Category: Thoughts

Why I’m proud to work in the student loan industry

Let me reiterate that this is my personal blog, and that I don’t speak for my employer here. This is a personal statement.

I do work in the student loan industry and I want to defend it. I think student loans in general are getting a bad rap. Groups like the Edu Debtors Union have a lot of really valuable things to say, but they’re also part of a backlash against something that has a lot of real utility.

Even my mother recently confessed to me that she had initially thought my job was specifically to turn the misery of young debtors into profit. That’s not what I do. That’s not what my company does (for the record, it’s a nonprofit that helps students manage education debt). That’s not what my industry does. Lord knows I’ve worked for companies that have no redeeming social value. My current employer is one of the good guys.

I’m not claiming the industry is perfect. I’m not claiming that student loans are always a great thing for everyone. But I do believe that debt, and education debt in particular, is underrated. I think it can be a great thing.

That sounds heretical, like being in favor of bullying or starvation. But hear me out.

Why Education Debt Exists
For most people, most of the time, higher education is a good thing. It’s good for society as a whole, but it’s especially good for the people who get the education.

Because society as a whole is better off with educated citizens, it makes sense that we should all chip in to subsidize and promote education, even if not all of us are students right now. That’s the reason we have public universities and federal student loans and the Department of Education.

Even so, the major beneficiaries are the educated citizens themselves. Since they benefit the most, they should shoulder a substantial portion of the cost of providing it. Since they don’t often have the ability to pay in advance, so it’s reasonable to study now and pay later.

Groups like Occupy Student Debt are opposed to all education borrowing, and want all education to be free. But remember, not everyone benefits equally from education. If there’s no tuition, then society at large pays for it, including people who don’t benefit at all from its existence. Look at Georgia’s HOPE scholarships, which largely go to middle-class white kids and are financed largely by poor people of color buying lottery tickets. Student loans are, frankly, a fairer way of addressing the cost of providing education.

Debt is a Tool
Debt isn’t bad. Not always. Even personal finance gurus like Dave Ramsay will tell you that borrowing money has its place. Think of it as a tool, maybe a circular saw. Used carefully, it cuts things down to size quickly and easily. Used alone or for the wrong tasks, it’ll just give you a pile splinters and sawdust. Used carelessly, it’ll cut your hand off.

I don’t mean to deny that over-borrowing, and borrowing to buy the wrong things, are real problems. You shouldn’t generally borrow to buy a car, and definitely not to take a vacation or buy a jet-ski. But financing an education can increase your earning potential and the quality of your life in a lot of ways. Not for everyone, not for every course of study, not for every school, not for every loan. But it’s not as bad as some people think.

The Trillion-Dollar Headline
The headlines are all screaming about the fact that there are now over $1 trillion worth of student loans outstanding. That’s a big scary number, but to me it’s mostly a good sign. Yes, college costs too much, and people are borrowing too much. But that worry is obscuring the fact that more people are going to college, and borrowing to do it. In particular, people who haven’t had the money or the opportunity in the past. I’d much rather see a trillion dollars borrowed to pay for education than a trillion dollars borrowed to pay for skinny jeans and smartphones.

Nothing is perfect, and borrowing is not risk-free. I know that. Debt-financed post-secondary education is going to backfire for a significant number of people, and we as a society need to find better ways to help those people. I also think that tuition is too high and that public universities and community colleges are under-funded, but that’s all a topic for another time.

But can tell you this much: For most people, a Stafford or PLUS loan is a good deal and helps them undertake a worthwhile endeavor. And that’s why I’m proud to work in the student loan industry.

The Revealed Preference

What we say and what we do are very different things; the distinction is what economists call revealed or stated preferences. A beautiful example, although one the authors actually disagree with, is the Boingboing statement that “Facebook proves that people don’t care about privacy the way that the Cheesecake Factory proves that people don’t care about obesity.”

With regard to the failure of governing bodies to jumpstart the economy, Brad DeLong points us to the following statement (emphasis mine):

Injustice System

The costs and benefits of the system of the Camorra… for which see also toxic waste from mob-run dumps causing premature aging.

Meanwhile, in the US, photographs of for-profit youth prisons.

Meanwhile, the inconveniences of the country gent, the makeover of the pony car, and
a very short poem by Margaret Atwood.

Meanwhile, elsewhere.

Meanwhile, elsewhere.

Anyhow in a corner, some untidy spot
Where the dogs go on with their doggy life and the torturer’s horse
Scratches its innocent behind on a tree.

Wall Street Journal Editorial … Sanity?

As a general rule I trust the Wall Street Journal only for their “a-heds” — the quirky fun stories — and their car reviews, where Dan Neill makes it more entertaining to read about cars than to drive them (seriously, I’d rather take the train and read his review of a Bentley than be stuck in traffic in a Bentley, or try to find a parking space for one). But sometimes the other writers come up with something that actually makes sense. Not, of course, on economics or science or public policy. There, they are refreshingly, consistently, insane.

But seriously: Bullying.

Yes, bullying is bad. But it’s worth questioning why it’s the cause du jour. WSJ columnist Nick Gillespie:

I have no interest in defending the bullies who dominate sandboxes, extort lunch money and use Twitter to taunt their classmates. But there is no growing crisis. Childhood and adolescence in America have never been less brutal. Even as the country’s overprotective parents whip themselves up into a moral panic about kid-on-kid cruelty, the numbers don’t point to any explosion of abuse.

Similarly, The Atlantic’s Ta-Nahesi Coates points out that the bullying discussion is largely about what Twitter would call #whitekidproblems:

That aside, worth thinking about the unspoken racial component. If you are a black kid growing up in urban America, as I was, you can expect to have a consistent and enduring relationship with violence. You can expect to find yourself ambushed by packs of children simply for walking down the wrong street. You can expect guns to intrude upon your world. And should you be perceived as “weak” in any way, you can expect all of these forces to fall upon you with an exponential fury.
…
I am glad to see Lady Gaga and Oprah combating bullying at Harvard. It would have been nice to see them in Harlem.

But yes, bullying is terrible. I was bullied for… oh, a long time. Eight, ten years? I was an odd kid, a nerd, a nose-picker, easily provoked to tears, and I didn’t immediately understand which toys and games were for boys and which ones were for girls. So, yeah. I was disliked widely by my peers. And it was unpleasant.

So that leads me to ask: How will these new policies and rules actually help?

More importantly: Is bullying necessary? It’s true, nobody should be cruel. But people are. And while it is almost certainly a good thing to reduce the suffering of children, I wonder whether we’d make more trouble for ourselves if we eliminated it entirely. Not that we could, but imagine if it happened.

Grownups lie to children about Santa and the Easter Bunny, and discovering that lie prepares them for the fact that adults are not always to be trusted. Having a beloved pet die prepares them for the eventual loss of parents and siblings and friends and lovers. Just as rote drills and homework and standing in line teach our children to put up with the inevitable pointless and unpleasant tasks of the rest of their lives, don’t the petty cruelties of childhood prepare them for the greater cruelties of adulthood?

Revenant

I’ve finally gotten around to watching the Popcorn Sutton documentary “This is the last dam run of likker I’ll ever make,” and it’s somewhere between awesome and horrible. He was a showman and a raconteur, and he put together a business out of being a hillbilly mountain man and cultivating the moonshiner mistique. And also he was, in fact, a moonshiner, and not in the romantic gentleman outlaw artisanal distiller way. More in the cheap unlicensed booze way. After this movie was made, he sold it and promoted it and profited from it. And he also continued to make liquor, “last dam run” or not. He got busted. Then he committed suicide.

Anyway, you can find the doc up on YouTube as a series of 10-minute clips, all of them worth watching.

But look at a picture of Mr. Sutton, and listen to him talk about how soon he’ll be gone, and tell me it’s not obvious, at least in retrospect, that he’s less a hillbilly and more a mountain revenant warning us of inevitable doom.

Popcorn Sutton

Modest Proposal on Healthcare

Like any right-thinking liberal, I feel that the individual mandate is a not-all-that-terrible way of getting toward universal healthcare. Not as good as some variant of “Medicare for all,” but better than what we’ve got now.

It doesn’t fix the fact that the insurance companies are still in the business of denying care to people. And it props up those companies.

And of course, a lot of people resent the mandate. And that mandate might be ruled unconstitutional. If it is, the most popular part of the ACA – the “no pre-existing condition denial” part – can’t work.

If it’s not withdrawn, it’ll kill the insurance companies, and we’ll have to turn to providing health care directly, through taxes, without having a special middleman insurer. Win.

If it’s withdrawn so that the for-profit insurers can continue to survive, I’d love to see a rule that anyone denied coverage by a for-profit insurer could enroll in Medicare. Also win.

Who’s with me?

The most horrible thing you’ll read all day/week/month

Worse than that Rolling Stone article about how Michele Bachmann’s congressional district has basically exacerbated bullying and touched off an epidemic of suicide among its teens is this piece in N+1 about violence, particularly sexual violence, in the the largest prison system in the world:

Crime has not fallen in the United States—it’s been shifted. Just as Wall Street connived with regulators to transfer financial risk from spendthrift banks to careless home buyers, so have federal, state, and local legislatures succeeded in rerouting criminal risk away from urban centers and concentrating it in a proliferating web of hyperhells. The statistics touting the country’s crime-reduction miracle, when juxtaposed with those documenting the quantity of rape and assault that takes place each year within the correctional system, are exposed as not merely a lie, or even a damn lie—but as the single most shameful lie in American life.
….
In January, prodded in part by outrage over a series of articles in the New York Review of Books, the Justice Department finally released an estimate of the prevalence of sexual abuse in penitentiaries. The reliance on filed complaints appeared to understate the problem. For 2008, for example, the government had previously tallied 935 confirmed instances of sexual abuse. After asking around, and performing some calculations, the Justice Department came up with a new number: 216,000. That’s 216,000 victims, not instances. These victims are often assaulted multiple times over the course of the year. The Justice Department now seems to be saying that prison rape accounted for the majority of all rapes committed in the US in 2008, likely making the United States the first country in the history of the world to count more rapes for men than for women.

Oh, I love quizzes that tell me about myself

Gawker has a great takedown of David Brooks and his love of crypto-racist Charles Murray.

Brooks, like Jeff Jacoby, seems to exist solely as a token conservative who reassures liberal newspaper-buyers that conservatives are idiots. But I think that’s not really the case. Well, not for Brooks. Jacoby’s opinions really are such a caricature of conservatism I can’t actually believe he’s serious, or that anyone would publish him as an honest and sincere advocate for anything.

But Brooks does a slightly better job of seeming reasonable. I mean, he’s identifying actual problems, like a widening cultural divide accompanying the widening economic divide. But his understanding of the causes and solutions are so stupid it just burns.

Anyway, Murray has a quiz he wants isolated upper-crusters to take to determine about engagement with the 99%. Gawker fills it out for all the candidates, and of course, Obama wins. Durh.