The Long Way Home with Moral Dilemmas

The folks who think “Let’s Go Brandon” is the height of political satire are quacking online and around town about the Biden administration canceling mountains of student debt. It seems they’re irked that some lazy English Lit major living in Mom’s basement, with purple hair, body piercings, and part-time employment at a coffee shop, will have their student debt paid with “my tax dollars.”

Federal student loans are used by college students of course, regardless of the field of study. They are also used by trade school students. You know, plumbers, electricians, linemen, carpenters, and even computer programmers. Your hair stylist, dental technician, or medical assistant could have used student loans to pay for training. Many a rookie truck driver was trained at a trade school using a federal student loan for the tuition.

The ease of getting a federal student loan is its biggest selling point. A borrower need not have a credit history, a co-signer, or an income. Interest rates are generally lower than private loans, have fixed rates, and have more flexible repayment terms.

So who else has benefited from student loans?

Lenders (banks and other grifters), so-called tuition consultants, and the education and training institutions themselves have done extremely well with federal student loans. It’s hard to imagine a public university able to pay its athletic coaches seven figures without federal cash from student loans coming in.

Without a doubt, the forgiveness of loan contracts raises serious moral questions about money lenders and their customers (victims.) The type of moral questions that should have been raised years ago.

Where were the quackers when credit card companies were exempted from state usury laws, those pesky restrictions on interest rates that a lender could legally charge consumers? Minnesota usury is maxed at 8%. The average credit card interest today is 16.45%, a rate available to a relative handful of cardholders. Most credit cards charge 20% or more. They aren’t subject to state laws. WTF?

I’m pretty sure none of the quackers were objecting about the Economic Impact Payments of federal taxpayer dollars they each received during the pandemic.

And where were the quackers a couple of years ago when the Federal government doled out billions of taxpayer dollars in Paycheck Protection Program (PPP) loans to businesses, non-profits, and even churches? That money was intended to cover payroll expenses, and if used as intended the loan was to be forgiven. Most of the loans have been forgiven, many in the six and seven-figure range. In other words, people (and corporations are people, correct?) borrowed money, taxpayer money, knowing they would not be paying it back. Now that’s a moral dilemma for someone to quack about.

Financial consultants and banks, many involved in selling student loans, enjoyed the PPP windfall, collecting significant fees for preparing and processing the loans.

In Shakespeare’s “Hamlet,” the character Polonius gave important advice to his son Laertes, including the line, “neither a borrower nor a lender be.” But in the moral dilemmas posed by government lending, lenders can’t lose. But taxpayers?

Back in the Watergate days the phrase “follow the money” became popular. And it seems applicable here. If you worry more about the purple-haired English Lit major seeing $10,000 of student loans forgiven than you worry about the industry that can’t lose in the student loan business, follow the money.