Two massive potential federal programs to ease the financial burden of college are being debated. One involves some type of free college program, and the other some type of student loan bailout. There is, however, a fundamental ethical difference between the two. The first affects the decisions of students moving forward, while the second rewards only select people based on past actions.
Even at a very young age, children know it’s blatantly unfair to change the rules of a game while it’s being played, but especially after the game is over. Millions of families made critical life decisions about college based on the financial rules and options at the time. They decided how much student debt (if any) they were willing and able to take on.
They made choices. Many made sacrifices. If some want to change the financial rules about college moving forward, that’s a separate debate. Changing the rulebook retroactively is both dishonorable and unjust.
The Choices
Imagine six high school seniors who have nearly the same GPA, comparable middle-class families, and similar life aspirations. They all have a passionate interest in the arts and want to buy a home someday. All are accepted into an expensive, prestigious liberal arts college that none can afford without taking on about $50,000 in student debt. Then reality sets in.
Ashley chooses to attend the expensive college, her dream pick. She majors in art history and, rather than work part-time, focuses on her social life, social causes, and grades. With her father as a cosigner, Ashley obtains federal student loans for the full $50,000 and hopes to obtain a coveted job at a museum after graduating. Fair enough.
Bryson abhors the idea of taking on any debt. He ultimately decides to skip college altogether and instead works for four years at the local supply store. He opts for fewer opportunities to have fewer liabilities.
Crystal reluctantly agrees to forgo her dream college experience. She instead attends the more affordable local public college and takes extra classes to graduate in three years. Crystal opts for a less prestigious name on her diploma in exchange for saving more money for a down payment on a home. She conscientiously completes one year of loan payments after early graduation.
Diego, like Ashley, attends the dream college but majors in civil engineering. He works 20 hours per week for four years, which takes a toll on his grades. While he would rather hang out in the student section during the basketball games, he instead works the concessions. Diego opts for less of the college experience and accepts average grades in exchange for graduating with minimal debt that he will quickly pay off as an entry-level engineer.
Eunice also goes to the dream college, where she enrolls in the military science program, earns an Army ROTC scholarship, and agrees to a post-college commitment. She opts for significantly less freedom — both during and after college — to graduate debt-free.
Franklin attends the dream college, majors in art history, and will later be Ashley’s competition for that museum position. His father’s credit record with the local bank enables him to obtain a student loan with a slightly lower interest rate than the federal loan rates. Franklin smartly opts for the private loan to lower his total payments.
The Consequences
Fast-forward to four years after these six graduated from high school when the federal government suddenly offers up to $50,000 in student loan bailouts. Yes, Ashley is thrilled and relieved that she’s no longer on the hook for that huge loan she signed. All who are not Ashley are relatively disadvantaged for not being able to foresee the future.
Guess what, Bryson: you could have had a paid-for college education by now. Crystal, oops, you could have attended your prestigious dream college, plus avoided 12 loan payments that will not be reimbursed. Sorry, Diego, you just learned that you did not have to work 20 hours per week for four years; it’s a bummer that you missed out on all those fun experiences and now don’t have the competitive grades for grad school.
Eunice, it turns out you didn’t need to crawl under barbed wire through the mud after all, but thank you. Franklin, can you believe that you still owe the entire $50,000 plus interest because you selected the wrong type of loan?
People who champion federal student loan bailouts focus almost exclusively on the hardships of certain borrowers and are dismissive of everyone else. We’re told that Ashley had no choice if she ever wanted a professional career but all the others, well, they each made a choice and should now quietly live with it.
The Trolley
Newsweek recently published an article in strong support of student loan bailouts that widely disseminated a tweeted cartoon by Georgia State law professor Anthony Michael Kreis. The cartoon references a classic ethical thought experiment regarding a trolley.
Here’s the problem. The analogy doesn’t apply to student loan bailouts. To be fair, it does apply to some type of free college program moving forward. It shows that even though people suffered in the past, others need not have a similar outcome in the future. Whether people suffer by making college payments is highly debatable, but yes, you can pull the switch to change the future.
Student loan bailouts, however, are different. It’s trying to pull the switch to alter the past, and only for a select few. Moreover, those who agreed to a student loan were never tied to the tracks against their will.
If student loan bailouts happen, the five innocent people on the track about to get hit will be Bryson, Crystal, Diego, Eunice, and Franklin, along with the tens of millions of young people like them who did not possess the right crystal ball.
Where’s Ashley? She hopped on the trolley as a passenger. The only question now is whether she is going to pay her fare.
