We need to understand, that anytime there is forgiveness, whether monetarily or otherwise, the loss does not disappear, forgiveness is only a transfer of loss. When Jesus tells the parable of the wicked slave in Matthew 18:21-35, the master is going to take the loss when he forgives the wicked slave. The wicked slave, however, is unwilling to take the loss to forgive his fellow slave. While forgiveness may seem free to the one receiving it, to the one offering it, forgiveness is costly. Similarly, if we offend one another, when we forgive we agree to not require of the offender anything to “pay back” the offense, but that means we agree to “take the loss” of the offense instead. True forgiveness is never free.
In our case, we can see how nice it is for the debtor to receive debt forgiveness, but who is taking the loss? With federally backed student loans, the federal government is not the lender, rather they are the guarantor of those loans. In other words, the federal government is simply guaranteeing the lender that they will get their money, if not from the debtor, then from the federal government. The lender is not going to be taking the loss on this debt forgiveness, rather the federal government is going to take the loss in paying the lender the amount to reduce the debt.