Monday, February 17, 2020

Student Loan Debt and Personal Responsibility.



We see a fair amount of discussion in the news as of late concerning federal student loan debt. Justifiably, loans taken out for college educations are a monstrous portion of the outstanding debt presently owed by Americans. I can see why many politicians claim that they’ll work to erase lingering college loans for voters. It sounds enticing to say that college debt can be magically deleted with the wave of Uncle Sam’s hand. Let’s look at the numbers as of 2018:
  • Total federal student loan borrowers: 43 Million People
  • Total outstanding federal student loan debt: $1.4 Trillion
  • Average amount currently owed by a federal student loan borrower: $47,671
  • Borrowers actively repaying their loan: 18.6 Million (43%)
  • Total number of federal student loan borrowers in some form of default: 11.3 Million (26%)
Let those numbers gestate in your brain for a moment so that you can fully understand their sheer size. The current amount owed in federal student loans is $1,400,000,000,000.00. Wrap your head around that number. It’s a number so large that the human mind can’t fully visualize it. Of the total US population, presently 327 Million citizens, 13% of them possess forty-seven thousand dollars of student loan debt each.

As you can see, the federal student loan debt crisis is frightening. This doesn’t even consider the number of private student loans, nor loans taken against personal lines of credit. It’s a gargantuan figure, not one to soon be erased. And you know what?

It’s your own fault.

I can’t muster even an ounce of pity for someone with student loan debt.

Taking out a loan for college is a personal choice. Just like buying a car, or mortgaging a house, or picking a dog at the local animal shelter – getting a student loan is your responsibility. You made that decision to borrow an average of forty-seven thousand dollars. You have neglected to repay that loan. You have chosen to default on the credit extended to you, an amount fully funded by your fellow Americans’ tax dollars.

I can’t state this any more plainly. Your student loan debt is your personal responsibility to repay.

When I hear a politician promise to erase the student loan debt of voters, what I really hear them saying is “I want to buy your vote.” Such promises are cheap, hollow, and desperately short-sighted. Carry this process to its logical conclusion. What happens if someone’s federal student loan debt is erased? Well, that debt doesn’t just disappear; the borrower’s responsibility to repay their loan has simply been forgiven. The money they borrowed is still outstanding to the US Treasury. If the buyer doesn’t repay it, then the federal government takes a loss on the loan.

Can you imagine what would happen if the Federal Government took a $1.4 Trillion loss? That’s $1.4 Trillion flushed down the drain, with no hope of that money ever being collected. It’s a loan fully funded by federal tax dollars that’s simply pissed away, never to be seen again.

What would happen if you simply failed to repay your auto loan? How about your mortgage? You know precisely what would happen. Your automobile would be repossessed, and your home would be foreclosed upon by your lender. Debt doesn’t just go away. Monies owed are always owed, up to the point that they have been paid in full and satisfied. If a politician promises to erase student debt, then they’re completely ignoring the damage that would do to our country. It’s gross negligence of the highest caliber.

The federal student loan crisis is the next fiscal bubble waiting to pop. Consider what the mortgage crisis did to our economy in 2008-2009. The massive amount of mortgage lending debt, coupled with the reckless gambling undertaken by the financial sector, sent our economy into a tailspin the likes of which we’ve never seen before. Ultimately, the US Treasury spent $439 Billion salvaging the banking and auto industries from certain collapse. Thankfully, the treasury’s efforts to assist the economy eventually resulted in a net profit of $3 Billion. Do you understand how scary the federal student loan crisis is in comparison to the 2008 financial crisis? The erasure of merely half of the outstanding federal student loan debt, with no hope of it ever being repaid, would make the 2008 economic downturn look like a field trip to Disneyland. The student loan bubble will eventually pop, and we’re collectively in for a rude awakening when it does. It's just a matter of time.

Beyond the numbers, the repayment of federal student loan debt is a reflection of individual accountability. When you sign a promissory note to repay a student loan, you’re wagering your personal reputation against your ability to securely repay the American People. If your obligation to repay what you promised is eliminated, then what good is your reputation? Your word would be worthless. Anything you further promised would be as feckless as the lies spoken by politicians to buy your vote. Your name, your reputation; they mean something in this world. You not only owe it to your fellow Americans to repay your debt to them, but you also owe it to yourself to be an honorable human being. At the end of the day, all you have is your good name. Consider the millions of Americans that have repaid their student loan debt. They worked tirelessly to satisfy their loans and followed through on their promises. How do you think those people would feel if the borrowers whom neglected to repay their debt got a proverbial 'Get Out of Jail Free' card? The subsequent discord that would erupt would not be repairable, I suspect. Even worse, what of the politicians that promise to forgive student loan debt -- will they be repaying all of the trustworthy individuals that previously satisfied their loans? What's to be said of the decent American? Not a lot, apparently.

You have to ask yourself the follow question.

Do you want to be remembered as a patriot… or as a phony?

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