'Student loans should be interest free'. That's the argument I intend to prove.
Let's just set up some standards here, to which we can roughly agree, and then refer. Let's suppose the average 'top-level' degree requires a 6-year period of study at university (for a degree like medicine, or a veterinary science degree - among the most expensive degrees that there are). Let's also assume that for the most part, these students are unable to work during their period of study (as this tends to be true with those types of degrees). And finally, let's assume that the average cost of such a degree is something like $150,000 - 200,000 (it is something like that, I believe).
My primary contention here is that it is both unethical and unreasonable to start adding interest to a loan over an extended period during which the person is practically guaranteed /not/ to be making any money.
Imagine you approached a bank and said: "Well, I'd like a large loan of something like $200,000, but over the next six years, I will have no chance of paying it back whatsoever, and after that six-year period, I still cannot guarantee that I will be able to pay any of it back". I don't think any bank in World would agree to that arrangement. It's an unacceptable risk for the bank to take.
Student loans are granted by the government, not banks (generally), but there are a number of things that distinguish governments from banks in this context, the most important of which is that governments are supposed to ensure the well-being of the public that elects them, and protect their interests as best they can (whereas a bank just makes money - that is their only goal, roughly speaking). The government could well lock a graduate into a feedback loop where they struggle to pay back the interest for the rest of their lives.
Let's assume a student enters one of these degree programs and immediately acquires a $200,000 debt. There are a number of things that could change - or even go disastrously wrong - over the period of study:
1) The job market may change drastically in six years, such that the market is saturated and there are simply not enough places for all qualified persons at the end of the six years. The 'recent graduate' is going to be at the bottom of the pile in terms of 'sought after candidates' in the field, due to a lack of experience. If the loan is still there, and is still accruing interest, then how does this recent graduate pay back the loan? They cannot work in their own field of study, and so may have to take up work in another field in order to pay back the loan. They could end up in a position in which they are only barely able to pay back the interest, without even being able to actually get into re-payment of the loan itself. In the worst case scenario, this person could end up with a ridiculously large loan hanging over their head with no way to pay it back and enjoy a meaningful life at the same time.
2) What if a recent graduate sustains a major injury just after graduation which renders them unable to work. Does the loan just sit there accruing interest, whilst this ex-student lives on the disability support pension/welfare for the rest of their lives? Is it passed on to family members after the person is deceased? Suppose the original loan was $200,000, with an interest rate of 3% per annum. That's $6000 a year in interest, or $300,000 in interest alone after 50 years. Again, it is /against the interests of the citizenry/ to have systems like this in place, as it can only serve to dissuade would-be students from entering study in much-needed fields, from which the citizenry as a whole could benefit.
On a different note: I think it's important to distinguish between 'interest' and 'inflation' here. It could well be argued that '$200,000' in, say, the year 2000, was worth more than '$200,000' in 2006. I'm not arguing against adjustment for inflation; with inflation comes increased salaries, so in my opinion, student loans probably could/should be adjusted for inflation, but that is a completely different argument from the idea that student loans should accrue interest. I also understand that governments, like banks, cannot afford to bleed money via loans, but I think 'adjustment for inflation' should cover this potential issue completely.
In my opinion, it is unethical for any government to make money off its citizenry via any means other than taxation. Taxation should be enough to pay for the government and essential services that it helps to provide. It is particularly unethical to make money off students who are, in fact, attempting to make themselves much more valuable to the country/society, and who are - during their period of study - almost completely financially helpless. If we recognise that education is beneficial to a nation - not just an individual - then we can conclude that any significant financial hindrance to education is against the interests of that nation.
Again, and in summary: it is unreasonable to add interest to a loan over a period in which both the lender and the beneficiary understand that the beneficiary will not be able to pay back anything towards the loan over the initial, lengthy period of the loan.
I look forward to your reply, and would like to thank you for your time so far.
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This is a four round debate, so I'll be using this round for constructive, and then I'll directly address my opponent's points in the next round.
A strong case can be made that starting a business, not being homeless and cleaning up the oceans are ALL very worthy contributions to society. All things that the Government should be happy for me to do - however I still pay interest on those loans.
My opponent is going to have to convince you that for some reason, STUDENTS are so special that they should receive special treatment in this way.
My opponent wants to paint a government who wants to charge students interest as a one that doesn't care, but this is clearly not the case.
In fact, in NZ, the government currently pays for almost two thirds of the student's tertiary education through subsidies!
Like it or not, these students are already given the special treatment!
But he needn't worry. The Government makes ZERO money from Student loans. As he's pointed out, the average loan interest rate from the Government is around the 3% mark. The rate of inflation is about 2%, so the government is only making about 1% on their loan.
Now consider the number of students who default on their loans. In the UK in 2016, that figure hit a new all time high with about 8 million borrowers decided that they just couldn't be bothered any more.
It's a really attractive business model right? "Hey, loan me some money so that I can learn about Turf Grass. I'm not sure when I'll be able to pay it back - probably never. But I promise I'll get around to it when I can!"
It's crazy that this kind of conversation actually happens, and that the government actually agrees. That's no magic beans it's dishing out - it's our actual tax dollars!
Charging a small interest on that loan is necessary, to slow the hemorrhaging and besides...
4. ... INTEREST HELPS THE STUDENTS!
That's right. Charging Interest HELPS the students.
Are there REALLY job prospects for graduates with a major in Taxidermy? Is it worth taking out a loan for my Philosophy of Star Trek course from Georgetown University?
You know what, maybe I'll just cut out the middle man and go get a job at Starbucks straight away.
Seriously, a few years ago it was estimated that only 27% of college graduates end up finding work in a field related to their field of study.
This has got to stop. The world might well need more Doctors and Lawyers, but it certainly doesn't need more Art Historians, and don't get me started on Communications Majors.
We definitely do NOT want to be making Student loans look attractive by making them Interest free. It is certainly not in the Taxpayer's interest, and I don't even think it's in the Student's interest.
5. LONG TERM EFFECTS ON COST OF EDUCATION AND JOB PROSPECTS
Making Higher Education more exclusive by raising the cost of attendance lowers the number of students - forcing Universities to streamline their operations, and eventually, lower their costs tot he consumer.
Eventually it also raises the average wage for graduates and creates more demand for their services.
Interest on Student loans is a part of the solution to this.
6. OPPORTUNITY FOR INCENTIVISING
In NZ, the Interest-Free loans only last as long as that graduate stays in NZ. If they complete their qualification then head overseas, the Interest kicks in. This allows us to ensure that we have the skills we need for our local society to function.
These are six valid reasons to attach a nominal Interest rate to a Student Loan.
I will directly address my opponent's case in my next round, and I look forward to his rebuttal and/or capitulation in the next rounds!
For now, the resolution has been firmly negated.
VOTE CON - We paid our own way through college!
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"For now, the resolution has been firmly negated", my opponent concluded. I would like to point out that the opposition is begging the question, and I would like to respectfully ask him to refrain from declaring himself the victor at the end of any round. Interestingly, the very last thing my opponent said was this: "Vote Con - We paid our way through college!". Although my opponent’s last comment is tangential to the question at hand, and was likely intended as a throwaway remark, I would like to say a few words about it:
There are reasons that tertiary study is largely subsidised and that student loans exist; one of those reasons is to ensure that higher education is not the exclusive domain of the rich and privileged. This wasn’t always the case; in Victorian-era England, tertiary education was indeed limited to the wealthy and powerful, and it ended up in what was essentially an elitist, class-based system. It was largely agreed that a societal system in which it was very difficult to be upwardly mobile on one’s own and outgrow the financial and social environment one was born into was not a good system. We hence try to give people the opportunity to out-grow the negative circumstances into which they were born, essentially through hard-work and diligence. This is known as ‘equality of opportunity’ (not to be confused ‘equality of outcome’).
Additionally, any field - doctors, nurses, lawyers – should aim to ensure that the people who make up that field are representative of the communities from which they come, as those are the communities they will most likely be serving. Opening these fields to candidates from an array of different socio-economic backgrounds is one obvious way to achieve the diversification required for a field to adequately represent its community... and of course; any individual student can still pay their fees up-front, should they choose. That option remains.
Regarding my opponent's introductory statements, and the numbered points that followed:
Firstly, my opponent is confusing terms; the ‘lender’ is the party that lends money, the ‘beneficiary’ (or ‘debtor’) is the person to whom the money is lent. I am not trying to nit-pick, but it is important that we get the definition of these terms correct.
Yes, I am arguing that it is unethical for a government to seek to profit off any particular demographic it governs, and this includes students. I content that it is unreasonable for any government to expect their student to pay back interest on an educational loan. My opponent goes on to pose the rhetorical question about this contention in the form of “…(Why), because they can’t afford it?”. Yes. Obviously during a period of time in which the beneficiary cannot afford to pay back anything, it is unreasonable to expect them to pay back that loan, and it is unreasonable to add interest to a loan during a period of time in which the beneficiary is unable to pay anything back. It is unreasonable for me to expect anyone to do anything that they are guaranteed to be unable to do. That is practically the definition of ‘an unreasonable expectation’.
K-12 students owe a debt to society in a very real sense, but the government must not attempt to profit from that ‘debt’. We understand that as members of a civilised society, there simply must be a bit of room for push-and-pull with regards to economics and education, and for consideration towards the plight of any given individual in that system at any given time; this is to allow society to grow and flourish in a broad sense.
1) My opponent states that I must convince the reader that “for some reason, ‘students’ are a group that should receive special treatment in the form on no-interest loans for study”:
Students ARE special in this way, because full-time students are unable to earn a wage during their period of study. In the same way that is unreasonable to consider a severely disabled person as being just as capable of earning an income as the average person. This is the whole reason we make these distinctions between groups with regards to their economic viability. Both groups are at a significant economic disadvantage, relative to the rest of the population, at least for some length of time. If it is reasonable to give special social welfare considerations to people who are disabled and unable to earn an income, then it is only logical that we extend this same consideration to other groups of people who are equally as economically nonviable.
I would further like to clarify that ‘NORMAL’ is not interchangeable with ‘REASONABLE’ or ‘ETHICAL’. It’s ‘normal’ for people to die in traffic accidents. It’s 'normal' for politicians to be murdered in some parts of the World. That doesn’t mean it’s reasonable, nor does it mean it’s ethical. I chose my words carefully and they are the words that I mean to defend. I did not say it was abnormal to pay interest on a loan.
I must skip 2), 3), 5) and 6) for now due to issues with character count, and will address them in the next round.
4) Here my opponent is making a vague point about how the government should be slapping students with an interest rate on their student loans as a means of preparing them for the ‘Big bad Real World’. Let me just make a few observations first: A U.K. Study finds that suicide rates in tertiary students has reached an all-time high. A Michigan study reveals suicide as the 2nd highest cause of death for university students, after traffic accidents. The study also reveals that one of the most significant factors for depression in those students was ‘financial concern’. The American Association of Suicidology has previously stated in a report that “There is a clear and direct relationship between rates of unemployment and suicide… Similar findings have been documented internationally." and states further that “Economic strain and personal financial crises have been well documented as precipitating events in individual deaths by suicide.”
With that in mind: my opponent argues that what students really need – students, who could come from any ethnic or cultural background, be in any economic situation, be of any age, from any country, have any level of life experience, and so on – what they really need is a good dose of financial stress, courtesy of the government. Would my opponent also argue for the regular government-sponsored spanking of children under the age of six in order to toughen the little snowflakes up a bit? It is absurd to claim that something that is generally considered to be bad for individuals is somehow good for this particular group of individuals.
From a purely economic perspective; having one’s debtors commit suicide is not good for business.
To re-iterate: It is reasonable to assume that students in high-tier education programs are already learning enough, without needing some kind of ‘kick in the backside to remind them of the realities of life’ courtesy of the government. Placing a psychological burden on a student in the form of a flag-fall interest rate that starts accruing the very moment they begin studying can hardly be regarded as a healthy strategy for ensuring long-term mental stability in a student, given that financial stress is so often quoted as the main source of stress amongst students.
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To be very crystal clear here - just because you've decided to dedicate your life to enriching society through your knowledge of the Beatles, Popular Music & Society, doesn't mean that society should automatically pay you for it. You are not ENTITLED to funds for this.
Instead the Government agrees to lend them money. But in doing so, it is entirely reasonable for them to place terms on that loan. For starters, we absolutely want to have the loan paid back. Interest is a great incentive to encourage the borrower to, not only pay the money back, but to do so in a timely manner. If they DON'T pay the loan back, the interest accrues, and eventually makes the initial sum much much larger.
All of these methods, as a Government, protect my investment - but they only work if Interest can be added to the loan.
BUT the Government is careful not to set the price so high that it hurts its citizens, and the money it makes allows the asset to grow, creating jobs and even training opportunities for University graduates who can do a course on "how the Sausage links us together". (A real class PRO wants us to lose money allowing Students to take)
Here are some quick reasons why not:
1. Students are terrible at paying money back. As my last round showed, a significant percentage of them will NEVER pay the money back. PRO supported this by showing that sometimes, (tragically) students die - those students will certainly never be paying anything back.
2. The rate of Interest charged over the amount of time the loan is given, means that the Government makes a net loss. Had they elected to not give that money out at all, but rather just stick it in a bank and accrue interest, they'd make much more money.
PRO supported this theory by stating that Banks would never agree to loan money at those terms - why? Because Banks exist to MAKE money, and those terms don't make money.
3. The Students loans are only a small part of the revenue the Government pours into Tertiary education. As shown by the graph in my previous round. Whatever scraps the government makes from a loan, are more than offset by the huge loss it makes in the rest of its investment.
Secondly, in the UK study he's cited Mental Illness is given as the major cause, and NONE of the five recommendations from the reserachers have anything to do with reducing interest on loans.
So actually supports my contention that this has less to do with the Interest, and more to do with the fact you took out a massive loan to pay for your useless Equestrian Psychology Degree, and now you've realised that Mr Ed was just a TV show.
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