Student Loan Forgiveness: The Libertarian Response?

By Walter E. Block

Someone just sent me this over the transom letter (if you don’t know what that means, you young kid you, look it up; ok, ok, it means “offered or sent without prior agreement; unsolicited”):

“I’d like to know your thoughts on this topic and my interpretation: If one voluntarily agreed to a student loan, the loan was ‘canceled,’ and the debtor decides not to pay back the lender, wouldn’t this hole in the budget have to be filled by placing debt obligations on others? The ethical issue is the debt transfer, and accepting this guarantees another injustice occurs by tax, debt, or the currency devaluation theft of the taxpayer.”

Here is my response:

I’m a professor. We’re not obligated to directly answer any questions. We’re allowed to beat around the bush instead. So let me share with you my thoughts on this matter from a slightly different perspective than the one you request.

I’m a libertarian. I look at all such issue through the prism of that political economic philosophy. So I ask, should libertarians favor or oppose the government’s forgiveness of student debt? I’m of two minds on this issue as you’ll see.

With Murray Rothbard and Lysander Spooner, I regard the government as a “band of murderers and thieves.” So, I oppose anything that benefits them. They seem to think that loan forgiveness benefits then, otherwise they wouldn’t do it, so I’m against this initiative of theirs if only for that reason.

Further, as you point out, this program will benefit people who were subsidized into extra education (let’s assume for argument’s sake that this didn’t consist, mainly, of being force-fed Marxism, feminism, queer and black studies, critical race theory, etc.). Then, the government will turn around and tax all people, including non-beneficiaries, to make up for this loss. As a libertarian, I can hardly favor the govt taking money from one group of people, no matter what are their characteristics, and giving it to another group of people, no matter what are their characteristics.

A third reason for opposing this further subsidy to higher education is that for the most part it does indeed promote Marxism, feminism, queer and black studies, critical race theory, etc. Who needs even more of that? We are presently inundated with such fallacious and uncivilized views from the media, the pulpit, Hollywood, et. Al.

On the other hand, if we look just at this program, and avert our eyes from the government later raising taxes to finance it, we reach a different conclusion. The less money the government has, the better. This initiative will impoverish them just a little bit. Who will it enrich? Why these students who won’t have to pay off their loans. Who is a greater enemy of liberty: the govt or these students? Well, that’s a no brainer. These students haven’t been taxing, regulating, murdering, stealing, cancelling, etc. At least not to anything like the same degree. So, as a libertarian I favor a transfer of money from statists to these relatively innocent students.

Thus, we have two effects, one in favor, one against. Which one is more powerful? How should we weight them? That is an empirical issue, not one of deontology. As a result, the way ahead for libertarians, in my view, is unclear. If an answer is demanded of me, my prudential judgement is to oppose this program.

Originally published at EconLib.org