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IPFS News Link • Student Loans/Debt

Student Debt Cancellation: Charity or Force?


During commencement exercises at Morehouse College, a historically black college or university (HBCU) located in Atlanta, billionaire Robert F. Smith announced that he was paying off all student debt for graduating seniors. According to the Atlanta Journal Constitution, the gift is estimated to be worth up to $40 million. Needless to say, the students who will be receiving the benefit of Smith's gift are ecstatic.

Not surprisingly, leftists are using Smith's generosity to buttress their position that the federal government should do the same thing for other student debt. What they fail to recognize, however, is the fundamental difference between voluntary charity and mandatory "charity." (Note the quotation marks.) Smith's act is an example of voluntary charity. The federal government's welfare state is an example of involuntary "charity."

Let's assume that a student borrows money from the federal government to finance his education. A question naturally arises: Why should the federal government be in the business of lending people money, for any purpose? Morally speaking, lending people money isn't within the array of legitimate functions of government, especially since it involves the forcible taking of one person's money for the purpose of lending it to someone else. Moreover, lending people money isn't among the delegated powers of the federal government enumerated in the Constitution.

It's easy to forget that government gets its money in only two ways: Taxation and borrowing. In order to pay back the government's debt, the government must tax people. So, for all practical purposes taxation is the only means by which government gets its revenue. While the federal government gets some of its money from tariffs and excise taxes, most of its revenue comes from the federal income tax, which is enforced by the IRS.

Contrary to representations made by the IRS, the payment of income taxes is not voluntary. If a person refuses to pay his taxes, the IRS will initiate force against him to collect it. That force comes in form of garnishments on bank accounts, liens on real and personal property, attachments, and even criminal prosecutions, fines, and imprisonment. If a person resists with violence, the government will meet force with force. In extreme cases of income-tax resistance, the resister will find himself dead for "resisting arrest."

Thus, with a student loan the government is taxing Mary in order to use her money to lend to John, a student. Where is the justice in such a process? In a free society, John would be free to approach Mary and ask her to lend him the money to pay for his education. Mary would be free to say yes or no.