With regard to Student Loans, the Position of the Louis Alfred Nickolas Stalwart Institute is as follows:
- We accept that usury is sin. Generally speaking (because some definitions may be nuanced), usury is any financial act in which one person (a natural or legal person) benefits from the financial distress of another.
- While we understand that competent persons (both legal and natural) are so empowered to make decisions for themselves, we believe acts of coercion themselves to be sinful. To be certain, we define coercion to mean any action that violates a person’s free will and/or personal autonomy without the bounds of proper stewardship.
- Given pointe #3, we see an individual taking a Student Loan to acquire a higher education in hopes of securing, to the greatest extent possible, future financial safety, as acts of both coercion and usury against the individual by creditors. Our reasoning is that individuals make this decision with at least some degree of anxiety about their futures, thus such decisions being made under duress.
- The duress under which we argue individuals make decisions about their education today creates long-term financial distress in three very crucial ways. First, compounding interest radically expands the life of your average student loan. Second, and deeply connected to the first pointe, is that as the value of the U.S. Dollar has declined, the value of the current earned dollars being used by a borrower to pay back these student loans declines year-over-year, thus requiring more currently earned dollars (i.e., a greater share of income) to re-pay student loans. Third, connected to the declining value of the U.S. dollar – and setting aside that your average entry-level U.S. job (which is where most graduates must start to establish their careers) does not pay enough for the average individual resident in the U.S. to sustain a lifestyle below his means – is the fact that the value of the current dollars earned even by those with a higher education and adequate professional experience is just enough to subsist but just as an un-married individual with no children.
- These acts of coercion and usury are supported by the state, as federal policy makes the discharge of Student Loans (whether federally or privately funded) virtually impossible in bankruptcy and federal policy makes absolutely no attempt to curtail, if not outright out-law, usury in student loan borrowing.
- We argue that the dreadful malaise that is the student loan crisis – a total student loan debt burden of a little under $2 trillion impacting 43 million borrowers – is the obvious conclusion of the argument made in pointe #4 and failures of federal policy as summarised in pointe #5.
- As the state should always opt for policy that limits state intervention to only what is absolutely necessary – and even then, as “light touch” as possible – federal legislation to curtail/out-law usury is not within the Overton window at this time. What is, however, currently within the Overton window is the reform of U.S. bankruptcy policy to permit an individual with student loans to dis-charge 100% of said student loans without having to forfeit any of his other assets. This change in U.S. bankruptcy policy would not only have the effect of chilling usury in student loan borrowing, but it would also make private lenders think twice about whether they want to fund the academic pursuit of the borrower in question.
- Subsidisation of any good or service by the state will result in not only a decline in the value of the good or service in question, but the distortion of the market for the exchange of said good or service. To that end, the federated state must cease all federal student loan programmes and hand the administration of all federal student loans to the U.S. Department of the Treasury. This change in federal policy would serve as a potent signal to the country’s institutions of higher education to radically reform their intake and retention models away from quantity and towards quality. Such a change would, like a change in U.S. bankruptcy policy, chill usury in private student loan borrowing and force said borrowers to more closely examine the academic pursuits being funded.