Student Loan Debt Forgiveness: Avoiding Moral Hazard

I’m also sympathetic to mortgage cram-down in bankruptcy court, and other forms of partial mortgage forgiveness, since it’s hard to argue that there’s something morally awful about those kinds of giveaways when bank profits have recovered due to a massive taxpayer bailout.

That all said, it’s tough for the person who paid off his mortgage and didn’t max out a HELO to remodel his home to accept that his neighbor who did so will be getting his pergranteel for free. Similarly, a student who’s working a crap job and barely making payments on his student loans isn’t going to appreciate his unemployed friend’s forgiven loan. via Balloon Juice

If debt forgiveness is unfair to those who already paid off their loans and would get nothing for being responsible, why doesn’t such a program reimburse those who already paid their debts the same proportion as those in a debt forgiveness program?

Seems simple and equitable to me, and the best way to relieve the majority of the country of crippling debt, and also put fresh money in the hands of those fiscally responsible. More worthy than a TARP, certainly.

Conservatives should see it as stimulative as another tax cut, but you know, they don’t actually want that if it would help the country and by extension the President.

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