In the Student Loan Game, Everything is Relative

The news of the week concerns a number: $10,000.

It’s a well-chosen number, easy to remember. A solid amount of money, not too much, not too little. A number that any American can understand.

We may fairly say that the poorest among us cannot really conceive of $1 billion… And that the richest among us have no appreciation for the fact that $20 means something to some people. But rich and poor alike know what $10,000 is.

So, when the Biden-Harris regime proposes a $10,000 giveaway to current and former college students, as a payoff for student loans, everyone in America will have an opinion about it. People will either favor the move or oppose it; people will either think it’s too much or too little.

And the Biden-Harris regime was prepared for that.

They knew that conservatives would oppose it because it’s illegal.  It is a moral hazard, a giveaway that is certain to cause an explosion of poor decisions in its wake.

But they also knew that liberals would oppose it because it’s not enough. It’s not as much as their most radical activists were demanding and expecting. They don’t care about the moral hazard; that may even be what they like most about it.

But as we consider this as a matter of public policy, there is something else we need to consider. And the value of money itself is at the heart of it.

Walk up to an ATM machine, and plug in your numbers. What do you get? A stack of $20 bills. Maybe just one or two, maybe five or ten.  They all use $20 bills now.

What is $20 to each of us? To some, $20 is an hour’s wage. To some, it’s three hours‘ wage. To some, it’s a fraction of an hour’s wage, maybe even an unnoticeable part.

Money, as it turns out, is a medium of exchange, with a different relative value to each person.   The wealthier you are, the more easily you can afford a larger amount.

One person goes to a restaurant, and easily pays a $20 bill for dinner, happily tossing a fiver on the table as a tip.

Another person goes to a restaurant, comfortably pays a $100 check, and happily tosses a $20 on the table as his tip.

We recall a Bible story, a moment from the New Testament, in which our Lord was standing at the temple, when he saw a poor lady drop a coin in the poor box. Our Lord remarked to his friends that she was the most generous person there that day, because others gave of their surplus, but she gave from her necessity.  It’s about how much that coin represented, not to the temple, but to her.

It is this difference, in both perception and economic reality, that serves as the heart of the student loan debate.

Outside of some percentage of students who never cared about paying off the loans to begin with - and certainly, there must be some percentage like that - the vast majority of students who took out student loans did so with the expectation that paying them off would be manageable.

They went to school, assuming, whether rationally or foolishly, that their debt, of $50,000 or $100,000 or $150,000, would eventually be low enough to them, not today but a few years out, a small enough percentage of their eventual salary, that it would be manageable.

Instead, to their surprise, that $300,000 English degree or $200,000 anthropology degree or $250,000 poetry degree did not pave the way to such a massive salary that they could easily pay off these debts.  You and I might not be surprised at the fact, but many of them certainly were.

To the government, a dollar is a dollar. 10,000 is 10,000, 1 million is 1 million. From the perspective of the government, there is nothing relative about the number.

But from the perspective of the debtor, everything is relative.

How much one can pay this month is dependent on how much one earns this month, how much one spends this month on other things, how many other obligations the debtor has to deal with at the same time.

The government doesn’t want to consider these questions. The government just wants to either demand the money, or transfer it into the national debt as a common obligation (collecting voters’ love or hate as a byproduct).

But there is another option, one without moral hazard, one without further expanding the national debt:

Government could make it easier for the debtors to pay the bills themselves.

How, you ask?

By giving us a strong enough economy that these people can earn more, an economy that enables them to pay their own bills without depending on impoverishing their fellow Americans to do so.

What makes it difficult to pay off your student loans?

An inability to find an cheap apartment, forcing you to pay a higher rent than you expected.  An inability to simply live in a cheaper neighborhood, because of high crime rates, forcing you to live in a more expensive neighborhood than you had planned. An Inability to find an inexpensive car, forcing you to buy a more expensive car than you expected.

Higher tax rates than you expected. A bigger grocery bill, due to massive inflation, than you expected. Higher utility bills, for the same reasons. Higher health insurance payments, because health insurance rates have skyrocketed since 2010.

And an inability to find that expected array of well-paying jobs with employers who don’t care what your degree is in, but value your willingness to work hard and excel in the role.

In a boom economy, more people can pay off these loans, because the loans become more affordable to them… because the loans represent a smaller share of their relative net worth then they do in a bad economy.

We currently have a bad economy. An awful economy.

Why? Why is inflation raging? Why are gasoline and eggs and beef more than double their prices of a year and a half ago?

Government choices. Foolish, destructive federal choices, local, state and national, but most of all federal.  It’s due to spending bills created by Congress and executive orders issued by the Biden-Harris regime. These are the causes of our current recession… These are the reasons it is harder than ever for people to pay their bills, let alone to pay off their loans.

If we want to solve the problem of student loan debt, we must view it as the problem of all debt. We must view it as the problem of our struggling economy itself.

The conservative policies of the Trump administration, despite its flaws, were propelling the American economy upward in every way. During the Trump economy, every demographic was improving economically; people were reaching the point at which even a multicultural studies degree would not prevent them from being able to pay off their debts, in time, if they lived frugally.

The progressive crowd doesn’t want to admit it, of course.… But a $10,000 down payment on an unaffordable $150,000 loan doesn’t really help very much. What we need to do is make the entire $100,000 affordable to the debtor, and the only way to do that is by implementing conservative policies – reversing the Biden-Harris errors and returning to limited government capitalism at last.

To the extent that the left realizes this - and since it is undeniable if you think about it, more and more of them must realize it, whether they want to or not - this must really drive them crazy.

John F. Di Leo is a Chicagoland-based international transportation professional.  A one-time Milwaukee County Republican Party Chairman, he has been writing a regular column for Illinois Review since 2009. His book on vote fraud (The Tales of Little Pavel) and his political satires on the current administration (Evening Soup with Basement Joe, Volumes I and II) are available on Amazon.

Image: Pixabay / Pixabay License

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