Why Forgiving Direct Student Loans
Is Inadequate
While there seems to be a corporate outrage that the United
States may forgive part of direct student loans, the very fact is that the
solution is only a relief and not getting to the root of the problem. It will
continue to plague us unless we root out the problem.
What the situation was a half
century ago
I can personally vouch
for this situation. Thanks to Lyndon Johnson’s Great Society, the idea was to
boost more people into the middle class, which at that time was about half the
population. The idea was to invest in its citizens and get back more taxes as
more payers would be earning more money and able to contribute more taxes.
Ironically, as then it was merely a war on poverty, now we’re in a global
economy and need a larger middle class to compete. Then we imported only tea,
coffee, and bananas, only because they don’t grow here. So, many were able to
go through college with no debts with basic educational opportunity grants, now
Pell, paying for the tuition.
At the time, I was under survival benefits from the Social
Security system, which enabled me to go virtually free with the benefits
running until I was 22. I experimented for eleven years at Penn State, always
trying to get a major which would make me employable.
Now, what is the difference between a Pell grant and
forgiving student loans? Actually, forgiving student loans often means that the
student had graduated, not a given for a Pell grant. There is a dropoff rate,
which would render those grants wasted. I know of some who never graduated during
my undergraduate days. I won’t even mention other useless grants like corporate
welfare, which has grown considerably over the past half century.
How it deteriorated
Even during my time at Penn State, the state kept cutting
its support of the state colleges. There was a hostility toward higher
education, even in the late 1970’s. Consequently, tuition soared. When I
started at Penn State Wilkes-Barré, tuition was around a thousand a year. Since
then, prices have risen six times, but today it costs over eighteen thousand a
year at Penn State. The states don’t seem to mind paying for “prison
industries” instead of investment in their residents.
After correcting for abuse of bankruptcy, a reform allowed
bankruptcy of student loans only if the former student could show hardship, and
even then only Chapter 13 (which requires an income). The plaintiff had to wait
five years without any sent payments to file for Chapter 7 (which then
discharges the loans and takes whatever assets to pay for it). Instead, in violation
of equal protection, Congress made it almost impossible to file for bankruptcy.
Repealing this last law and reverting to the earlier compromise would ease the
situation.
Over the past half century, corporations have shipped jobs
overseas, and the folly of it has reduced the middle class and the ability to
pay back those same loans. The recent shortage due to the supply chain only
further exposed the folly of making goods overseas and making us vulnerable to
shortages. The same goes for importing labor over American labor. I’ve seen
many foreigners making loads of money who come to me to do their taxes. I once
thought that Americans were too lazy to become educated and skilled for those
jobs paying over one hundred thousand a year, but now I think importing
foreigners for cheaper labor as part of the mix.
Conclusion
It’s obvious that forgiving some student loans doesn’t solve
the problem. This country cannot compete in a global economy with a shrinking
middle class and worsening inequality. States don’t invest in their higher
education, more must take out student loans, corporations make the jobs as “not
what you know, rather who knows you”, and finally not allowing the poorest of
the students to declare bankruptcy. Then the predators charge usury because the
debtors cannot shop around for better rates nor cancel the debt. Another aspect
is employers’ refusing to hire those “overqualified” for their jobs, even when
there’s a labor shortage.
My parents instilled in me that working harder brings
rewards to get ahead in life. Should employers fear educated workers, then it
discourages these very workers to find suitable employment or to be stuck in
severe underemployment, and then slide into what I call the Alopexian Paradox.
I still believe that everyone has talents and should be encouraged to develop
them for our benefit. Unfortunately, the attitude today seems to be: I have
mine, I deserve it because…., and you don’t.
