Student Loan Forgiveness: It’s Not Fair
When I attended university, I set out to eliminate my student debt as quickly as possible. I have long had a deep aversion to accruing debt.
I made payments upfront to get discounts on my student loans and paid the rest off throughout my degree with assistance from family members. As the result I had no student debt when I finished university and felt I had made responsible decisions.
From December 2025, the Albanese Government rewarded those with HECS debts with a 20% reduction on debt accrued prior to June 2025. Although those with large student loan debts felt incredibly relieved, those who no longer had student loan debt like me, as well as those who had been making concerted efforts to pay theirs down, were left incredibly irritated. It’s like being punished for making financial responsible decisions.
It creates a situation of reverse wealth transfer in which professional workers who have a degree are funded by lower income workers
Student loan forgiveness creates a variety of issues for society. For a start it discourages people from paying off their student loans. After all, if people think they will be rewarded for not paying off their student loans then what incentive is there to pay them off?
This results in more student debt to pay off in the long run as people will hold off paying their student debts in the hope of being rewarded with a taxpayer funded refund. Especially given student debt accrues interest which can result in a significant increase in total debt over time. They may even be more careless in taking out larger loans in the first place as they expect it may be forgiven eventually.
Secondly, it does not eliminate the debt but rather shifts the burden to the taxpayer. Even worse, it creates a situation of reverse wealth transfer in which professional workers who have a degree are funded by lower income workers who did not choose to, or could not, go to university.
It also does not prevent people from accruing new large student loan debts. All it does is make the government and society feel better about the issue of large student loans for a short period of time. And of course, if large government handouts are expected, then universities will account for this when determining the prices of classes and degrees.
If people think they will be rewarded for not paying off their student loans then what incentive is there to pay them off?
I would argue that student loans ought to be handled by the private free market system rather government backed loan programs, as this will encourage universities to charge more reasonable prices that graduates can more easily pay back. Government intervention in the student loan system, such as occurs in Australia and the US, only inflates the prices of degrees and leaves many with debts which they will never pay off.
A private free market student loan system would also give universities an incentive to provide more useful degrees which help people get a job and pay back their student loans. This will in the long-term benefit graduates as more useful degrees will result in fewer people believing that getting a degree has not helped in acquiring a job.
 |
|
When I started my tertiary studies, they were "free". I only had to pay HECS for my final semester.
When it started, the fees were fairly reasonable and could be justified by making the people who will benefit from a Degree pay their way.
However, the University sector is now a huge government funded and controlled monstrosity. Mid level jobs that 30 years ago required a High School education now need a Degree. Think Nursing, Policing and Accounting.
Young people are being lumbered with a massive HECS debt and it is affecting their ability to get a home loan now - and with house prices ridiculously high the next generation will be renters.
So, good luck to these students getting a 20% reduction in their massively overpriced study costs. Remember, it's not a free market.
As a comparison, if your neighbours won the lottery would you cry "not fair" as you missed out?
How about when your friend gets a big inheritance and you don't? - also unfair?
Exactly. How do I look my tradie mates in the eye and tell them I deserve this when they work hard for their money? How does someone with a degree in vegan feminist literature studies do the same thing? Vote grabbers gonna grab.