agree with loan debt forgiveness, but I also don’t think that those working in the public service sector are getting paid a fair wage for how important and crucial their work is. It takes special and patient people to be educators and work with those with disabilities, and yet they are not making much money. Most teachers are lucky to be making over $40,000, which is sad considering how significant education is and how much we rely on people in those roles. I understand that student loan forgiveness is meant to help those that will not be as capable for paying off debt based on their salaries as much as others will be able to, but I also think that this will be unfair because everyone’s situation and life is different and even those making a higher income could use help in certain circumstances. There are always going to be arguments as to where to draw the line between who is eligible and who is not. I think instead of doing student loan forgiveness, those working in public sectors should be given a higher wage and be more valued for their work. I think this would be fairer than trying to decide student loan forgiveness and who can receive it.

Submitted by Adam Kirk on
As much as a higher wage would alleviate the problem, it could also not. As business students, I know that a career path is not selected purely on salary for everyone, one that is specifically weaker in CBA is students are selecting a career based on passion instead of salary. Awhile back a someone asked how they could reduce the deficit they have sharing the expenses they have throughout the year or month like $2,000 on clothes for example. Here is an article that is similar (I could not find the exact story) More money is not a solution without the ability to handle it isn't any better I think. As for loan forgiveness, that's a tough one, because of the promise on either end of a lender or lendee with a career that would pay for itself in a timely manner, or having a career that would p[ay for itself. Not to mention that businesses are moving into a college degree becoming the new minimum requirement because of the evolving environments.

Submitted by Elliott on
I agree with this post 100%, student debt forgiveness is unethical. Not only is forgiving student debt unfair to those who worked hard to not have debt but unfair to those who's debt is forgiven. If you forgive student debt you do those who have student debt a disservice by not teaching them financial responsibility. If they get a hand out now what teaches them to not always expect handouts. Not only that, but its a slap in the face to those who worked hard to pay for their own tuition and living expenses. When students sign up for college they know what kind of expenses come with it. In the end if all student debt is forgiven then the number of students enrolling into college would skyrocket and eventually a college degree wouldn't be worth what it is today.

Submitted by Katie Taylor on
I don’t agree with student loan forgiveness. As the article mentions, loans are a legally binding contract that borrowers knowingly got into. While at some points, it may get difficult to make loan payments, I believe that loans teach discipline and good money management that is important for everyone to learn. As someone who is about to graduate, money management is a topic that frequently crosses my mind. After graduation I will be moving to a new city, finding a new apartment, paying car payments on a new car and starting my life as an independent person. As I look for apartments, I have to keep in mind my salary and all the other expenses that I will incur. Student loans can be a large expense, but by having them, I believe it teaches young graduates the importance of living within your means and how to control spending. There is no class in school that can teach you how to manage your money quite like real experience. I believe that loan forgiveness would also encourage reckless spending. If people knew going into college that they weren’t going to have to repay any loans, then they would max out the amount they could borrow, and use their personal money on more fun (possibly foolish) items. While some people may use their personal money for beneficial items, I think it opens the door for bad decisions and misuse of money.

Submitted by Mustafa Akbar on
Revoking the terms of the contract VS loan forgiveness are two different aspects. I totally agree if someone voids the contract and doesn't complete their obligation, they are liable for litigation or punishment to the full extent. But loan forgiveness is something that both parties mutual consent to, and the burden of the contracts falls more on the lender in this case because they are foregoing their profit.