It seems to be a week for market worshipers in academia. In “To Fix Student Lending, Rethink the Concept,” it’s two very conservative economists telling us, once again, that the market has failed and so the solution is, well, the market. Or maybe the implicit argument is that the market only failed because of government interference and if you got rid of that interference then the market will work. Or maybe it failed due to a lack of information or….
Authors Gillen and Vedder begin by setting aside the most basic argument in any discussion of debt, forgiveness, (not a very sexy economic word) as if it had no real place in student debt discussions. That’s how we know that we are going to hear an argument designed to help banks and not people. It’s not as if we don’t have the money; by some estimates, nearly 13 trillion was spent bailing out the economy, and then there’s that war…
We could forgive student debt– or some large part of it– and free up billions of economy-stimulating dollars while undoing a profound injustice in which the collective benefits of education were paid for by shifting the costs to individuals. We could also use forgiveness to reward students who have gone into poorly paying professions, like teaching. No, we have to set aside that argument in favor of reforms of the current system, rooted in private profits.
If your loans are too large, for example, Gillen and Vedder say, then you should be able to file for bankruptcy. Never mind that the Bush era (2005) bankruptcy laws are already written to benefit banks. These are just solutions at the margins, though. To really fix things, we need some “measure of quality in higher education,” so that the market can work to keep down the cost of education and, by extension, the amount of student loans.
Gillen and Vedder don’t want to talk about changing the current system, they want to rationalize (to use a favored economic term) a system of indenture. Students will be forced to pick education and learning based on– surprise!– the employment market because as human capital they would be expected to pay a portion of their income to private banks for, presumably, for all of their working lives. Isn’t that what’s already happening?