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?
Moe Lane
The whole student loan bankruptcy scam which this was supposed to correct was started by…ahem…doctors. A truly sweet deal: run up school debt, promptly declare bankruptcy, live on cash for 3-4 yrs while your credit score recuperates. Easy to do for a single doctor with a very high income stream, north of half a mil for some specialists (which makes my income look like a pittance). As I understand it, a bankruptcy stays on your record for 7 years, but is only scored for 3-4 years. So the banks and the govt were stuck with the tab and the doctors had a great life without all that 10-20 year repayment hassle. Doctors, healing hands for a troubled world. Bah! We are all sinful bastards, every last one of us. Sue me, I’m a Calvinist.
The point of that is to counter the argument by some that student loans should be dis-chargeable in bankruptcy. It sounds nice, but like no “preexisting conditions” restrictions on insurance, it doesn’t work in the real world.
For the record, mine have been fine.
In fact I just contacted my current one to start working on repayment. No trouble at all so far.
So does anyone else see the potential for a great US brain drain, as newly graduated (and unemployed) young people leave the US to work as expatriates?
What’s to keep a young graduate with $100k in debt from leaving the US to start a professional career abroad, and never repaying the debt?
I’m not worried. We’ll have plenty of uneducated arrivals to take their places in our own domestic work force. :-\
Well, Joseph, since the primary lender is now the US government, they’ll simply refuse to issue you a passport! You know, like they’re considering doing for anyone who owes taxes!
I’m going to second Neil; my experience with student loan collectors has always been a positive one. I’ve never had any problem paying, but I do have an unfortunate habit of not paying ON TIME. I’ll definitely get a phone call after a couple weeks, but they have always been extremely polite and never fail to ask if I need to alter my payment structure or get a deferment in order to make things more manageable. My general impression is: they know I’m not going anywhere, and that the economy sucks, so they’ve got nothing to lose by working with me. Admittedly, due to incomplete schooling at public in-state rates, my loans are probably small beans to the people who hold them.
“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;”
.
Or that education was/is equal to sanctification in progressive theology.
It’s not so much that the liberal mind sees it as ritual magic, it’s that it sees it as sympathetic magic. Cargo Cult magic, in other words. If it has the form of education, if it looks like education, it must be education. If you haven’t seen the term “Cargo Cult” before, please see the 1974 speech by Nobel Prize winning physicist Richard Feynman. I’d cite the Wikipedia article for it, but it goes to great lengths to avoid mentioning AGW in relation to it. The complete speech is here: http://is.gd/IwcsNS
My wife and I stupidly majored in humanities for our undergraduate degrees and had to go back to school (to become an accountant and a nurse). We’re now in our 30’s and just starting to repay $120k in student loans. Who lets an 18 year old borrow $20k a year to pay for a history or philosophy degree? Now every time my son and I walk past the Armed Forces recruiting office, I let him know that’s who’s going to pay for his college degree.
Jbird, good for you. Parents need to get off the “follow your dreams” malarkey. I gently steered my daughter away from marine biology and into petroleum engineering just by talking about income and jobs prospects. Kids need to choose, but they also need to be informed. She’s now really excited about it. She said she felt like she had no direction in her life and needed someone to help her choose. She’s a kid after all! Her biggest choice at 16 is what purse to buy.