Fantastic news: The Trump administration has started collecting the defaulted federal student loan debts of millions of borrowers, ending a moratorium initially launched as a COVID-era stimulus effort.
The holders, of course, are at fault: If you take on debt, you’re obligated to pay it back. And that goes double when you’re in hock to the public.
And endless, ever-forgiven defaults raise the central question here: Who exactly is going to pay for this?
Yes, economic disruption during COVID offered a semi-reasonable justification for pausing payments, but the pandemic is now (at least) three years in the rear-view mirror.
But the left, spearheaded by President Joe Biden, stayed all-in on a “forgiveness” jubilee.
Their excuse was noise about “equity,” as if giveaways to college grads weren’t the reverse of fairness.
In fact, the collections pause and the massive outright forgiveness were plain ol’ cash-for-votes: Student-loan recipients tend to be Dems.
But Education Secretary Linda McMahon hit another crucial point in her remarks: The modern university, in many cases, is little more than a hedge fund with a four-year spa attached, is the real villain in all this
US schools, she noted, are required by law to keep defaults below certain thresholds or risk losing their eligibility for federal student assistance.
McMahon also warned universities that soon their loan non-payment rates will become public knowledge.
That last is key. Disinfect with sunlight!
As McMahon said, “For too long, insufficient transparency and accountability structures have allowed US universities to saddle students with enormous debt loads without paying enough attention to whether their own graduates are truly prepared to succeed in the labor market.”
Exactly right.
These schools, remember, hijacked an effectively bottomless credit market and raised tuition to the heavens while hard-selling financially illiterate teens on assuming massive debt with the promise of future earnings gains, and offloading the risk onto Joe Public.
Even as the quality of their education went to pot.
It’s a neat little system, but it’s time all the delinquents here — the loan defaulters and the higher-education business — get held to account.