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http://www.unz.com/article/student-debt-cancellation-a-good-idea-and-a-political-hoax/

Steve Penfield

Debt Cancellation will come whether we like it or not. So it’s in everyone’s interest to develop a sensible plan that liberates the (mostly) innocent and assigns responsibility where appropriate.

There are certain moments in history where each person—and eventually the larger community—must decide which path to follow, ultimately leading us in vastly different directions. With the U.S. student debt fiasco now approaching $1.6 trillion and 45 million borrowers, we seem to be rapidly advancing towards such a moment.

At present, one of the biggest problems regarding the student loan debacle is the dismal nature of the polarized “debate.” Not just on debt relief, but on the many dysfunctions of the college system and its financing mechanisms as well.

On one side, we have free-lunch Democrats that want to “give” everything away in order to buy votes and seize control of higher education; their Debt Forgiveness schemes merely dump liabilities onto taxpayers and give banks and colleges a free pass. Republicans and conservatives, meanwhile, prefer to lecture students on the morality of paying your bills, while forgetting that students didn’t create the corrupt system of mandatory college or its skyrocketing costs. That came from “responsible” adults. And both sides insist that federal involvement in all levels of learning is essential.

Since Debt Cancellation is one of those explosive topics that can lead to partisan bickering and empty sloganeering, I should start by saying that I disagree with nearly everything that BOTH official sides are saying. After much searching, I was able to find a few sensible voices in the wilderness as detailed and expanded upon later. But at this point, anything rational or productive on this issue remains strictly forbidden in the mainstream press, which strongly favors centralized banking and collective education, preferably sold in easily digestible sound-bites.

Taking a broader approach to this looming decision, the major themes of this essay are:

• Weak Arguments against Debt Cancellation from the ‘Right’
• Weak Arguments for Debt Cancellation and ‘Free’ College from the ‘Left’
• Winners and Losers of Honest Debt Forgiveness

I’ll try to fill in some related gaps along the way, mainly to address entrenched ideologies on overall education and financing.

My conclusions are: 1) people can learn quite well without federal involvement and the suffocating strings attached, 2) after over a century of massive (over 2,000%) inflationary stresses, Americans could benefit from an overdue Inflation Dividend, and 3) student Debt Cancellation will come whether we like it or not, so it’s in everyone’s interest to develop a sensible debt re-structuring plan that liberates the (mostly) innocent and assigns responsibility where appropriate. As for culpability, I’m talking about banks and colleges, not taxpayers.

For demographics, I don’t mind saying that I turned 50 this year and never had any debt from college when I graduated in 1991, back when state school in New York was pretty cheap. I work in the private sector and find time to research and write on the side, among other things.

Washington Orthodoxy: Education Must Be Centrally Controlled

With “education” becoming increasingly politicized over the last century, it’s hard to find valuable information through the haze of overt and subtle misinformation. As usual, if you follow the money it leads back to a common theme. Total government spending for combined federal, state and local levels (K through college) came to a staggering $1.1 trillion for FY2019. That enormous pot of “free” gold comes with heavy strings attached and influences nearly all modern decisions on the topic of learning.

First of all, both parties in Washington and at the State capitols almost unanimously view individual learning as a group decision. Proceeding from that bias, public schools in America have become burdened with licensing restrictions, teacher credentials and accreditation requirements to justify accessing their “fair” share of public funds.

Those self-focused legalities have led to an inward emphasis among academics over time. For generations, there has been widespread agreement amongst ruling elites of all political persuasions: kids learn better in awe-inspiring fortresses of grand architectural triumph.

All of these accessories add enormous costs to taxpayers and stifle any meaningful academic freedom. None of those gimmicks have been shown to add value to actual education, since literacy rates were generally higher (and delinquency rates were far lower) 200 years ago when almost no one in the U.S. went to college. Modern education at the college level has become so corrupted with authoritarian ideology that two separate organizations (The College Fix and Campus Reform) are kept busy documenting the daily abuses.

The university system in particular—since its State-fueled rise in the 12^th century—has always been about politically and theologically correct lectures, assigning safe books (from the ruling class point of view) and testing on recited orthodoxy. Remarkably little has changed to that ultra-conservative structure, which made more sense before the invention of the Printing Press (c. 1450), when hand-written manuscripts were rare and knowledge was centralized among political and religious elites.

The main difference today is the widespread acceptance of university-style “indoctrination” methods (a term our ancestors openly accepted) across such a wide segment of society. College no longer exists as an exclusive retreat for the idle rich, aspiring politicians and the clergy. A solid core of the middle-class now views obtaining a college “degree”—at any cost—as an important milestone in life.

As a result of its new-found popularity, the university model’s inherent shortcomings have become magnified. Longstanding concepts of dialogue and creative problem solving have been pushed aside for mass-market approaches that rely heavily on the weakest forms of teaching (one-way books and lectures). These formats invite all sorts of political correctness and appeasement of special interest groups, as evidenced by the increasingly weaponized schooling for Capitol-style awareness.

A better alternative has always been available, if people were willing to work for it. This once commonly did (and may soon again) involve community schooling for basic math and English, self-study or private clubs (aided by independent scholars where appropriate) for the liberal arts and sciences, then more mentoring and apprenticeships for professional skills (as doctors still do). These efficient, social and personalized teaching methods were crowed out over the last century from the mad rush for outside funding and superficial credentials. Mentoring and apprenticeships seem poised to make a comeback now, due to the high cost and low quality of college and the online availability of educational courses on virtually every topic.

Community schooling for K-12 is now making a resurgence as well at the grass roots level, although it’s rarely recognized as such. This positive development comes from the millions of families involved in more personalized education—often referred to as “home schooling”—which increasingly occurs in group settings with paid teachers or via co-operative bartering. Locally funded Community Colleges now attract far more students than even a generation ago. These schools are not just less expensive than their four-year counterparts; Community Colleges usually skip the exhausting “Publish or Perish” mania for boosting academic pedigree and pass on federal research Grants that do nothing to improve student achievement.

The last frontier is the privileged and isolated confines of the state and federally funded four-year college and university system, which has been resisting change for pretty much all of its existence. With the help of technology, institutional barriers may finally yield to progress. Students can now access thousands of more independent scholars at online providers such as Khan Academy, Udemy, EdX, and Coursera to help fill the need for advanced training or merely satisfy the pleasure of learning.

For the first time in decades, teacher competency matters more than artificial titles—precisely because students finally have real input in the selection process and teachers face fewer obstacles in reaching interested students. At least it does for untethered experts found on the internet, which includes some of the better Old Guard college professors, and at multitudes of privately administered classes.

These are all good developments that get little or no credit in Legacy Media. My point in mentioning the condensed history above is to dispel the myth that people can’t be educated without “help” from the federal government. That’s a lie that has gone unchallenged for far too long.

For the rest of this piece, I’ll give it my best shot at combatting the bi-partisan misinformation on student Debt Cancellation and providing reasonable arguments for true Debt Forgiveness.

Weak Arguments against Debt Cancellation from the ‘Right’

Under normal circumstances, the advice to “pay your bills” and not go into debt in the first place makes great sense. So does the advice to work… most of the time.

What so many conservatives forget is that no sane person works 7 days a week. Human beings need rest every so often (and afternoon naps are highly beneficial according to my personal research). When a corrupt financial system has been foisted on Americans of all ages and economic levels for generations, people need a break and society needs a chance to reset and stabilize.

Right-wing partisans don’t see it that way, when it comes to young people saddled with liabilities from ridiculously high college costs. All they see are lazy kids trying to slack off again, which is of course sometimes true. Professional conservatives also relish the chance to pummel career Democrats for being soft on the “crime” of not paying your debts. British debtors’ prisons followed this logic throughout most of the 18^th and 19^th centuries, imprisoning thousands of people for the offense of not repaying an ill-considered loan from a wealthy lender.

Over the last year or so, I’ve collected some examples from the leading thinkers on the libertarian right on the topic of Debt Forgiveness. Mind you, the screaming rants of AM talk radio and FoxNews are infinitely worse. And neo-con puppets were ignored due to their track record of irrelevance. These “thought leaders” offer the best conservative arguments I can find.

Economist and author Doug Casey abandons his usual calm analysis and offers petty insults on the “whacky” and “evil” Democratic Party “freak show” pushing for pseudo Debt Forgiveness. Mr. Casey says “Forgiving student loans would be disastrous. First of all because it would encourage more kids to go to college.” He gives no support for these illogical statements, which I address in more detail below. His angry taunts of people with student loans is classic conservative compassion: kids in debt “want somebody else to pay the consequences. I say, Tough! It’s now time to pay the piper.” Like many, Mr. Casey confuses Debt Forgiveness (resulting in far fewer loans available for future students, meaning kids will finally have to PAY for themselves) with “free college.” Those are two completely different entities, although politicians often lump them together.

An even weaker analysis of Debt Forgiveness comes from another normally good economics expert (quoted favorably much later), Martin Armstrong of Armstrong Economics. Writing about debt options in general, he states:

We either default, which will result in civil war and revolution, or you inflate your way out like Venezuela so your Social Security check will not even buy a cup of coffee. A default will result in war.

As institutional investors, both gentlemen above may have some exposure to Debt Cancellation that they neglected to mention (or at minimum, should have clarified). Ditto for this hysterical analysis from a flack working for billionaire media mogul and financier Michael Bloomberg. And for full disclosure, I’ve done some volunteer work on setting up a non-degreed professional mentoring system. If all goes well, that endeavor may actually earn money someday. If not, no big deal; I’ve got a job outside of the educational field.

Popular conservative writer Matt Walsh (like many others) settles on the classic liberal argument: it’s not fair for indebted students to get a break since so many others did not. Mr. Walsh augments his position with the claim that “it costs almost five billion dollars to operate Harvard for one year” based on a questionable analysis (his link) from Harvard. Who knew all those dusty books and opinionated philosophers cost so much?

Rounding out the attacks from the right, a libertarian critic of Debt Forgiveness and former college finance professor, Michael Rozeff, at least gets it correct on who would pay the bills under the leading Democrat proposals:

Some of our home-grown socialists/communists (like Sanders and Warren) want taxpayers to assume the debts of students. … All their proposals are outrageous. All are undiluted communism. All are unfair in the extreme. All make a mockery of contracts.

The sacred “contract” than many pro-business conservatives and libertarians talk about is not always what they make it out to be. Any written contract becomes a dead piece of paper (kind of like our Constitution) when powerful special interests poison the system for so long that words (like “education”) no longer have meaning, our fiat currency (see Roosevelt and Nixon) is nearly worthless, and true cost discovery becomes almost impossible.

We also need to factor in the mandatory licensing and degree requirements of many professions and the corporate Human Resources policies requiring college just to get an interview. Then it becomes apparent that quite a bit of coercion comes into play for a high school grad “deciding” what to do next. The act of coercion generally negates the legitimacy of any contract. When students are essentially FORCED to obtain a “degree” to get a professional job and college costs have skyrocketed due to corrupting subsidies and entitlements for decades… the students are actually the LAST ones we should blame.

Yes, many college undergraduates have been brainwashed by radical (and subsidized) professors to believe that everything should be “free.” The free-stuff ideology promoted by some tenured fanatics promotes their belief that all aspects of life should be centrally managed by remote officials and financed by voiceless serfs. But again, students didn’t create that warped mindset. College administrators, bank executives, financial counselors—like the 28,000 loan advisors at the National Association of Student Financial Aid Administrators (NASFAA)—and two D.C. parties full of pliant politicians did.

In the end, who’s the bigger fool? The inexperienced student who took on a loan they now can’t pay off, or the adult lender who offered unsecured credit to a young “slacker” in the first place? For now, most conservatives seem to side with wealthy bankers and college administrators.

Weak Arguments for Debt Cancellation and ‘Free’ College from the ‘Left’

On the other side, we have liberals and progressives who ostensibly favor some type of student Debt Cancellation. The biggest problem here is that all of their leading proposals are just bait-and-switch cover for another bailout of Wall Street banks, while funneling more taxpayer money to feckless college administrators. The associated rush to keep student “aid” flowing also obscures the overt politicization of schools already underway, which would only get worse under a system of full government control—sold as “free” education.

The fraudulence of these Debt Forgiveness schemes should be laid bare by the internal contradictions and “free lunch” mentality surrounding the plans. Before touching on the broader picture of bi-partisan support for academic control, I’ll look at the main two Debt Forgiveness proposals of the 2020 Democrat presidential frontrunners, U.S. Senators Elizabeth Warren and Bernie Sanders (with links provided to their respective plans).

According to numerous favorable press accounts (like this one which was featured in Microsoft News) “Warren estimates her plan would cost $1.25 trillion over 10 years, and Sanders says his plan would cost $2.2 trillion.” “In addition, they demanded the government make public college free.”

Bank Bailouts Posing as Debt Forgiveness

For starters, it should be apparent to any thinking reader (or competent journalist) that true Debt Forgiveness should cost almost nothing. Maybe a few million for administrative costs and the obligatory public ceremonies. But nowhere near the staggering sums of cash—and new taxes—that Warren and Sanders are seeking.

These plans amount to nothing more than another taxpayer bailout of big banks, that Democrat supporters of student debt relief plans usually fail to acknowledge. Worse yet, the bailouts would come on the backs of people who responsibly payed off their own college loans or maybe never attended college at all.

Unfortunately, it’s this type of duplicity from the left that has so many conservatives and independents disgusted with the overall concept of student Debt Cancellation. Throwing in “free” college for everyone just sinks the plans entirely in many people’s minds.

Government Advertising for More Government Schooling

The structural flaws beneath the demands for political bailouts also warrant consideration. The college and university system in America has grown to become one of our biggest industries, bringing in nearly $650 billion in revenue for the latest school year available (Fall 2016 to Spring 2017). For comparison, the total U.S. automotive industry revenue stood at $752 billion for 2018.

As detailed below, over 80% of college and university revenue now comes from outside loans, grants and direct government spending. That makes the college books-buildings-and-lectures circuit probably the most subsidized industry in America, next to the federal military.

With so much money and prestige on the line, the college and university industry spends billions to attract students into their system each year and to entice politicians to keep funding it. The U.S. Department of Education (U.S. DoE) uses tax dollars to elicit more taxpayer support for what they frequently spin as “aid” or “assistance.” The College Board (2017 report on the right) is a tax-favored organization that has been steering kids towards the university system since 1900. The College Board uses similar jargon to market the “benefits” of debt-fueled classroom instruction to prospective customers.

The U.S. DoE office that produced the 2016 Federal Student Aid report on the left has an administrative budget of $1.6 billion with almost 1,400 employees. The agency boasts of delivering “nearly $125.7 billion in [federal] aid to more than 13 million students attending over 6,000 postsecondary educational institutions” for that year…

Long article…

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