Mid Rivers Newsmagazine 5-18-22

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STAR PARKER
Students must take
responsibility for their debt
Lending money is not, as they say, rocket
science.
According to the Federal Reserve Bank
of St. Louis, in the last quarter of 2021, of
the total of all outstanding business loans
from all commercial banks, 1.08% were
delinquent.
Per the Federal Reserve Bank of New
York, as of second quarter 2021, a little
over 2% of the $1.4 trillion outstanding in
auto loans were delinquent.
Yet in the student loan market, totaling
around $1.6 trillion, not that different from
the total size of the auto loan market, an
average of 15% are in default at any given
time, per the Education Data Initiative.
It should be clear what the problem is.
Auto lenders make sure that those to
whom they lend can and will pay back the
loan. They are careful because if the borrower
defaults, the lender loses.
But if, tomorrow, President Joe Biden
or Sens. Elizabeth Warren or Bernie
Sanders decide that it is not fair that
there are Americans without new cars
and managed to get government guarantees
for auto loans, is there any doubt
that there would be a dramatic rise in
defaults on car loans?
Those lending wouldn’t care who they
lend to because they wouldn’t take the
loss on a default. You and I, we taxpayers,
would, as we will if Biden and his party
have their way to wipe out student loans.
Of course, “wipe out” is not the right terminology.
Debts don’t get wiped out. They
just get transferred to someone else. In the
case of government guarantees, that someone
else is taxpayers.
The concept of student loans backed
by the government is another child of the
allegedly compassionate 1960s.
Doesn’t it make sense to help the less
fortunate obtain funds to pay for college?
But as many theologians and philosophers
have noted, the greatest charitable
act is to help another individual take control
of their own life. Teaching personal
responsibility is the most valuable gift that
one can provide another.
Our American compassion, our moral
compass, has gone awry.
A child growing up in America today
looks around and finds himself or herself in
a nation where debt is larger than the entire
economy, and still growing.
But just as inflation shows that the costs
of fiscal irresponsibility cannot be hidden,
so the costs of teaching our youth that personal
responsibility is irrelevant cannot
be hidden. It manifests in the destructive
behavior we see now.
The Wall Street Journal reported that one
student loan adviser told them, “I’m seeing
them say, ‘I’m going to take out more loans
now and go buy GameStop stock with it
because it’s going to get forgiven anyway.’”
A new Gallup survey reports “32% of
currently enrolled students pursuing a
bachelor’s degree report they have considered
withdrawing from their program for a
semester or more in the past six months.”
Thirty-six percent attribute this to financial
reasons. But 76% attribute to “emotional
stress.”
Of course, the universities love this.
What business wouldn’t think the government
subsidizing purchase of its product is
a great idea?
Per the American Enterprise Institute,
from January 2000 to December 2021, college
tuition costs increased 175% and college
textbook costs increased 150%. Over
the same period, the consumer price index
for all items increased 65.5%; prices of
cars, household furnishings and clothing
remained relatively unchanged; and cellphone
services were down 40%, computer
software down 71% and television sets
down 97%.
Per Education Data Initiative, highest
default rate – 26.33% – is among arts and
humanities majors attending nonselective
schools. Can anyone really think such
loans make sense?
We need to help our youth who want
education to get it. But it must be done
prudently.
Teaching our youth that they don’t need
to pay back debts is not a good start.
Misguided efforts by Biden and his party
to cancel obligations on student loans
should be vigorously opposed.
• • •
Star Parker is president of the Center
for Urban Renewal and Education and
host of the weekly television show “Cure
America with Star Parker.”
© 2022 Creators.com
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May 18, 2022
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