WHY ELIZABETH WARREN MISSES THE POINT AND SETS THE WRONG PRECEDENT ON STUDENT LOAN FORGIVENESS

Reading through Ms. Warren's proposal on Medium I can see the allure. I am in debt and she is offering a solution to get me out of debt. The solution simply requires me to make < $250k / year and for my debt to be in the form of student loans.

She goes on to propose making 2 to 4 year colleges free for most Americans.

That is certainly one avenue. She says of the current student loan situation: "The result is a huge student loan debt burden that’s crushing millions of families and acting as an anchor on our economy. It’s reducing home ownership rates. It’s leading fewer people to start businesses. It’s forcing students to drop out of school before getting a degree. It’s a problem for all of us." I agree with her. Anytime there is a large group of citizens struggling with burdensome debt, it hinders other purchases like homes, and is an impediment to starting a business.

But has it occurred to Ms. Warren to ask an even harder question of herself and people: "Is College even worth it?" Let's first look at her proposal in the context of other burdensome debts for our citizens. 

Auto loans are about equal to student loans. Clearly they force citizens to forego other purchases. I would argue they have a much greater utility in our lives than a degree. Should we wipe out that debt? We, as the Federal Government could walk into the office of any auto financing arm of any company and tell them that: "We are the Government and we are here to help. You need to cancel all of your loans and eat the losses. We know the buyers made a deal with you on the initial purchase but, them the breaks."

Credit Card Debt Comprises a significant amount of debt. I could argue that debt forces people to either purchase fewer things or forego other opportunities before that debt is paid off, but a lot of those purchases have a lot more daily utility then college. Should we wipe out that debt? Maybe the Federal Government just walks into Synchrony Financial and shuts them down. Tell them that all the mattresses they helped subsidize so people could avoid sleeping on the floor should now be considered a gift. (So at least you can use as a charitable deduction)

Of course there is cell phone debt which has grown significantly as well over the last decade. Should we wipe out that debt? I think you get the point.

Ms. Warren picks student loans because those are the easiest to go after. But it doesn't change the fact that someone has to eat that loss. It doesn't disappear simply because it doesn't show up on a College Grads W2. What will most certainly happen is that companies will go bankrupt, which means that synthetically or directly, the average U.S. Citizen will pay for this student loan forgiveness through their taxes. Essentially, we are robbing Peter to pay Paul as the old adage goes.

But all of this discussion has yet to focus on the real issue: College may not be worth it. Students take on these loans because they feel that a "higher education" is going to generate more job opportunities and higher income when they have graduated.

Yet,

The unemployment rate among young college graduates has fallen to pre-recession levels, but it is still higher than the full-employment economy of 2000.

The underemployment rate of young college graduates has recovered somewhat—at least relative to its business cycle peak of 18.8 percent (in 2011)—but it still remains higher than it was in 2007, and it is much higher than in 2000.

Over much of the last four decades, young college graduates have experienced lackluster wage growth.

There are of course qualitative measure as well. But if I asked you if a college education was worth $300k all-in, what would you say?

There are other solutions instead which I prefer. If the Federal government has to be involved - then at least partner with public companies to train people for the future instead of beating the crap out of them while stumping and calling for them to be broken up.

It would make more sense to give people different Federal job opportunities that may not require the current college system. (Infrastructure Build, Addiction Counseling, Teachers, Alternative Energy to name a few) that would at least contribute to production as opposed to wiping out debt so much of that savings can sit in the banks you hate so much.

Debt is an American way of life (mostly in the last half century). But it is at all levels!! Look at the Federal Government balance sheet. Look at the $4.5 Trillion in underfunded pensions across all levels of government. Can that debt be wiped out? Maybe we should tell the Chinese and the Japanese, that we are sorry, but can't pay you what we owe.

There are better ways than simply putting a band aid on a more fundamental and tougher question: "Has the perception of the benefits of a college degree completely diverged from the reality of its worth?"