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The Morality of Forgiving Student Debt

photograph of graduates at commencement

In March 2020, as the pandemic began, the federal government temporarily suspended student-loan payments and the charging of interest on student debt. Two years later, the suspension continues. There are now growing calls for student debt to be canceled entirely.

Forgiving student loans is a deeply controversial topic, as a few of our own writers have discussed. The policy raises difficult economic questions (would forgiving student loans beneficially stimulate the economy, or simply contribute to the already-high inflation?), political questions (would this be a political “winner” for the Democrats going into the midterms?), and also essentially moral questions.

Do the borrowers deserve forgiveness? Would forgiving existing loans be fair to those who have already paid off theirs? Would a government bailout of student loan borrowers be just when they tend to earn more than most taxpayers?

Both sides of the student loan forgiveness debate use the language of morality and justice to defend their views. On the anti-forgiveness side, it is common to hear expressions to the effect of “I paid mine. You pay yours.” How is it fair on those who worked hard, lived frugally, and repaid their loans that their lazier or less financially responsible counterparts get their loans bailed out by the government? It seems morally wrong to reward failure when it is the result of personal irresponsibility. Those who took out loans did so freely. Perhaps they ought to deal with the consequences themselves, rather than have those consequences shifted onto the taxpayer’s back.

Whether this is a convincing argument depends largely on whether you think those taking student loans are fully informed about the relevant information before making their decisions, and whether you think they are being financially exploited by the universities they are joining. If borrowers were exploited, then it seems just to forgive their debts.

First, some background. Student loan debt has grown rapidly over the past two decades, almost fourfold from $480 billion in 2006 to $1.73 trillion in 2021. Approximately 45 million Americans have student debt, an average of $39,351.

The U.S. Department of Education claims that 10 years is the ideal length of time to pay off a student loan. But, in reality, these loans take an average of 21 years to pay off. If you graduate at 22, you can be expected to be paying off your student loan into your mid-40s. And some student loans are far worse than that. The average Professional degree at a for-profit college takes a shocking 46 years to pay off — longer than most Americans are in the workforce. Even worse, some borrowers are unable to repay their debts. The default rate for the student loans owed to for-profit colleges is 52%, and 66% for African Americans.

The personal impact of crushing student loan payments can be severe and endure for decades. Given these possible long-term negative effects, perhaps the federal government shouldn’t be giving these student loans out in the first place.

The brain takes an average of 25 years to fully mature, but the life-changing decision to take a student loan is made by those as young as 18 years old. If these loans should have never been given, then forgiving them would be rectifying past exploitation.

Debt is also not solely the moral responsibility of the borrower; the provider bears some moral responsibility too. But federal student loans are available to almost all students with no requirements beyond meeting the program’s requirements. The government spends no time nor effort assessing whether the prospective student will be capable of repaying the loan, nor if the degree will be considered an asset. Both eligibility and interest rates are the same for the top-earning degrees (e.g., Petroleum Engineering, Operations Research & Industrial Engineering), and the lowest (e.g., Medical Assisting, Mental Health, Early Childhood Education), despite their vastly different risks of default. Is it really fair to give the burden of a student loan to a future low-paid Medical Assistant, on the same terms as a future Petroleum Engineer? If not, perhaps the federal government has failed to act responsibly in giving these loans in the first place, suggesting forgiveness is the moral choice.

But why should the government opt for forgiveness?

If you get into debt you cannot repay, our society has a system for escape: bankruptcy. It is a painful solution, but an essential one used by 1.5 million Americans each year. Isn’t this the solution to the student debt crisis? The problem is that this basic financial right is tightly restricted in the case of federal student debt. While some advocate changing bankruptcy law to include student debt, until those changes are enacted we are seemingly left with only one solution for those with non-repayable student loans: forgiveness.

Despite these considerations, there is also a strong case against student debt forgiveness. Student loans are not always exploitative. Used well, they can provide access to higher education to millions of Americans who could otherwise not afford it. In a world without student loans, we would expect fewer students from poor families to go to university. Most college students take student loans, and most are able to repay. The access to higher education that these loans can provide is often immensely valuable, both economically and personally.

Of course, an education is worth far more than its financial benefits, but even if we focus narrowly on the economic benefits of university education, those with a bachelor’s degree earn an average of $2.8 million over their careers, compared to $1.6 million for those with a high school diploma. In fact, every extra level of education is correlated with another boost to lifetime earnings. So, while some student loans are lifelong financial burdens, others act as financial life-rafts, leading borrowers to better lives in the broadest sense. Student loans can be irresponsible, exploitative and morally wrong, but they can also be transformative.

If student loans are neither inherently exploitative nor inherently beneficial, how can we assess blanket policies such as forgiveness? One way is to examine the effect of the policy through the lens of distributive justice — the question of what allocation of society’s wealth and resources would be equal, fitting, or otherwise just.

Congresswoman Ayanna Pressley appealed to the value of distributive justice in support of student loan forgiveness, calling it ‘a racial justice issue’, ‘a gender justice issue’, and ‘an economic justice issue’, and tweeting that “Black women are … the most burdened by student debt.” The implication is that Black women are unjustly disproportionately burdened by student debt, in part due to the existing racial wealth gap, and that forgiving this debt would make the country more just. Similarly, Senator Elizabeth Warren and Senate Majority Leader Chuck Schumer wrote that “Canceling student debt is one of the most powerful ways to address racial and economic equity issues. The student loan system mirrors many of the inequalities that plague American society and widens the racial wealth gap.”

Historically, Joe Biden has been fairly skeptical of such claims. In 2021, he told The New York Times, “The idea that you go to [the University of Pennsylvania] and you’re paying a total of 70,000 bucks a year and the public should pay for that? I don’t agree.” Despite the fact that Biden disagrees with Pressley, Warren, and Schumer, he too views the issue through the lens of distributive justice. But Biden believes distributive justice would not be served by a blanket policy of forgiveness. This explains the most recent proposals to be floated by members of the Biden administration, which consider much more limited and targeted debt forgiveness, aimed at those below a certain income threshold.

Biden has a point. Those who go to university earn, on average, significantly more than their high-school diploma holding counterparts. They also are much less likely to be unemployed; college graduates’ unemployment rate is now just 2%.

So how could it really help promote equality and distributive justice to bail out the debts of the high-earning university-educated elite?

Pushing this point further, the recent calls for student debt-forgiveness are seen by some as a disproportionately wealthy, powerful, and influential segment of society seeking to massively financially benefit themselves at the taxpayer’s expense. Is it right to force blue-collar taxpayers to bail out Harvard graduates? Megan Kelly recently put it like this: “There people are going to be… elite graduates… Why should I be paying for their education? I don’t want to!”

Congresswoman Alexandria Ocasio-Cortez has pushed back against these skeptical characterizations and defended the distributive-justice credentials of student loan forgiveness. She wrote that “Taking the school that someone went to college to is not really shorthand for the income of the family that they come from.” Martina Orlandi gives a similar argument here. The trouble with this argument is that when we talk about adults being wealthy, we aren’t generally talking about their parents’ wealth but their own. The first person in a family to have wealth is still wealthy, and we don’t think they should be taxed less because their parents were poor. Likewise, it is unclear why college graduates should have their debts forgiven because their parents were poorer than them.

At a recent town hall, Ocasio-Cortez provided a much stronger argument in defense of debt forgiveness as a vehicle for distributive justice, pointing out that most students from high-income families never take student loans: “if you are very wealthy, if you are a multimillionaire’s child, if you are Bill Gates’ kid, if you’re Jeff Bezos’s kid—Jeff Bezos isn’t taking out a student loan to send his kids to college.” If rich kids don’t take student loans and poor kids do, then it is clear that forgiving these loans should promote greater wealth equality.

To get a better grasp on these various conflicting claims about what distributive justice demands in relation to student loans, we need to look more closely at the statistics.

Black college students are indeed the demographic of students most likely to use federal student loans. However, Black Americans have significantly lower rates of college enrolment than White Americans. 29% of Black Americans aged 25 to 29 have undergraduate degrees, while 45% of White Americans do. Therefore, forgiving federal student debt would probably help narrow the racial wealth gap between college graduates, but it would most likely widen the racial wealth gap between Americans overall. Likewise, college students from the wealthiest families tend to take out fewer loans, while those from the poorest take out more. Forgiving student loan debt would, therefore, likely decrease wealth inequality between college graduates. But, in terms of income, the top 40% of households owe 60% of outstanding education debt and make 75% of the payments. The bottom 40% of households have only 19% of outstanding educational debt, and make only 10% of the payments. So forgiving student loans would likely increase the wealth inequality between Americans overall, even as it lowers wealth inequality between college graduates.

Intergenerational justice may provide a more convincing lens from which to defend student loan forgiveness. In 1970, the average in-state tuition for a public university was $394. In 2020 it was 25.8 times higher, at $10,560. Meanwhile, the federal minimum wage has risen by just 3.5 times. Instead of 5 hours of work per week paying for a year of tuition at an in-state university, it now takes 28 hours per week. The days of paying for college with a part time job are over. At the same time, employers now demand higher levels of education from their employees, putting this generation under immense pressure to take on educational debt to access the same jobs their parents worked with less education. In this context, student debt forgiveness can be seen as a way of mitigating the inequality between the generations — a way of transferring the nation’s wealth to younger Americans who have lacked the financial opportunities their parents had. Whether this is convincing or not likely depends on your view of government debt. Forgiving student debt would, effectively, nationalize the debt — add it to the total U.S. federal debt. But fiscal conservatives argue this would simply add to the burden of future taxpayers (i.e. young people and their children). If they are right, then student loan forgiveness could simply perpetuate generational injustice, rather than mitigate it.

Student loan forgiveness is a controversial topic for good reason. Student loans can be irresponsibly given and exploitative, but they can also be extremely beneficial. Forgiving them could reduce certain unjust inequalities in American society, but it could increase others. But this much is clear; the issue is not just political. It is also a debate about morality and about justice.

Under Discussion: The Marginalization of the Future

photograph of human shadow stretching out over dry lakebed

This piece is part of an Under Discussion series. To read more about this week’s topic and see more pieces from this series visit Under Discussion: Combating Climate Change.

Predictive models projecting the course of global temperature rise and general climate change have been largely accurate. As the anticipated effects have become clearly manifest in weather effects, governments, businesses, and individuals have begun to consider the grim future that awaits. And yet across the world, especially in the United States, many people continue to deny that human action is responsible for climate change. Or, even where people acknowledge the reality of climate change, they do not deign to take action. Frequently this inaction stems from a conflict between the scope of the needed action, and a belief in individualist and free-market ethics.

Proponents of free-market views on economics and ethics argue that what is most efficient or most ethical, respectively, is to allow individuals to negotiate one-on-one exchanges in accordance with their preferences. This is the rationale behind at-will and right-to-work employment laws and the repeal of the individual mandate of the Affordable Care Act, among other things. Anathema to a free market is centrally-coordinated action from strong governments or monopolistic corporations. This is where the reticence of even those who recognize the looming danger of climate change enters. They disagree that either massively and centrally-coordinated actions are necessary or that such action, even if in some sense pressing, is not politically or ethically acceptable.

Why not? What could be unacceptable about massive and centrally-coordinated action? The idea is that such action necessarily tramples on individual preferences. If most individuals want to act on climate change, then they will make deals in the market to affect that change and top-down institutional action will be superfluous and risk creating a tyranny that outlasts the current emergency.

What can easily evade our attention here is what does not get mentioned: nothing is said about the people and creatures that will inherit the world as shaped by our choices. People who do not yet exist do not have preferences and so the free market had no direct mechanism to factor in their interests. This difficulty is highlighted by a constellation of issues known as the non-identity problem, future individual paradox, or intergenerational justice. (Note: intergenerational justice also covers the rights and interests of past and deceased persons.)

The marginalization of future persons within a free-market decision-making structure is a deep-seated, structural problem. A free-market exchange assumes that interested individuals are directly interacting to advocate for their preferences or interacting through an agent who will do so. And future persons are not the only entities marginalized in this way: any lifeforms that cannot secure meaningful advocacy for themselves are effectively marginalized. The forms of racism, misogyny, and other invidious bigotry with which we are all too familiar also operated (partially) through this mechanism. Whereas future persons do not exist to advocate for themselves, oppressed groups have been — and are — deliberately prevented from such advocacy. Like future persons, non-human animals and the inanimate environment are, by the nature of their existence, incapable of advocating for themselves.

But don’t people with the ability to advocate for marginalized entities do so? Can’t that solve the problem? In short, no. In the case of currently existing human beings, there has proven to be no substitute for self-advocacy or advocacy through others who share a meaningfully similar perspective. Hence the importance of historic firsts in political representation, like Kamala HarrisRaphael WarnockDeb HaalandIlhan OmarSarah McBrideRashida Tlaib, and Jon Ossof. However, there is no way to extend the power of political participation to animals, the environment, or future persons.

While there is rhetoric to the effect that we must consider how our actions will affect the world inherited by those that come after us, its reach is often limited and the motivations behind it sometimes suspect. Deficit hawks in U.S. politics wring their hands and rend their garments about the debt we are foisting on our children and grandchildren as a way to avoid spending money on current problems that aren’t in line with their preferences. Many young people are concerned for the world that they will have to live in imminently and seethe at the injustice of having to clean up the mess made by their predecessors. This latter concern is not illegitimate — it simply isn’t the same as concern for people who do not yet exist.

“Tenet” and Intergenerational Environmental Justice

image of Tenet movie poster

[SPOILER WARNING: This article discusses a number of plot points of Christopher Nolan’s latest film.]

Earlier this month, Christopher Nolan’s highly anticipated new movie, “Tenet,” released on virtual platforms. Tenet includes time travel, weapons of mass destruction, and a stereotypical Russian bad guy. The film follows the story of an ex-CIA agent living in the present who must prevent the destruction of all of human history by future generations. The protagonist’s main mission is to obtain and hide an algorithm created in the future which will enable future generations to reverse cause and effect through a process called entropy inversion. Though the plot tackles many complex concepts, it leaves one relatively unexplored: the motive of future generations to completely annihilate their ancestors in order to reverse the uninhabitability of earth.

Is time travel ethical? If possible, would it be unethical for future generations to interfere with the actions of their ancestors? How should we interpret Tenet’s intergenerational environmental justice?

“Tenet” is by no means the first film to examine moral quandaries of time travel. From “The Terminator” to “Groundhog Day,” time-travel movies, often drawing inspiration from novels, have been steadily present since the 1980’s. These films often give the protagonist the ability to time-travel in order to save the world, re-examine their decisions, or even to remedy their past mistakes. The ethical questions posed by these films often focus on the protagonist’s decision to time travel, rather than the morality of time travel more generally. And usually, those who time travel face potentially grave consequences on their present and their future, depending on the decisions they make. As time travel is currently impossible, and there lie many logical paradoxes within the concept, this question has not been heavily debated. However, for the sake of argument, assuming that time travel is possible and that it is possible to change the past and impact the future, when might doing so be ethical, and when might it not?

If one believes the best moral outcomes from time-travel are positive impacts on the future, time-traveling would be considered morally positive when one time-travels in order to maximize social good for the most people. Though time travel is in many ways, linked to cause and effect and therefore consequences, it could also be considered morally positive if it is a way for society to gain knowledge. Such knowledge could be based on our distant past and ancestors to more accurately understand history. Time travel could also be used, if not to interfere, to solve mysteries, either on an individual or collective basis.

“Tenet” applies time travel to flip the normative narrative of intergenerational justice on its head by asking the question: what if future generations could fight back? Intergenerational justice appeals dominate ethos marketing of the modern environmental movement, especially concerning climate change. At the core of these appeals is the central moral tenant that it is wrong to predestine harm, in the form of environmental destruction, for those who have no agency in this decision. While many see our obstinance to curb climate change and environmental destruction as a deep irrefutable moral harm to our descendants, whether or not future generations have a moral license to retaliate is a different question entirely. Such a question though, is not dissimilar from many ethical questions we currently face in regards to self-defense, retribution, and sacrifice.

“Tenet’”s choice to interplay climate change as the reason for the future’s desire to destroy the past makes the question of its morality far more complex, as it is a reaction to a ruined world rather than an offensive aggression. Future generations fighting back might even appeal to those who view environmental destruction as the defining moral issue of the current age. If viewed in this manner, the “war” occurring in “Tenet” is less between the past and the future, and more between environmental destructors and the victims of this destruction. Those familiar with environmental justice and its modern movements, might see the antagonists as fighting for environmental justice, and see the protagonists as the true wrong-doers.

Of course, “Tenet”’s time travel plot comes with the caveat that future generations are incorrect about “The Grandfather Paradox” and in reality, will cause humans to go extinct if they succeed in obtaining the Algorithm. However, assuming that future generations were not incorrect, and the environment could be “reset” by wiping out the human ancestors, is doing so unethical?

The answer to this question might rely on knowing the full consequences of doing so. Inability to predict consequences is often the dilemma inherently posed by time travel. However, if wiping out human history leads to even greater future human stability and success, those with consequentialist leanings would likely believe future generations’ desire to obtain the Algorithm is moral. However, the unknown consequences of using the Algorithm might be enough for many to argue that destroying human history is not justified. Even in a scenario where humans faced inescapable extinction, wiping out the humans of the past with no guarantee of survival in the future might be too large of a risk to take.

From a retributive standpoint, wiping out the humans of the past might be justified even if it did not necessarily lead to better consequences in the future. If one views the antagonist future generations as activists fighting for environmental justice, one could argue that such extreme actions are justified, as past humans deserve to be wiped out. Some radical environmentalists, such as those in The Voluntary Human Extinction Movement, suggest that one day, humans should initiate their own extinction in order to restore environmental stability. Though many disagree with this stance, the antagonists in “Tenet” are not trying to end human existence, but rather, to further it, by erasing the past. In a way, the core issue at the heart of the film is whether or not our past is worth sacrificing for a better future. The attempt to erase the future envelops many of the same moral wrongs that climate activists take with our current destruction of the environment: robbing individuals of the ability to survive. The actions of the antagonists might also be viewed as self-defense rather than retribution, as they are fighting back in order to undo the wrongs which have occurred.

Lastly, the question of the antagonist future generations decision to wipe out the past, rather than to convince past generations to change their actions, or to focus on wiping out the biggest contributors to environmental destruction, might be viewed as immoral. “Tenet” takes place in modern day, with the future antagonists set many generations in the future. Countless environmental organizations, individuals, and nations have joined forces in the past few decades to combat climate change and environmental destruction in general. Some of us are trying, despite the pushback. In addition to this effort, the question should also be asked: who is truly responsible for the environmental destruction of which future generations now suffer?

It is rather easy to subscribe to narratives which purport that we are all equally responsible for climate change and environmental destruction, but this way of approaching responsibility in environmental collectives fails to recognize both the quantitative differences in our impacts, as well as the existence of economic power and political structures which give individuals relatively little control over their impact on the environment. This is not only problematic in wiping out all individuals in the current era, but also those in the past, who had no knowledge of nuclear arms, climate change, or pollution. The lengths to which the antagonist future generations are willing to go, by wiping out all of their ancestors, punishes pre-industrial humans for the actions of their descendants. Though humans have been committing large-scale environmental destruction arguably since the dawn of agriculture, both the invention of nuclear fission and the rapid release of greenhouse gases into the atmosphere really kicked off the type of long-term environmental destruction which will likely be responsible for the majority of future generations’ grievances.

Should future generations fight back to preserve humans from extinction? If so, who and what should they sacrifice to do so? Though time-travel is not yet possible, it need not be for us to ponder such ethical questions. The best approach to answering these questions can likely be found in turning to the modern environmental justice movement, and the activist ethics employed in fighting for a healthy environment for those in the modern era, as environmental destruction has consequences now as well as the future.