Last month, President Biden said that he’s still considering canceling some student loan debt; perhaps fulfilling his campaign promise to eliminate $10,000 per borrower. For anyone losing sleep over the massive pot of outstanding student loan debt in the U.S. economy, that might seem like a good thing. But the reality is that a move like the one being considered would likely result in a worsening of circumstances, with tuition rising more quickly than before and borrowers quickly amassing debts in excess of the level we see today.

The driver of that counterintuitive dynamic is a phenomenon called moral hazard. Moral hazard describes the nature of people to take excessive risks when they are protected from the consequences of their actions. In this case, a student loan cancellation event, like the one being considered, creates an implicit guarantee that future students won’t be on the hook to pay back what they borrow. Students choosing where to enroll, how much to pay and how much to borrow for future semesters will have in mind that the amount they’ll actually pay is likely less than what they signed up for. Economically rational people will respond to that dynamic by choosing more expensive programs of study and borrowing more than they would have otherwise. The result: a pool of outstanding student debt growing even more quickly than before.