, Columnist
Forgiving Student Debts Is a Bad Idea — Just Ask India
Evidence from elsewhere in the world is clear: Canceling out debts incentivizes bad choices among borrowers and political leaders.
Who’s going to resist future demands for more?
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The United States government will find out soon enough what “moral hazard” means. Clearly it does not know already, or President Joe Biden would not have announced earlier this week that his administration would forgive US student debt worth around 1.6% of GDP.
It’s natural to ask, as critics have, whether the new policy is fair. Should regular taxpayers subsidize those who went to college — who, after all, have above average human capital and earning potential? Should those who have already paid back their loans subsidize those who have not?