What Does the Torah Saying about Forgiving Student Loans?
Student loan forgiveness has evoked great discussion since President Biden announced it. Religious groups have made arguments for and against it. What does Jewish tradition say?
It says we should repay our debts. The Jewish sages make that point frequently and emphatically. But that’s not the entire story. Other considerations matter as well.
These considerations reflect the values and needs of a culture. In a healthy society, loans are given and repaid. They strengthen bonds of trust.
But in an unhealthy society, debts divide and engender distrust. They can become a source of manipulation and destruction.
If we are to return to a healthier society, here are a few of the Torah values to guide us.
1. "You shall not place a stumbling block before the blind” (Leviticus 19:14): This verse seems straightforward. You should not place an obstacle before a blind person because it might trip them.
But the verse is about much more than physical blindness. What about financial blindness?
Many people are financially illiterate. They do not know how loans balloon, interest compounds, and debts grow.
There is an information asymmetry, especially with college students, and any lender who encourages a financially blind person to take a dangerous loan has undermined this verse's imperative.
Of course, the borrower has a responsibility to learn. We should not sign documents we do not understand.
But in the case of student loans, universities and government agencies encouraged students to take them. They took advantage of the financially blind.
I saw it happen to many of my seminary classmates. Even if we do not agree with completely forgiving those loans, we need to take into account the context in which they were encouraged.
2. “If you take your neighbor’s garment as security [for a loan], you must return it to him before sunset. This alone is his covering, the garment for his skin. With what shall he sleep? Therefore, if he cries out to Me, I will listen, for I am compassionate” (Exodus 22:25-26)
There's a reason Judeo-Christian societies no longer have debtors prisons. Debts can destroy a person.
Without any regulation, a debtor could lose everything, including clothes to wear and a blanket to stay warm.
Every human being is created in the image of God. Today, if a person has to choose between repaying a student loan and getting life-saving surgery, the choice is clear.
3. "At the end of every seven years you must cancel debts. This is how it is to be done: Every creditor shall cancel any loan they have made to a fellow Israelite." (Deuteronomy 15:1-2)
This verse has been cited repeatedly by those supporting student loan forgiveness. And you can see why. According to this text, Jewish law mandates the cancelation of debts every seven years.
But there's more to the story. Scholars doubt whether the law was ever implemented because it is so impractical.
If a lender knew debt could be forgiven in seven years, they would stop making loans as the seventh year approached.
In some Jewish communities, it became customary for a lender to sell their debt to a non-Jewish person during the seventh year and then buy it back for a nominal sum when the year was over.
The person who owned the debt during the seventh year would collect a minimal fee and give all the repayment proceeds collected during the year to the original owner.
Of course, this scheme strikes some as legalistic, but it did make it possible for lenders to continue to make loans without fear of those loans never being repaid.
Instead of taking this verse literally, I look at it as establishing limits for debt collection. Debt should not be so large as to cripple us, and we always need a way to ensure we do not need to take self-harming measures to meet them.
In a perfect world, we would not have any debt. But we live in the world as it is, even as we strive to improve it.
In such a world, we need room for compassion alongside justice. Figuring out the best way to reach these ideals is a never-ending quest.
What do you think?