By Steve Segner
In this crucial national election year, the issue of forgiving student loans under the Biden administration’s policy has become significant and widely discussed.
This policy has been met with both praise from loan recipients and criticism from those currently repaying their loans or who have already paid them off.
The historical use of government credit to promote government policies is a fascinating and often overlooked aspect of our past. In 1965, the federal government began guaranteeing student loans by banks and non-profit lenders, establishing the Federal Family Education Loan (FFEL) program.
This history resonates with the government’s earlier initiatives to encourage settlers to move west and start farms on previously Native American lands.
For instance, in 1804, France officially transferred its claim to the Louisiana Territory to the United States, effectively doubling the size of America.
This transfer made millions of acres of land available for future growth, with the aim of encouraging young adults to move west to federally owned lands and begin farming.
The government’s enactment of the Harrison’s Land Act of 1800 reduced the minimum amount of land that could be purchased and introduced a credit feature, allowing thousands of farmers to begin new lives but also instilling fear of the government that persists to this day in the West and Midwest.
Similarly, the government’s use of credit to encourage growth and upward mobility through the federal student loan programs, such as the Public Service Loan Forgiveness (PSLF) program, has had varied effects. While it has helped many, it has also caused resentment in others, echoing the mixed results of the historical land loan policies.
Looking back at history, it is clear that government lending policies can have both positive and negative consequences. Lessons from the past should guide our current policies, and considering alternatives such as providing free higher education in certain fields could be beneficial in avoiding burdening future generations with government debt.