Lending money is not 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.  

It’s more obvious by the day that President Biden and his progressive allies in Congress do not agree with notions of contractual obligations and personal responsibility.

President Biden and his progressive allies in Congress are working today on initiatives to “forgive” the student loans that certain college students borrowed. They want to wipe out certain borrowers’ responsibility to pay back their contractual debt.

But debt doesn’t just get wiped out. The responsibility just gets transferred to someone else; and in the case of government guarantees, that someone else is taxpayers.

How did we get here?

Well, 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.

Yet in America today, our compassionate streak and our moral compass have been passed off to our federal government.

A child growing up in America today looks around and finds that they are living 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.

A new Gallup survey reports “32% of currently enrolled college students pursuing a bachelor’s degree have considered withdrawing from their program for a semester or more in the past six month.”

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 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 percent.

In contrast, the consumer price index over that same period for all items increased 65.5 percent.

Prices of cars, household furnishings, and clothing remained relatively unchanged

Cell phone services prices were down 40%; computer software down 71%; and television sets down 97 percent.

Per Education Data Initiative, highest default rate – 26.33% – is among Arts and Humanities majors attending non-selective schools.  

Can anyone really think such loans made any sense in the first place? And frankly, without government interjecting itself into the learning business, those loans would have probably not been made.

Look, perhaps we can and should help under-privileged youth who want higher education to get it. But this is the work of charity, not government. 

Teaching our youth that they don’t need to pay back debts they incur is not helping them, especially if they come from homes of limited financial resources. 

So these misguided efforts by President Biden and his party to cancel debt obligations on student loans should be vigorously opposed.