Occupy Student Debt campaign: Debtors’ Pledge

I wrote recently about the new Occupy Student Debt campaign, and the planned defaulting of student loan debt in protest. After my first post, I did some research into the particulars of the campaign… And I have even more to say on the subject now.

The Debtors’ Pledge boasts four principles that I’d like to comment on:

“We believe the federal government should cover the cost of tuition at public colleges and universities.”

I’m not necessarily opposed to this — many state governments offer this today, for high school students who study hard and get grades, participate in community service, and maintain good grades in college. The federal government also offers this for military personnel through the G.I. Bill. But let’s keep in mind, this isn’t free — it’s paid for by tax dollars. If higher education is a priority for this country, and we want to apply our tax dollars towards this goal, then this could be an option.

“We believe that any student loan should be interest-free.”

Again, there’s no way that this would be actually free. At best, the interest expense would be funded by taxpayers, because that money could otherwise be applied towards interest-bearing investments that would benefit the federal coffers and could be used for other purposes. But that’s a choice that we, and by proxy our representatives in Congress, can choose to make if it’s important to us.

“We believe that private and for-profit colleges and universities, which are largely financed through student debt, should open their books.”

In theory I agree. On a very cautious front, I’ll say that consumers have a right to only choose private and for-profit colleges and universities that are transparent about their finances. If we wanted to be more aggressive, we could say that any school who accepts government-subsidized student loans should be required to publish their financials. This gives universities the option of refusing government-subsidized student loans if they want to be secretive about their finances — and savvy consumers (students) could then make an informed decision to avoid schools who behave this way.

“We believe that the current student debt load should be written off.”

Here I absolutely disagree. To offer blanket amnesty to anyone with student loan debt would indirectly punish people who have been paying off their student loan debt as agreed, or have completely paid it off already. And as with any loan debt, the bottom line is that people knowingly agreed to borrow money and pay it back, by their own choice, as grown adults who should be held accountable for the credit decisions that they make.

Wiping the debt free now would reward those who may have made poor decisions about their higher education costs, and would be unfair to those who have been paying their debts as agreed. As an alternative, we could look to federally subsidize career paths that are in the public interest, such as the military, or civil service government jobs, or inner city public schoolteachers. Including student loan forgiveness could be part of the compensation package that entices graduates to choose these kinds of jobs over the private sector, if that’s a priority that we want our tax dollars going towards.

Ultimately I keep saying the same things — none of these solutions are “free” in the strictest sense of the word, and they would come at the expense of other possible uses of tax dollars… And many of them are purely intended to reduce contractual obligations that adults knowingly agreed to, because those adults aren’t happy with the consequences of their choices.

If we’re serious about building an educated workforce, the government can develop programs to encourage more people to get a college degree going forward, assuming we’re willing to have tax dollars fund these programs. But protesters demanding changes to erase current student loan debts and make future college education “free” are naive at best and willfully ignorant at worst.

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7 Responses to Occupy Student Debt campaign: Debtors’ Pledge

  1. Michael says:

    Honestly, I agree with this. Though there’s precedent for blanket debt relief (it used to be called a “Jubilee”), I think the reverberations through the financial system would be too unpredictable. I think there’s certainly room for a case-by-case consideration of debt forgiveness–there have been some unsavory practices out there–but an across-the-board reset seems a step too far. One thing I do take issue with is your emphasis on people’s “poor decisions.” It’s very difficult to make enough to get by these days without a college degree and very difficult to get a college degree without taking on an enormous debt burden–if you want to eat, pay rent, et cetera, you pretty much HAVE to take on debt whether you can afford it or not. Even if one manages to avoid taking on additional debt (hard to imagine, given the fact that 30 years of stagnating wages have forced Americans to use credit to make up the difference), college loan repayment still takes up a significant amount of post-college income–assuming you can even find a job. The system is clearly set up in a bad way for too many people. Reform is needed.

  2. gatoruptown says:

    Michael, thanks for your comment.

    My comment about “poor decisions” was referring to people who go get a Yale degree in philosophy (for instance) without making a concerted effort to earn scholarships, without a work study or part time job, just throwing that incredible expense onto a huge pile of student debt without considering the consequences… And then complaining that their student loan payments are too high and that they can’t get a job that will let them pay their bills.

    My point is that there are reasonable steps people can take to get a college education and a stable decent-paying job without getting hugely in debt in the process. As an example, my student loan debt for my junior and senior years of college, together with my Master’s degree, combined is less than ONE SEMESTER of the private liberal arts school our mutual acquaintance attended. But at least in his case, he knew what he was getting into and doesn’t blame “the system” for the massive student loan debt he incurred.

  3. gatoruptown says:

    (Note: a go into a lot more detail on my general feelings about student loan choices in general in a post I’ve already written, which will be published tomorrow. Stay tuned!)

  4. Michael says:

    Oh sure, there are always people who’ve made poor decisions and nobody should be expecting a free ride in life. But my concern is that we’ve gone to an extreme of telling people, “tough luck, sucker.” We can’t let a recognition of individual responsibility blind us to the existence of social responsibility–otherwise it’s just “devil take the hindmost.” Individuals are not only responsible for themselves but have a responsibility to each other as well. America works best when Americans work together and everybody benefits when everybody pitches in.

  5. […] Occupy Student Debt campaign, including its Debtors’ Pledge, has quite frankly gotten under my skin. The more I write about it, the more riled up I get, and […]

  6. hjh says:

    I have 200K in student loan debt and said f*** it. I haven’t paid 1 cent, defaulted on all my loans and am happier than ever. Life is too short, overgrow america and stay blazed 24 / 7.

  7. Bernard says:

    I graduated from dental school with 91K in debt in 2000. I now know people who are graduating from the same school with 400K in debt. I just do not know what is going on.

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