FEAR for student loans

A modest proposal

There is a crisis in America. It has been building for a long time — unreported by the complicit liberal media — in the campuses and classrooms of our nation’s academic institutions, from the lowliest liberal arts college, to the most illustrious of the Ivy Leagues. It represents a clear and present danger to America’s future, and is on a scale so great that no right-thinking person could fail to be shocked by the magnitude.

It is, of course, the robbery with malice aforethought perpetrated by 40 million current and former student thieves: the non-repayment of student loans.

Deceitful students, eager to gain an advantage in the hyper-competitive US job market, are taking advantage of the generous nature of student loan companies like Sallie Mae and American Education Services, taking out hundreds of thousands of dollars in student loans with no intention of paying them back within their lifetime.

The combined national student loan debt stands at $1.2 trillion. This cannot go on. That money could and should be going to back to these companies’ poor shareholders so they can stimulate the economy. How is money supposed to trickle down if it’s collecting in a stagnant pool of unpaid student debt?

Last year, the House of Representatives passed the eminently reasonable Defending Investors in America’s Future bill. Under the bill, indebted students would be registered in a Student Labour Occupational Pool jointly administered by the student loan companies. Student loan companies would recoup their investment by leasing the services of these slops to other companies, with the student free to leave once their debt (and reasonable interest and administrative overheads) had been paid.

Sadly, DIAF was defeated in the Senate, after weak-willed liberal supporters of welfare queens and the work-shy banded together to create a vicious campaign smearing the outsourcing of indebted student labour to third parties as “basically slavery”.

Despite the vitriol and scurrilous lies of the Righteous Left, the core problem still needs solving. We have a moral obligation to do all we can to prevent student loan company insolvency.

Recall how piracy destroyed the music industry. If DRM had been introduced sooner, we might still have the pleasure of listening to music as its creators intended, on CDs. Congress had the opportunity to act, but the DMCA was a day late and billions of dollars too short. We must learn from the past so that student loan companies do not go the way of EMI, Universal, BMG, and Sony.

These students are stealing from our humble student loan companies. They take this money — not caring how they’ll make payments — and use it to acquire knowledge which cannot be taken back. It is, in point of fact, the literal theft of intellectual property.

But if we can’t stop people from bettering themselves, we can at least deny them the support of the institutions that they supposedly value.

Next week, the House will take up The Albert Lord Fair Education and Academic Repayments Act, a vital piece of legislation that will discourage wanton student thieves. FEAR would establish a new mechanism — Degree Grade Withholding, or degrading. Under degrading, students would not be entitled to reveal their Alma mater or GPA at job interviews, on their résumé, or in any written correspondence, until they paid back, in full, the debt they owe society and the student loan companies.

Representations of one’s college in any written communication would be allowed only when accompanied by the notarised statement (paid in full, with gratitude). Verbal communication of one’s college and academic performance would be illegal. Attempting to avoid being degraded, or misrepresenting a college course as “completed” — regardless of academic status — would be a felony, punishable by imprisonment. Enforcement would be the responsibility of a new division in the Department of Commerce, the funding for which would come from a new tax on textbooks.

Under the scheme, benevolent student loan companies would hold students’ degrees in escrow, releasing and validating them only when the full balance of the loan is repaid (with reasonable interest and administrative overheads).

In the interim, it is envisaged that student loan companies will find interesting ways to leverage this collateral. Indeed, degrading is likely to create many new possibilities in the kind of securities that have been all too rare since 2008. We foresee significant trading opportunities in novel instruments securitised by degrees held in escrow, like Credit Degree Swaps, Exchange Traded Student Futures, and Limited Access Options. These would give the student loan companies some way of monetising their investment in America.

No one should be under any illusions about the predatory nature of the student loan crisis. This is a problem that affects everyone in America.

Call your congressperson and senator today. Tell them to vote in favour of FEAR. Demand that delinquent students be degraded.

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