The past 4 years have been especially hard for many. Much of the middle class, now formerly middle class, finds itself stranded on the mud flats of credit as the economic tide has gone out.
In desperation many sought refuge in college paid for with easy to obtain federal loans.
Just wait out the economy many thought, good times will be here again soon. Many thought that greeting a newly rising tide with a fresh degree made a lot of sense.
The only problem is the tide has not rolled back in and now the people who lent the money, the Federal Government, want to get paid back.
To this end the Feds have amassed an army of private debt collectors to pursue those who have defaulted on their loans. Many of the people who have defaulted are in the midst of terrible personal financial trouble to begin with. That is why many of them defaulted, of course. But a pound of flesh is a pound of flesh and the beast must be fed.
If one signs a contract one has an obligation to adhere to that contract so long as it is not coerced. It doesn’t matter that one was young and didn’t understand the concept of interest. You made a bonehead move and now you must pay what you owe. Contracts must be adhered to for a free society and economy to work.
But saying this however it should be remembered that the feds are making money off of these loans which supposedly exist for the betterment of the populous at large. The government gets (nearly) free money, you do not.
It must also be noted that the rules that apply to the wayward student who owes $25,000 do not apply to the big banks. If one is a big bank and one can’t pay one’s bills, a phone call to the Federal Reserve usually solves the problem. Soon freshly “printed” dollars find their way into the troubled bank and, presto, no more default.
Think also of all the people who have defaulted on credit cards issued by the likes of Wells Fargo and Bank of America during the “Great Recession.” The banks were able to pony up to the Fed window to get out of trouble. The credit card holders had no such luxury.
Indeed many of the banks who now come after defaulted individuals managed their books far worse than many of their shamed former clients.
The same could be said for the government.