By Professor Doom
Medieval laws can
be funny to read. Both the
laws and the penalties for violation are bizarre by modern
“civilized” standards. Many laws, of course, were enacted differently for the
serfs than for the nobility, with the former typically being punished more
severely, for a wider array of violations.
The reason for
this was simple: the nobility wrote the laws. Things have changed a bit
nowadays, we don’t really have nobility, and there’s this theory that laws now
apply to everyone (except for Hillary, of course). It’s a good theory, but
something happened to warp that theory.
Our laws are no
longer necessarily written by human beings. Our courts ruled that “corporations
are people,” especially when it comes time to make campaign donations, and so
corporations have a major hand in our law writing.
This is most
evident when it comes to banks (which have a great deal of money to influence
lawmakers), where the laws just don’t seem to apply, no matter how egregious
the criminality. It’s clear the banks are now starting to write laws, and, much
like the laws of centuries ago, these laws seem to be ridiculous to a civilized
mind.
A recent example
highlights what our system is degenerating into:
To be clear here,
this only is a problem in New Jersey. For now. The article focuses on a poor
mother whose son was murdered.
When
DeOliveira-Longinetti called about his federal loans, an administrator offered
condolences and assured her the remaining balance would be written off.
Federal student
loans are already atrocious: you can’t escape such loans via bankruptcy, you
can’t even escape them if the loans were made to a fake school offering bogus
education. Even if the loans are made on your behalf without your
knowledge…you’re still in debt until the day you die (for new readers wondering
how this can happen, the loan money goes to the school first, which can easily
take all of it, while the student has no clue what’s going on. I’ll leave the
gentle reader to consider how the loan disbursement system was set up this
way…).
So, death can
clear a student loan. Alas, New Jersey was influenced, somehow, into thinking
that this was too generous a gesture, and decided to write the law so that a
student loan debt can transcend death. New Jersey will pursue a debt beyond
sanity:
“Please
accept our condolences on your loss,” said a letter from the Higher Education
Student Assistance Authority to DeOliveira-Longinetti, who had co-signed the
loans. “After careful consideration of the information you provided, the
Authority has determined that your request does not meet the threshold for loan
forgiveness. Monthly bill statements will continue to be sent to you.”
True, the
poor mother made a mistake by co-signing the loans, but New Jersey is
remarkably vicious here:
New Jersey’s loans, which currently total
$1.9 billion, are unlike those of any other government lending program for
students in the country. They come with extraordinarily stringent rules that
can easily lead to financial ruin. Re-payments cannot be adjusted based on
income, and borrowers who are unemployed or facing other financial hardships
are given few breaks.
New Jersey’s loans also carry higher interest
rates than similar federal programs. Most significantly, the loans come with a
cudgel that even the most predatory for-profit players cannot wield: the power
of the state.
New Jersey can garnish wages, rescind state
income tax refunds, revoke professional licenses, even take away lottery
winnings — all without having to get court approval.
“It’s state-sanctioned loan sharking,” said
Daniel Frischberg, a bankruptcy lawyer. “The New Jersey program is set up so
that you fail.”
It’s natural to
ask why New Jersey is like this, but the answer is an easy one to guess:
One reason
for the aggressive tactics is that the state depends on Wall Street investors
to finance student loans through tax-exempt bonds and needs to satisfy those
investors by keeping losses to a minimum.
I keep railing
against the Federal student loans as a great destructor of both higher
education and our kids, but even state-based loans are clearly a horrible idea.
Please understand, higher education doesn’t need government support, and
certainly not “support” in form of a retributive student loan system. There
have been “private” universities for centuries that are still doing just fine,
despite this system.
On the other hand,
the huge sums of money involved here simply invite corruption, in addition to
being a system that provides no benefit to the taxpayer:
New
Jersey’s agency was caught in what amounted to a kickback scheme. The state
attorney general found that the agency had improperly pushed one company’s loans in exchange for annual payments
of $2.2 million. A subsequent investigation by the state’s inspector general
found that the agency was in “disarray.”
When faced
with scandal, and the crushing of its citizens under an obviously detrimental
system, a legitimate government would dismantle the system. New Jersey, of
course, will take a different route:
New Jersey,
meanwhile, encourages students to buy life insurance in case they die to
help co-signers re-pay. As an agency pamphlet cautions, “Are you prepared for
the unthinkable?”
Honest, if human
beings were the only ones writing the laws, the abominations going on in New
Jersey simply wouldn’t happen. The only question the remains is how long until
the Federal government uses New Jersey as an example, and makes all student
loans actually last past death?
One final point: despite spending all that money on higher education, these kids come out stupider.
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