The Equity Illusion: The Trap of Loan Forgiveness

Who wouldn't want to help a young graduate by erasing some of their student loan debt? On the surface, it sounds compassionate—a chance for the young generation to move out of their parents' houses, build stability, and start their lives. But loan forgiveness, as federal policy, is less an act of generosity and more a political shortcut. And it ultimately harms the very people it claims to help.

You Buy, We Pay For It

It’s hard to see how loan forgiveness passes the fairness test. Many families deliberately made financially responsible decisions—choosing more affordable schools, completing general requirements at community colleges, commuting, or working long hours—specifically to avoid large loans. Those sacrifices are effectively devalued when others who borrowed more, including those with greater financial means, receive broad forgiveness.

There is also the question of who pays. Asking all taxpayers—including those who never attended college or who already repaid their loans—to subsidize the degrees of future higher earners is difficult to justify. If college is truly a gateway to higher lifetime income, then widespread forgiveness becomes a regressive transfer from working-class households to the professional class. It is an elitist policy dressed up in egalitarian language.

Higher Education’s Broken System

The deeper issue is that the higher education system itself remains unaccountable. Tuition has skyrocketed far beyond inflation. Completion rates remain mediocre—universities celebrate when just over 60% of students graduate within six years. And the incentive structures inside universities reward research output over teaching quality or job-market readiness.

Loan forgiveness allows all of this to continue. It relieves the pressure on institutions to reform tuition, modernize programs, improve advising, or expand applied learning options. If policymakers keep wiping away debt, colleges have little reason to change. The result is predictable: rising tuition, uneven outcomes, and graduates who often struggle to find roles aligned with their college experience, while employers continue to report shortages of qualified candidates.

Conclusion

Few people like student debt, and real reform is overdue. But loan forgiveness is a band-aid that props up a failing system while shifting the cost to taxpayers who may not benefit from it. If we care about fairness and long-term opportunity, we should focus on structural changes—more transparent pricing, accountability for outcomes, stronger career alignment, and genuine alternatives to the traditional four-year path. Fixing the system, not subsidizing its failures, is the more honest and equitable approach.