There are logically two reasons why student loans are defaulted: (a) the former student is unable to pay them, as a result of insufficient income; and (b) the former student is able to pay them, but chooses not to do so.
In the case of (a), a very significant cause here, which no one has yet discussed, is so-called commercial educational institutions of the type which advertise on low cost television stations at 1 AM in the morning -- the de Vrys of the world -- which sucker all sort of already impoverished young people into their institutions, with financing based entirely on federally guaranteed loans they obtain for these students. These students almost never graduate, much less graduate with a marketable skill, and they are left with loans they can not afford to pay off, and nothing to show for them. If my memory serves me correctly, studies have shown that very large portions of student loan defaults come disproportionately from a small number of these institutions, but very little is done about it, as these same institutions have significant lobbying operations in Washington, DC. This is reprehensible, both from the point of view of the individual student, who ends up worse than s/he began, not only poor but in serious debt, and from the point of the community, which finances those loans through taxes and is being ripped off by these institutions.
If these types of defaults were eliminated, we would be left with a much smaller number of genuine defaults, where a former student either had to drop out and was unable to find decent paying employment, which the system could much more easily handle. As well, if options were opened for forgiving loans in return for providing important and needed social services for a minimum number of years -- such as teaching, or practicing law or medicine in high poverty communities -- there would be even less reason for genuine defaults.
There are defaults of type (b). I doubt that there are any reliable figures on how many of these they are, if only because it would take a great deal of effort to figure out if an individual was able to pay, but there certainly are some cases. If I read the text and subtext of some of the arguments here correctly, it appears that some of our LBO-Talk community think that there is nothing wrong with an individual who can pay, not paying. This is, I hear, a species of 'ripping off' the system, the state, the 'man' or whatever, and so is not wrong. I disagree. In my view, it is no different than a father who can pay child support not paying child support. It is an abdication of an important social responsibility, and it shifts that responsibility onto other members of the community, who will now have to pay more taxes to maintain financing for current and future students while the system absorbs the cost of your default, or who, as a current or future student, will have to forego some of the financing they should receive because the system is short of funds due to defaults.
In my just world, all education would be public and free, financed by the state. But education is both a public and a private good, and when the community has financed an individual's education through taxes, that individual has acquired a responsibility to make a corresponding contribution back to the common good. So in my just world, having finished his/her education, every student would then spend a period of about five years in community service of some sort.
In the interim, it seems to me that when the community makes a financial contribution to an individual student's education through state financing provided out of taxes, that student has the social responsibility, to the best of his/her ability, to repay that contribution, ensuring that the next generation of students have at least as good an opportunity for education as s/he did.
Deadbeat former students are like deadbeat fathers: parasites on the community that seek private fulfillment and private gain at the expense of others. There are not radical democrats or socialists, but radical capitalists and individualists, acknowledging no good above their own selfish interests.
The state should punish those who can -- and do not -- repay their student loans. It should garnish income, with a punitive add-on. Individuals who steal from the common good should be punished.
Leo Casey United Federation of Teachers 260 Park Avenue South New York, New York 10010-7272 (212-598-6869)
Power concedes nothing without a demand. It never has, and it never will. If there is no struggle, there is no progress. Those who profess to favor freedom, and yet deprecate agitation are men who want crops without plowing the ground. They want rain without thunder and lightning. They want the ocean without the awful roar of its waters. -- Frederick Douglass -- -------------- next part -------------- An HTML attachment was scrubbed... URL: <../attachments/20010421/a3cb726b/attachment.htm>