Wednesday, March 7, 2012

Yahoo! Piece - "Could the Government Decide it Can't Afford Student Loans?"

Todd Pheifer wrote this piece over at Yahoo! Pheifer doesn't really answer the question, which was intended. Nevertheless, it is one that doesn't make much sense. After all, the Government is the biggest lender, so it is highly unlikely that they would eliminate their lending programs. That said, Pheifer makes some good points about why borrowers wind up defaulting or falling behind on their payments.

Avoiding those inappropriate, moralizing remarks, which are callous and brutishly reductive, the reason for why this happens to people, according to Pheifer, is quite simple:
[I]f people do not have money, they do not meet their financial obligations. This is not necessarily due to irresponsibility in all situations. Rather, it is an issue of financial survival [my emphasis]. In most life scenarios, people meet them in a particular order of urgency. A person is going to pay their rent and their utilities before they make their loan payments.
Having interviewed thousands of student loan debtors, he is dead right. They have never said, "Oh, I don't want to pay back their loans." It's quite the opposite. For some, big, unintended life changes take place. For others, they notice little shifts, and before they know it, all these small events eventually lead to financial disaster.

They find themselves suddenly in a position in which they can't make ends meet and keep up on their monthly student loan payments. Take the woman whose daughter wound up with a broken body after a devastating car wreck. How can a borrower anticipate that sort of disaster? They can't. Same goes with losing a good job, getting sick, all those complicated life events that no one can ever predict. Unfortunately, we now have an economic system that ensures that any 'false' move means that you're suddenly on a fast track to permanent, indentured servitude. That's the way life is for most of us. Safety nets that were once in place, and they weren't that great to begin with, are gone. So, if you get sick or you lose your job or make a 'poor' decision, it's your own damned fault. Meanwhile, if you're exceptionally wealthy and you mess up, you're fine.

Alas . . .  Socialism is for the rich, capitalism is for the poor.

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