Should Colleges Have to Repay Student Loans?

This is a common belief among individuals in an entitled society. If colleges are causing students to go into debt, then shouldn’t they be the ones to pay for it? A few Democrats in the Senate seems to think so and have been pushing legislation to make it happen.

The legislation in particular here is the Protect Student Borrowers Act of 2013, which would force schools to pay a penalty based on how frequently students default on loans. These penalties would be based on the percentage of students who defaulted and the penalty would be a percentage of the total in loans that were defaulted, depending on how many that defaulted. It’s a reasonable solution for an ongoing problem, but should colleges really be the blame here?

If you know how a free market economy works, you should know that all businesses within that economy base their prices on supply and demand; so if there’s a high demand for a specific product, then prices will most likely go up. In this case, the product here is education and colleges are the businesses struggling to keep up with the demand.

Our education system pushes students to go to college, oftentimes recklessly. Students aren’t prepared for the non-academic realities of college and end up making poor financial choices in the end. But who do we blame for it? Colleges. If we were to start viewing colleges as not a right, but an investment, wouldn’t we stop to ask ourselves, “is college really worth it?”

Passing legislation to punish colleges may bring down college expenses, but it would be an artificial change as there would be no change in demand. In the end, government intervention may help students, but it’s likely such involvement would also serve to cripple our education system in the process.