When Elliot Ness raided bootlegging establishments, did Al Capone get to keep the money? If we are going to ‘forgive’ college loan debt, do schools get to keep all the money they collected from the usurious loans?
The arguments have not mentioned colleges at all so far. There is great debate about the economics and ethics of erasing student debt that was freely entered into by transferring the debt to those who never incurred it by paying it with tax dollars. There is anger on the part of those who entered into loan obligations and dutifully paid it back by working hard, skipping luxuries, and even greater anger from those who never attended colleges at all.
Back in 2007, student loan debt was $642 billion; in 2020, it was $1.5 trillion an increase of 144%. The government student loan program created in the 1960s was never designed to handle numbers like these. The program was administered by banks until 2010 when Congress federalized the program and loans were issued by the Treasury Department. The idea was that there would be no scarcity of funds during a recession but a guaranteed loan program quickly outpaced inflation as well. If this pattern does not change, some 40% of college borrowers who entered college in 2003 will be in default by 2023.
The principal increases in college costs have been fees such as room and board. But fees cannot be funded with Pell grants which only pay tuition. That makes them less valuable for defraying the overall costs of…
