Reggie Figard’s recent commentary (“Student loan debt is student’s responsibility,” May 30) on student loan debt spoke of the virtue of “responsibility” for one’s decisions, and not being “saved” with bailouts. In that regard I think that he is right on target. However the complexity of the issue and the timing of his call for responsibility are certainly suspect. As always, “the devil is in the details.”
(1) If, student loans are “no different” than buying a house or a car, as Figard states (besides the obvious recourse of ‘repossession’), why did John Boehner work so hard in 2005 as the chair of the House Committee on Education to push to change the law specifically to target student loan debt, making it non-dischargeable in bankruptcy? Should the responsibility for the risk (moral hazard) lie with lenders since they reap the rewards?
The Hill reports that student loan debt was about $100 billion when Mr. Boehner took over committee leadership, and currently resides near $1.5 trillion.
(2) The author’s comparison to borrowing for “cars” and “houses” was particularly interesting. Lee Iacocca, after all, became a household name shortly after 1979 for his role in turning around Chrysler after their bailout. In the last economic upheaval General Motors received their own special conditions from the government.
The “Great Financial Crisis” of 2007-2008 arguably had housing (e.g. mortgage backed securities, etc) at its core, and the TARP bailout of 2008 was followed by the rollout of a series of “Quantitative Easing” actions. The Federal Reserve’s balance sheet swelled to $4.5 trillion (that we know about) as they purchased “bad paper” from the market combined with interest rate manipulations put a floor under the real estate industry.
(4) And lastly, as the world’s courts of law seem to be seeking some determination of responsibility for the crashes of the 737 Max and the subsequent loss of life. According to Marketwatch, Boeing spent $30 billion in stock buybacks between 2009 and 2017, rather than investing this money in R&D. Would a future corporate bailout of Boeing, not beyond a possibility at this point, be acceptable?
These actions by the federal government, using “Joe Taxpayers” money (to use Mr. Figard’s phrase), have made a world of difference in the ability for many in my generation to grow their assets and retire comfortably. However, to rationalize “responsibility” at this point in the economic game seems more than a bit capricious and self-serving. Responsibility is a virtue, but please, can we apply it in a more even-handed fashion and not forget history?
Edited June 28 to remove an inaccurate sentence.