Tuesday, October 11, 2011

Nontrepreneurism Part 2a Forgiving Student Loans

Richard Vedder of National Review Online does not mince words: Forgive Student Loans?
"Who would take the loss from the unanticipated non-repayment of a trillion dollars? If private financial institutions are liable for some of it, it could kill them, triggering another financial crisis. If the federal government shoulders the entire burden, we are adding a trillion or so more dollars in liabilities to a government already grievously overextended (upwards of $100 trillion in liabilities counting Medicare, Social Security, and the national debt), almost certainly leading to more debt downgrades, which could trigger investor panic.
This idea is breathtaking in terms of its naïveté and stupidity. The demonstrators say that selfish plutocrats are ruining our economy and creating an unjust society. Rather, a group of predominantly rather spoiled and coddled young persons, long favored and subsidized by the American taxpayer, are complaining that society has not given them enough — they want the taxpayer to foot the bill for their years of limited learning and heavy partying while in college. Hopefully, this burst of dimwittery should not pass muster even in our often dysfunctional Congress."
Of course, I am not cruel or inflexible: 

  1. Did you actually graduate college? (After year 2006?)
  2. Did you (or your immediate family) pay at least 51% of your tuition?
  3. Have you been current on each and every monthly loan payment, for a time period equal to the time you were in school? (Example: 5 years to graduate = 60 months of consecutive payments.)
  4. Are you currently working at a job that leverages your degree? (A very flexible definition.)

OK... Loan Dismissed
A big chunk of Student Loan debt, whether performing or not, belongs to the government anyway, and we, collectively, are the government, so this is a "cost" that we should be willing to pay.

Bottom Line: 
Let's hope that Vedder is correct about how our Congress might react. 

Doing the right thing (meeting your commitments/obligations) should be rewarded.

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