I wanted to write about student loan forgiveness since the idea has been floating around. I am not in favor of blanket forgiveness but I have another idea. We should let students work off their debts by working for charitable institutions.

Student loans really are causing big problems right now. They create a lot of stress for the people who owe money, whether they are able to pay or not. And as some critics have pointed out, myself included, much of that debt will never be paid back anyway (the trends and statistics are awful). But those who are saddled with unpayable debt are kind of locked out of many economic activities due to no access to credit. They are stifled, economically, and that is not good for them or the country.

But, with blanket forgiveness, there is the issue of moral hazard. How do you face someone who avoided debt by scrimping and sacrificing or who has been struggling for years to make minimum payments, and tell them that it was all for nothing and they should have just defaulted from day 1? What message does that send?

Also, ultimately, the US government money is OUR money. It is 1.5 trillion dollars! Do we want to forgive all that debt and not even get anything back for it? Normally in a default situation there is some type of negotiation that goes on. You may not get 100% of your money back, but you get something. At least a few pennies on the dollar. I think we can ask something of people who owe the money in exchange for debt forgiveness or cancellation.

So here is my idea. Let's allow 501(3)(c) charitable institutions to hire people who owe student debt and put them to work. Instead of paying them with real money, they send a record of hours worked to the government, and the government credits those hours (at some TBD pay rate) to the person's student loan debt. This would be voluntary for the charitable institutions and the people who owe money. Nobody has to participate. If you owe money and are making payments and have a good job, good for you! But if you owe money and don't have a job, or have a low paying job, maybe you can find a few hours a week to work for a 501(3)(c) and make your minimum payment every month that way. If your charitable organization doesn't want to deal with sending hours records to the government, no problem. Don't hire anyone on that basis.

This is just the sketch of the idea. I am not an expert on charities. Maybe it does not need to be restricted to 501(3)(c) organizations. I just picked that because it seems to be a clear cut designation. Either you are one, or you aren't one.

Image: Slightly cropped version of "Protest Sign08" by a.mina found on Flickr. Image License CC 2.0.