The fish rots from the head down.
For the benefit of my readers who have had public school educations – and thus probably only have a rudimentary grasp of European history – tax farming was a practice from the Roman empire where the state licensed out the right to collect regional taxes to private individuals and groups, told said groups what they had to kick back every year, and then left the tax farmers to acquire the money somehow. If you’re wondering what then stopped the tax farmers from gouging their victims, wrecking long-term financial structures, and/or generally making life miserable, let me answer that: absolutely nothing. Which is one reason why you’re reading this missive in a language influenced by Latin, but not descended from it.
Not that things are nearly that bad in this country. Unless, of course, you have a student loan that you can’t pay. Then you’re fodder for the administration’s privatized student loan debt collectors – who will hound you to a fare-thee-well, complete with a total disinclination to give you any idea about how to get them off of your back. Because they actually aren’t from the government, and they’re certainly not there to help.
I’m sure that people out there are even now writing bitter anti-capitalist screeds on the subject of the collection of student loan debt, but let’s be clear, here: the current system is hardly a free market. The government wanted to boost college attendance, under the assumption that college attendance is some sort of ritual magic that mystically gets you a good job; so they made it much easier for people to get loans. The problem is, of course, that after a certain point “making it easier for people to get loans” means “making it easier for people who are poor credit risks to get loans.” To combat that the government made it almost impossible to discharge a default student loan via bankruptcy – which is another distortion of the market, or possibly a facet of the first one.
Meanwhile, the universities – recognizing that the collegiate system now had a virtual monopoly on access to white collar jobs, and that the loans were more or less a renewable resource from the point of view of the universities – started steadily increasing tuition costs. And as for the students… well. The economy was booming, right? They’d just pay the dang things off. In the meantime, college life beckoned. Only it’s now 2012, we’re in the middle of a stalled-out economy, and the unemployment rate of under-25 year old workers is in double digits. And the ones that are working aren’t mostly not saving worth a darn, with all that that implies for long-term stability.
But from the government’s point of view… well. As the Bloomberg article notes, the Department of Education paid out a billion in commissions on retrieved student debt last year; and while it may be easier to get the collection agencies to ease off than it was to rein in a Roman tax farmer it’s not exactly the simplest thing in the world, either. That may be because the rake-in for the Education Department is over ten billion. A year. Or it simply may be that the Obama administration prefers the culture free-form anxiety that it has inherited; their attempts at reform have been laughably chintzy. Well, it’s laughable if you don’t have any student loan debt looming over you, at least.
As Glenn Reynolds (H/T, by the way) has noted, this entire situation would go away extremely rapidly if you could discharge your student loans via bankruptcy and included the schools themselves when it came to determining responsibility for the debt; and God forbid that that happen, huh? I mean, think of Obama’s poor tax farmers. That’s a billion-dollar industry, remember? Can’t let it just… dry up and blow away, can we?