The Other McCain

"One should either write ruthlessly what one believes to be the truth, or else shut up." — Arthur Koestler

Gillespie On Forgiving Student Loan Debt

Posted on | November 20, 2011 | 9 Comments

by Smitty

I like all three of Nick’s arguments, but he’s focusing on the Economics:

Let me add three more:

  • Student loans are not a federal task, and never were. The federal government should be forcibly precluded from queering the education market any further. If Virginians need student loans, we should be handling that in Richmond.
  • This is a transparent vote buying scheme. Not only will this act of Roman-style patronage turn into votes for whoever is waiving the magic wand, those grateful little creatures will hail their caesar and support his re-election as motivated campaign workers.
  • This is yet another brick in the wall of the mausoleum of separation of powers. This Administration continues to undertake tasks that, if not rightfully those of the States, certainly belong to the Congress. I guess Congress may be too busy figuring out how to rig legislation to maximize portfolio values to notice.

via Veronique de Rugy

Update: linked at Eternity Matters

Update: picked up at Chockblock’s Weblog.

Some liberal wag held up a sign “Pay your taxes teabaggers!”. I propose we tell him and his freinds in the tents to “Pay back our money, deadbeats!”. That’s what a loan is after all.


9 Responses to “Gillespie On Forgiving Student Loan Debt”

  1. Liz
    November 20th, 2011 @ 1:50 pm

    I have a few questions for all the college grads whining that Daddy Gubmint should forgive their student loans:

    (1) If you’re so smart, why did you go into six figure debt for a degree in, say, Women’s Studies or Sociology? Or even law school, or science?

    I mean, I figured out that grad school (in *anything*) is a bad idea when I was sixteen. I realized that a liberal education is a wonderful thing, and often more profitable than the “practical” majors people keep recommending, but not worth going into debt. 

    And all this was because I actually looked at the numbers the colleges were giving to see if they were true. How hard is that? 

    I graduated without debt – and still sometimes get mocked for not going to a “prestigious” school.

    I could possibly be more sympathetic if these people (1) admitted they’re not as smart as they thought they were and (2) stopped using me as an example of how unfaaaaaair the system is.

    Yes, *I* went to a no-name college with no debt. (I think I got a great education, thanks to the seemingly little known honor college system.) I have a decent job. *You*went to a “prestigious” college, racked up massive, non dischargeable debt and now have no job prospects.

    That doesn’t mean the system is broken and we all need socialism. It means I made better choices. The meritocracy, inasmuch as it exists, is not broken simply because you yourself failed.

    (2) If an 18 y/o is “too young” to understand the consequences of debt, then why are they claiming that 18 y/os are old enough to drink alcohol?

    If an 18 y/o is too young to manage his financial affairs, then why does the left claim that his 14 y/o sister is old enough and mature enough to have an abortion on her own?

    The left has a very funny idea of when you’re an adult. Never, seems to be the basic answer.

  2. Anonymous
    November 20th, 2011 @ 2:24 pm

    If you forgive their student loans now;  their car loans, mortgages loans, and credit card debt is sure to soon follow.  

  3. smitty
    November 20th, 2011 @ 2:54 pm

    Sure, as additional votes are needed.

  4. What could go wrong with forgiving student loans? | Eternity Matters
    November 20th, 2011 @ 3:00 pm

    […] Lots.  Via Gillespie On Forgiving Student Loan Debt: […]

  5. Danby
    November 20th, 2011 @ 5:20 pm

    The real problem with student loan debt is that it is non-dischargable through bankruptcy.
    Back in the 1990’s, the banks  had a problem with student loans. The problem being that an unsecured loan, to a student at a top-tier school was a debt of several times the average earnings of a college graduate. It made good financial sense for some of those recent graduates to take the credit hit (particularly if their credit was already bad), of going to bankruptcy court to get the loan discharged. While it wasn’t exactly a common strategy, it was too common for the bank’s comfort, particularly in the majors that didn’t have great post-graduation income prospects, like library science and journalism.
    So they went to Congress and demanded that student loans be exempted from bankruptcy laws. Congress, being full of fools who don’t understand the regulatory nature of bankruptcy laws, complied. Suddenly, banks no longer had to be careful about who they were loaning money to, what they were loaning it for, or even whether the loan made sense. Anyone could get a student loan, because the bank could hound a young person for the rest of his life, racking up interest charges, destroying his credit. Student loan debt is dischargable through death only.
    This lead to a huge, rocket-powered increase in the amount of money lent, and a huge increase in the cost of going to college, by removing almost every restraint on demand, including price pressure.

    So the answer is not to “forgive” everyone’s student debt, but to make student loans dischargable through bankruptcy, just like every other kind of loan. Then debts that cannot be paid won’t, but they wouldn’t anyway. And the banks would have to actually vet their student loan candidates, to make sure they got repaid. This would necessarily restrict the number of student loans and the amount of money loaned. And by reducing the demand for college diplomas, would do a lot toward making a college education affordable.

    When I went to college, in 1979, I paid for a 9 months of education and living expenses with a full-time summer job at minimum wage, and a part time (<10 hours/wk) job during the school year, also at minimum wage.  That's essentially impossible now.

  6. Anonymous
    November 20th, 2011 @ 6:57 pm

    The problem with allowing people to get out of repaying student loans is that the government backstops them. There should be no government support for student loans if the banks are on the hook for student loan defaults the cost of higher education goes down.

  7. Don’t bail out Student Loans « Chockblock’s blog
    November 20th, 2011 @ 8:38 pm

    […] act of Roman-style patronage turn into votes for whoever is waiving the magic wand” –R.S. McCain on why we don’t need to help the […]

  8. Christy Waters
    November 20th, 2011 @ 10:10 pm

    Now THIS pisses me off. I’ve worked my ass off to get out of debt, including student loans, credit cards and car note. I’m debt-free and won’t go back. So I guess that makes me an evil, racist conservative because I expect these worthless, vermin-infested, slack bastards to do the same!

    OK, I have to end this comment now, or I’m going to cuss an everlovin’ blue streak.

  9. Adjoran
    November 21st, 2011 @ 3:10 am

    Gillespie is incorrect that banks “were made whole for their losses at taxpayer expense” or words to that effect.  All the major banks who received TARP I “bailouts” repaid their loans if full – many did not need or want the money in the first place, Bush’s Treasury Sec Hank Poulson forced them to do it so those who did need the loans would not suffer in the market for taking it.

    Another argument against forgiving OR guaranteeing student loans is practical:  they don’t help.  Every time student loan limits increase or eligibility expands, tuition and fees increase enough to absorb it and more. 

    You can’t blame the colleges, really, it only makes sense for them.  People were buying your product for $5000 a year.  The feds come in with grants, subsidies, and loan guarantees to offset half that cost.  Of course the prices go up to suck up the subsidies for the school.

    But it shows why federal involvement cannot help the students, only the colleges.  And if aid to the school is justified, it should be direct, shouldn’t it?