Every so often some politician makes it their (brief) mission to address the burdens of overwhelming student loan debt. Universally overlooked is that these students chose their institutes of higher learning 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. The federal government isn’t blameless in the cost of college tuition and have aided in artificially inflating 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, this choice is destined to bring high debt with few prospects. When people go to school for, say, 18th century French poetry, the specialties limit the occupations for which the degree would be valuable. What can you do with a French poetry degree except teach French poetry? Instead, a smarter choice would have been to study engineering, medicine, or some other science-based field for which there are endless job opportunities. 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.
Because of high debt and low job prospect, activists on behalf of these financially burdened students lobby law makers to forgive or significantly reduce the principal amount owed. You might even hear this championed by lawmakers themselves. They might cite the bank bailouts from a few years back. If you can bail out the banks — and GM, and environmental companies, etc. — then surely we should bail out students…right? But they don’t seem to know what it is they’re asking for. I suspect the kind of bail out the students and their advocates 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 financially irresponsible students 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 — if they want the same deal as the banks. What they actually want is money to be taken from the haves and handed over to the have-nots…themselves.
Banks — who are in business to make a profit — 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.