Beat on the brat

A lot of people have really strong feelings about President Biden’s plan to forgive up to $10,000 in federal student loan debt for individuals earning less than $150,000 a year.

Based on my social media feed, the debate pretty much runs along partisan lines: Democrats support the idea and Republicans vehemently oppose it.

From what I can gather, each side is flooding Facebook, Twitter and Tik-Tok with two very basic themes to support their arguments and position. Democrats are relying upon the virtues of kindness and empathy, castigating Republicans as selfish and mean-spirited. Just because I struggled to pay off my student loans, does not mean I think that other people should struggle to pay off their student loans.

Republicans, on the other hand, are trumpeting the virtues of personal responsibility, arguing that the loan forgiveness simply transfers debt incurred by someone else onto the backs of hardworking taxpayers who are already suffering under record-breaking inflation.

On the surface, I can see the merits of both arguments and it’s easy for me to see why the debate has become so heated and intense, but that debate – from both sides – does very little to address what is a very real problem in this country.

I get it. Republicans are playing the elitist card. Isn’t it lovely that Johnny or Susie was able to go to Harvard or Yale, but how about the hard-working people who went into the trades instead of college? It doesn’t take much to stoke that fire. There is always a not so hidden layer of resentment just below the surface when discussing college education among the working class.

Democrats are quick to fire back that the world needs engineers, architects, chemists, doctors, nurses and pharmacists; and that the cost of the necessary education has skyrocketed, making it almost unbearable to be saddled with a debt that could take as much as 30 years to repay.

Again, I understand the validity of both of these points, but I don’t see how those arguments – and especially Biden’s plan – really address the fundamental problems: the crippling cost of higher education and the completely bungled student loan process itself.

Before we go any further, a quick bit of disclosure. I have two sons, one did not go to college but is doing very well as an auto-body technician in an employee-owned firm with insurance, a retirement plan, paid vacations and sick time. He is learning new things every day and building his skills. My younger son chose to attend a private university in North Carolina and majored in fine arts. He is also hard-working, and is employed in the service sector. He will likely benefit from President Biden’s student loan forgiveness plan.

Both of my kids made their own choices. Laura and I obviously advised them, but ultimately they each chose their own path and understood that they are responsible for their own choices.

I made lots and lots of mistakes as a parent (I still do), but I like to think that we raised our kids to be responsible, hard-working and decent young men. It looks to me like those lessons worked . . . so back to the national argument.

Let’s first pause, however, and consider a couple of things:

  1. President Biden’s plan only forgives $10,000 of a student’s “federal loan” debt. This is a fraction of the debt that most college kids rack up in pursuit of their education. People like my youngest son will still have a ton of debt upon finishing college. No complaining, and yes, he is responsible for that debt. not you and me.
  2. We are all Americans and should be at least somewhat concerned about the well-being of our fellow citizens.
  3. In the United States, we have many taxpayer-supported programs that provide short and long-term assistance to all kinds of people across the entire economic spectrum. We routinely provide debt forgiveness to major corporations and every individual is able to file for various versions of bankruptcy as a final resort if they find themselves unable to cope with their debts.
  4. I know what you’re thinking: if someone files for personal bankruptcy, it is their creditors – not the taxpayers – who get screwed. Yes and no. Those creditors turn around and file those losses as tax write offs. So, yeah . . . the taxpayers (you and me) subsidize those losses.
  5. Yup, Biden is playing politics with this issue, making his decision just weeks before the mid-term elections, when Democrats are poised to perhaps lose control of the House and maybe the Senate. Imagine that. A politician playing politics. The nerve of that guy. (Remember, Biden talked a lot about this student loan relief idea while he was on the campaign trail.)
  6. The way federal student loans are structured, the government reaps plenty of interest (profit) from borrowers. Even with the $10k forgiveness, the government will still be making a profit on the repayments.
  7. Let’s also remember that FEDERAL student loan debt cannot be discharged by bankruptcy, like other kinds of debts.

Republicans, in my opinion, should tread a bit carefully on this topic without bloviating about “rugged individualism,” “personal responsibility” and debt repayment.

President Donald Trump’s businesses (casinos and hotels) filed for bankruptcy (more than once). No, he did not file personal bankruptcy, but his businesses sought bankruptcy protection during the days before he was an elected official. The media and other candidates harshly criticized Trump for seeking bankruptcy relief.

Then candidate Trump defended the move by arguing that “businesses often have to file for bankruptcy and that filing for bankruptcy was a financially sound move each time he did it.”

On this point, I agree with Trump. I also believe bankruptcy protection – whether Chapter 11 for a business or Chapter 7 or 13 for a person – should be a last resort and come attached with some consequences, such as determining future credit worthiness.

The meat of the matter

My friend Scott Jalbert wrote a piece about this subject on his Facebook page. It was one of the most cogent pieces I have seen about this issue. Scott and I, for the most part are politically aligned. I would describe us as center-right individuals. It would appear that we both tend to believe that the government that governs least governs best.

 Scott made several points on his post. 1.) That the ease and availability of federal student loans has allowed colleges and universities to jack up their tuition rates to astronomical levels while stockpiling huge endowments. 2.) The federal student loan program, itself, is fraught with bureaucratic gobbly-gook that is both confusing and misleading. 3.) There is a fundamental absence of reasonableness when it comes to lending money for education. (No bank in the world would allow me to borrow $2 million for a summer home on Rangeley Lake) Yet, with the backing and guarantee of the federal government, student loans are dispensed like candy at a street festival.

“I went to college 30+ years ago and since then public college tuition has increased by 200 percent,” Scott wrote on Facebook. “Private college [tuition has risen] by about 140 percent. It went from something that we could pay off by working summer and school-year jobs to a mountain of debt that takes 20 years to pay off.”  https://www.facebook.com/scott.jalbert.3

“Remove the federal government from the college business.” Jalbert continues. “Force colleges to enroll the best and the brightest instead of packing campuses by enrolling everyone to meet quotas and to boost profits. Have students secure loans from private lenders without government intervention. Stop the vilification based on career choice and stop applying the pressure that everyone should go to college. Period.”

An idea for consideration

I am empathetic to the plight of young college students and their families, but I also know many other young people who did not go to college and are also struggling during these tough economic times. Where is their bailout?

If I were president (now there’s a scary thought), I would propose the following: 1.) Immediately freeze interest rates and set to .5 percent for all student loans (private and public). 2.) Establish a commission to review and recommend changes to the student loan process and 3.) . . . well, here’s where it gets interesting.

I would make available up to $10,000 of student loan deferment for those borrowers who are college graduates in exchange for their commitment to pay back those funds through public service.

My plan would require 10 hours per week of public service, which could be through enlistment in the military, the Peace Corps, the Red Cross, AmeriCorps, Habitat for Humanity or many other programs. It could also be as easy as volunteering at a soup kitchen, a homeless shelter or helping remove litter from public roads and highways. This commitment of 10 hours per week would last a minimum of two years.

This way, we all have some skin in the game. I would also offer up to $10,000 to any American who wants to pursue non-traditional educational opportunities, such as apprenticeships.

The reason we establish governments is to make it easier to survive and thrive. Government provides for a common defense, public infrastructure and education. Imagine what the world would like without a government that addresses the needs of all of its citizens.

The money you have in the bank would not have the protection of federal insurance, there would be no ambulance if you begin having chest pains. There would be no public roadways or highways.

We have laws that prohibit price gouging, perhaps it’s time to examine the pricing practices of both public and private colleges and universities. It’s just a thought, nothing more and nothing less.

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