Student-Loan Forgiveness Will Cover Non-Education Purchases, Say, Newer Cars

On the basis of fairness, the editors of The Wall Street Journal and numerous other policy analysts and pundits have rejected student loan forgiveness plans, and rightfully so.

By forgiving loans, taxpayers—many of whom make less money than student loan borrowers—take on the debt that was previously borne by students who voluntarily took out the loans.

But many who oppose forgiving student loans have failed to recognize how forgiving student loans can essentially turn into forgiving other non-educational purchases.

This is made possible by student loans, which have more enticing interest rates and payback conditions than personal loans and come with government subsidies and guarantees.

Consider a telling example of parents who, over the years, saved $30,000 for their child's college expenditures to show how the loan switch-a-roo can be pulled off.

The parents would also like a brand-new all-electric vehicle for when their child enrolls in college (or any other purchase).

At the auto showroom, they can obtain a loan with a 5 percent interest rate and 60-month payments (with the terms illustrative only).

However, their child can receive $30,000 in student loans over four years because of his college expenses (by proving simply a "financial necessity").

Which can be paid off over decades and will have a lower interest rate—say, 3 or 4 percent—after graduation (and just might be forgiven).