Bail Outs: Banks vs Students

The Occupy movement has voiced many concerns over its few month’s existence, some legitimate but mostly selfish and idealistic, and in my opinion misguided.  Sure, the demands would certainly benefit individuals, but for the overall economy would be very disastrous.  One of the complaints of the Occupy movement that has me particularly perturbed is the idea that student loans are so burdensome that they should be forgiven.  Bail Out Students, Not Banks! is a slogan being bandied about.  I have a few thoughts on bailing out students.

Personal responsibility is a vulgar concept to most liberals, of which the Occupy movement is near universally comprised.  These students went into the collegiate arena knowing exactly what the costs of education would be.  They intentionally overlooked smaller, less prestigious schools such as State colleges or Community colleges — not to mention technical or trade schools — in lieu of high-priced universities with name recognition.  This recognition and prestige doesn’t come cheap.  But tuition fees are not a secret.  Everyone goes into higher education with eyes-wide-open.  To be sure, the federal government has artificially inflated the cost of higher education by guaranteeing what ever the tuition costs may be.  Loans, being so easy to secure invite schools to inflate fees and entice prospective students to think of short-term schooling rather than long-term debt.

Add to that all the pie-in-the-sky students who choose fields of study that are of personal interest rather than financial security, the situation is a powder keg just waiting for ignition.  When people go to school for, say, art or history, the specialties limit the occupations for which the degree would be valuable.  What can you do with a liberal-arts degree except teach liberal-arts?  Instead, a smarter choice would have been to study engineering, medicine, or some other science-based field.  The problem is too many people are educating themselves for pleasure.  Education is put to better use by studying for field that will be lucrative.  This is the root of many of the financial woes of students saddled with debt and no work to pay it off.

Now for the illogic of the Occupiers demand: Bail Out Students, Not Banks!  They don’t seem to know what it is they’re asking for.  First, it is obvious they get their information from activists like Michael Moore rather than actual news sources.  I suspect the kind of bail out the occupiers are looking for is a payment of loans on their behalf.  After all, the banks were defaulting and the government “bailed” them out, why not us, right?  Well, most people are oblivious to the fact that the bail outs for the banks were loans.  And they have been repaid…with interest.  So if what the Occupiers are seeking is a bail out, they have already received it.

The student loan “bailed” them out of having to pay the university upfront for their education.  In essence they are asking for a loan to pay their loan, they just don’t realize what it is they are asking for.  What they want is money to be taken from the haves and handed over to the have-nots.  But what they are asking for is a loan.

Banks — who are in business to make a profit (See: Shocking Revelation) — offer a service for a disclosed fee.  It is not the job of banks, or any business for that matter, to work or provide their service for free.  Businesses are not charities, and should not be derided for not acting like one.  I don’t provide my services free of charge to my employer, and neither do you.  Why not?  Because we work to make money, we strive to turn a profit.  So do businesses.  They rely on people honoring their informed commitments.  As soon as we demand businesses — banks, insurance companies, investment firms — to work for free, they will close up shop or move to a country that will let businesses be businesses.


  1. So, uh, ever looked up the Bible’s position on usury? Yes, yes, it’s a necessary evil and all, but, still. I wouldn’t have expected a Christian to so excitedly defend the status quo.

    That said, I agree with you, the government wold go broke (which is to say, even more broke) if they were actually to pay for all student loans, and Occupy needs to think about what they want before they chant it. That said, cheaper public tuition, more generous financial aid and interest free, or, at very least, low interest, loans to bring down the cost of college are necessary, because, when people must get a highly paid job to pay off college loans, you end up with an excess of highly paid medical specialists, but not enough general practitioners, not enough scientists to do basic research, since not many people are willing to pay for a PhD only to get paid next to nothing in a government or academic lab, and not enough well educated, quality teachers. For the long term well being of our economy, then, we do have a responsibility to make college a little less ridiculously expensive.

    • Biblical usury prohibitions were intended more for personal loans, not professional lenders.

      But the reason tuition is so expensive is because Sen. Kennedy got legislation passed that the federal govt would guarantee any tuition cost. So the colleges said, “well if youre guaranteeing, we’re raising”. But who is going to offer low or no interest loans? The govt? Well, they are too forgiving. Soon govt loans will all turn into grants. That translates into me paying for some occupiers education. Well I’m none too happy about that prospect.

      If we want college to be less expensive it needs to stop being so easy to get loans. Or at least only cover portions so colleges actually lose business. If they lose students because of money, they’ll have to reduce costs. Right now there is only incentive to increase cost.

  2. I suppose this is what should be, not what can or will be in the near future. Sadly, you might be right that it is necessary to reduce access to loans in order to lower tuition. Those in the transition period are going to get screwed over, however.

    • Well,. you say screwed over as though these people were in it with their eyes closed. But when your schooling costs 22K a year, you plan to go for four years, you’re looking at 88K of debt. Then you’re surprised when you have a loan for 20 years? It’s just that I have little sympathy for people who live life so short sighted as these people. Going to college is more than just getting an education. There is so much more to it. Loans, job prospects, where there might be openings in the field. Like I said in the post, too many people go to college for their passions rather than the prospect of a lucrative employment opportunity.

      But until people are allowed to actually have to feel the consequences of their bad decisions, nothing will change.

  3. As to those screwed over: I’m not talking about people now, I’m talking about people stuck in the transition period you propose, when loans and financial aid are harder to get, but tuition has not yet come down. I don’t have much sympathy for anyone who is in debt because they got a PhD in English either.

    Also, as I said, we don’t really want people to go to college just to get high paying jobs, because many of the jobs which need to get done don’t pay as well as some borderline useless jobs.

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