We hear a lot about student debt these days and many on the left are pandering to this voting bloc by suggesting that somehow student debt should be forgiven. They come up with all sorts of reasoning on how this might actually benefit the economy because then these former students would have more money to spend on other sectors of the economy thus creating a ripple effect that would stimulate more jobs and more wealth. Based on that logic I would propose that we also immediately forgive all kinds of debt. Why should you have to keep paying for the car you are driving? Why should you have to pay that mortgage every month?
Congress explicitly exempted student loans from any bankruptcy procedure and for good reason. How many students do you think would file for bankruptcy in the first three months after graduation? Anyone that did not would look foolish. That is not to say that you cannot get around this prohibition but it is difficult. Any good bankruptcy attorney can give you the blueprint to discharging the debt. It is normally referred to as the Brunner test.
In plain English, the Brunner standard says:
- the borrower has extenuating circumstances creating a hardship;
- those circumstances are likely to continue for a term of the loan; and
- the borrower has made good faith attempts to repay the loan. (The borrower does not actually have to make payments, but merely attempt to make payments – such as try to find a workable payment plan.)
So basically the student has to go to court and prove that they meet the criteria and hope the judge will grant them the ability to discharge the debt. Fortunately this is not a normal occurrence.
When politicians and students say their debt should be forgiven they don’t say who is going to actually repay this debt. Guess what, it is you and me as taxpayers in this country. Democrats in Congress and a few Republicans have not let those facts scare them away from trying. Cong. John Delaney (D-MD) has introduced H.R. 2366, The Discharge Student Loans in Bankruptcy Act, that would allow student debt to be treated like any other debt is a bankruptcy proceeding. As I stated before, the courts would immediately be clogged with recent graduates filing bankruptcy petitions.
I would also tell anyone reading this that they should get used to Cong. Delaney’s name because he has already announced that he is running for President in 2020. What his bill does not seem to address is the root cause of student debt. I believe that cause is based in the belief that students think they should be able to go to any school they want, no matter what the cost, and borrow the money to go there. It does not matter to them that they really cannot afford that school. In most cases there are less expensive state schools or even community colleges that would prepare them for the workplace but that is not in their mindset.
All to many of them graduate with degrees in things they enjoy but with little job prospects in that arena. I remember a few years ago meeting with Sen. Harry Reid (D-NV) on the topic of for profit schools. Sen. Harkin had a bill that would place severe restrictions on this category of schools. Sen. Reid was not inclined to bring the bill to the floor of the Senate and for some good reasons. He looked around the room, filled with about five staffers, and asked where most of you Ivy League poetry majors would be working if you did not have a job in the U.S. Senate? Obviously this was a bit of hyperbole but it was not far from the real point.
By most estimates there is now about $1.4 Trillion dollars in student debt. There are approximately 44 million American with student debt and the average montly payment for these debtors is $351. The delinquency rate is now at 11% and rising as more and more former students decide that either they cannot pay the debt or just refuse to pay it. The statistics get even direr when you realize that in 2012 71% of students graduating from a four-year college had student loan debt. Even more surprising is that students who qualify for Pell Grants (money given them because of financial hardship) are borrowing more money than those that do not get Pell Grants.
So how do we tackle this growing problem? I think the first step is to start educating young people about the value of money and the burden debt will place upon them in future years. All to many of them borrow this money so they can live very comfortable lives while going to college. This means a nice apartment or dorm room, a car to drive around in and pocket money to go out with their friends and enjoy life. Statistics tell us that fewer students are actually working while attending school. They get the money so easily without any consideration of what it will cost them to pay it back
The second step is to start looking at the rising cost of higher education. Universities seem to raise their tuition on a yearly basis and anytime Pell Grants go up or the amount you can borrow rises the schools believe they can raise the cost of attending. The salaries and wages of administrators and teachers at universities has risen way outside the rate of inflation and in many cases these professors spend very little time in the classroom. Instead they delegate that to Graduate Teaching Assistants. They are more involved in their own research and publishing to care about the undergraduate students footing the bill for their individual desires.
The third step would be to start looking at some of the curriculums offered. A degree in Medieval Art might sound good but what is the return on that investment for a student seeking employment in the real world. The political correctness of the academic community has spawned all sorts of odd classes that seem, to me, to have very little to do with a real world education. Let me list just 10 of the classes being offered that will certainly enhance your marketability in the job force:
The Phallus: Explore the role this part of the male body has played in society from the early, often sexist works of Freud to newer feminist theories. [Occidental College]
European Witchcraft: While so-called witches are still around today, you can learn about the origins of what people thought were witches and the often extreme and illogical measures they took to get rid of them. [Oneonta College]
The Lucifer Effect: Understanding How Good People Turn Evil: This course examines a question that many people ask themselves–how can good people do bad things? [MIT]
Mail Order Brides? Understanding the Philippines in Southeast Asian Context: As off-putting as it sounds to most people, mail order brides are a real thing, and students at this prestigious university can learn why the phenomenon exists and is so prevalent in the Philippines through this course. [Johns Hopkins
Daytime Serials: Family and Social Roles : Students in Wisconsin can take this course that explores the familial relationships of characters on soap operas–essential for those who just can’t get enough of their programs. [U of Wisconsin]
The Science of Harry Potter: Unicorns and magical spells might not be real, but this course addresses the magical happenings of the Harry Potter series through a scientific lens, applying physics to things like quidditch. [Frostberg]
Cyberporn and Society: With the Internet housing more porn that one could look at in a lifetime, this course explores the role of porn in the development of the web and the effects it has had on relationships and expectations. [U of New York – Buffalo]
Philosophy and Star Trek: Students who take this class will not only get to watch Star Trek, but delve into the issues the show discusses like time travel, a sense of reality, free will and more. [Georgetown]
Getting Dressed: While many students wouldn’t have made it to college without some idea of how to get dressed in the morning, this class takes it one step further and takes a look at what it really means to wear those Uggs or backwards baseball cap. [Princeton]
How to Watch Television: Though most of us are pretty adept at turning on the TV and vegging out, this course aims to teach students how to watch TV actively. [Montclair]
Now I could go on and on with this list. My favorite here was learning how to get dressed and wear a baseball hat backwards. I would not have known how to get by in life without those new skills being taught at Princeton.
The bottom line is the amount of student debts is a problem and we have to start finding ways to curb this need to borrow. We also need to start looking at the institutions and holding them accountable on both their costs and what they are teaching. Then perhaps we can get a grip on the rising costs of higher education and start to bring it back to reality.