Are Navient Loans Really the Problem?

On face value, in an article from Bloomberg it looks like Navient is the latest Scape goat of the massive nightmare that is the government-subsidized student loan program. I’m not sure how entangled Navient is, and I am not condoning them, but the article is surprising on its conclusions.

  1. It accepts these student loans were beneficial to the consumer, but then it accepts 1/4 are struggling to repay their loans.

At least 1 in 4 of these loans were not beneficial to the student based on the value derived. Don’t confuse me with blaming the student and parents for a chance at a degree. As a culture, the perceived value is far out of scope with the actual value of a degree. If one goes into debt for a better more independent life, but gets the opposite….the investment was not worth it. Blaming the student or parents would be a misguided approach when there is a massive government promoting/subsidizing a degree’s worth alongside companies benefiting from government mandates.

In an actual free market, both lender and the borrower have incentives to ensure the loan is made for the right reasons and amount. A lender won’t lend if they know they will not be re-paid, and the borrower is evaluating how much is the reason worth justifying the loan. The interest rate is to ascertain the amount of risk a lender is willing to take, and if agreed upon, what the borrower is as well. Together, both parties are incentivized to make the optimal decision, to be better off after the loan is repaid.

  1. It blames a former branch of Sallie Mae as not doing its “job” to help former students pay their debt.

What incentives does a company like Navient actually have to help when it is illegal to walk away from student loans? This alone eliminates any downward pressure on price to ensure loans are of a repayable amount. Additionally, any incentive for a company to work with you to ensure payment is lost. By law the borrower has no escape from an ill-advised decision early in their lives.

Many of these student loans on a free market were bad decisions by any company issuing loans, but this isn’t a free market. Ensuring a loan company by law will receive payment eventually incentivizes more ill-advised loans, and less chance of assistance to pay back.

On this one example in a truly voluntary market, the company issuing loans with a fear of bankruptcy will, A) Not issue the loan to begin with if there is no evidence of possible repayment, B) Should a loan be issued and the student is having difficulty, the company would rather see partial or longer repayment options rather than receive pennies from a bankrupt 22 year old that has no assets to their name.

This article shows me there are huge issues way before Navient showed up. The value of a degree is not what our culture or government promote it to be. Based on the debt and money needed for a degree some are arguably worthless. Not all degrees are equal in value.

Problems with Navient will keep happening but with either different companies, or different people unless the root problem is solved.

The solution is not finding more scapegoats, its allowing education to adjust to its actual value, not subsidized and made more expensive by intervention.

Grizzly DeVos and Choice

Perhaps there was a better way for Betsy DeVos to express how the educational needs of a community are unique in her Senate hearing, or maybe not. After Sen. Chis Murphy (D-CT) asked her, “Do you think guns have any place in or around schools?” DeVos’s response soon created a “grizzly” firestorm on social media with ridicule and pious attitude from thousands of people. Now named “the Grizzly Defense,” reading social backlash it seems DeVos stated the only reason you need guns in schools are because of Grizzly Bears. What her real comments brought to light is the outright disdain or perhaps disregard most of the elites in America have for a minority population and the absolute distraction of the true point: local communities can do a far better job of education than can a Washington bureaucrat at the DOE or Sen. Chris Murphy for that matter.

The grizzly firestorm has been taken out of context, an easy feat in a twitter driven news cycle. DeVos was citing Mike Enzi, Republican Senator of Wyoming, who expressed schools in Wapiti, WY have grizzly bear fences for protection. DeVos, then took a logical next step to showcases her original point that the decision for firearms to be inside schools are “best left to local communities and states to decide,” She then followed up this comment with an example stating “I think probably there, I would imagine, that there’s probably a gun in the school to protect from potential grizzlies.”

A quick google maps inquiry yielded the knowledge this community is 2 miles away from the border of Yellow Stone National Park, which if Yogi Bear cartoons are any indication of the wildlife in the area, there are numerous grizzly bears inside the park. Additionally, these grizzly bears are probably unaware exactly where this Yellowstone border is, hence the Wapiti’s school fence. (I am unaware if the Federal Government has attempted border education programs with the Grizzly Bears instead of resorting to this fence)

It looks like DeVos was expressing each state/community is unique, which in this scenario really got the point across far better than any other example. It is probably safe to assume 99.98% of the United States believes worrying about grizzly bear attacks is ridiculous (as it should be if you live in Connecticut) but to those few schools in this region of Wyoming some 2000 miles away from Connecticut, it is reality every day.

For the thousands of people ridiculing this remark I would assume they are going to enroll their children in a gun free zone, as for communities who see no harm or actually see benefit in a firearm used as protection they are now connected with an out of context grizzly bear remark. This is a prime example of shutting down debate by using out of context ridicule and shaming.

This firestorm reveals there are segments of every population who are the forgotten, a massive reason why Trump is now about to be president. A one size fits all mandate could potentially endanger these children in Wapiti, no matter how small in numbers they are. All because people in a far off city that has political authority and ability to coerce, think this is ridiculous and know better. We are so caught up in these cabinet appointments we forget these monstrous bureaucracies are so massive there is no way a cabinet appointment can know the needs of real people in each community such as the Wapiti, WY families.

This destruction of debate also overshadowed a brilliant point; Connecticut has no idea what Wapiti, WY needs, and Wapiti, WY has no idea what Connecticut needs.

The next few days DeVos will be receiving a huge backlash from social media, public opinion and the mainstream media for thinking there could possibly be an exception to a gun free zone. But it goes beyond guns, this is also an attack against those who don’t agree with a one size fits all education. Having choices in education whether it’s what school your child goes to, what they are taught, or how they are protected; these choices are all affronts against central planning at the Department of Education.

DeVos looked to be expressing there is no one size fits all decision Perhaps when given a choice 99% of schools will decide to stay gun free but this is about the possible 1% who do not agree. The 1 % who believe a gun at their school is for safety purposes for any number of reasons, the 1% who want their child to be educated in a different manner, the 1 % who know their child does not learn like everyone else.

Careful jumping on the band wagon of ridicule. In this case a valuable point and lesson was overshadowed by an example to prove how unique our nation is, in that a school still worries about grizzly bear attack. Time will tell if DeVos actually promotes choice in schools, but her point was valid, no one at the DOE, in Washington, or the world for that matter has the knowledge or love of a child more than their parent does. That parent will have the most control and ability to effect the child’s education if those decisions are kept in the local community or school. Whether the danger is a grizzly bear, a bully, or a bad teacher only a parent has the ability and knowledge to help their child succeed in this crazy grizzly infested world.