Fifteen former Everest University students have made public their refusal to repay the loans they took out to finance their education.
There are two important phenomena worth identifying here. The first is that for-profit “degree mills” like Everest are a product of our insistence that the federal government subsidize everyone’s education without regard to individual merit or the intended course of study. If school wasn’t “free,” these institutions would not exist to take advantage of the helpless and hopeless.
The second is the perverted view of reality that the students’ letter betrays. The reality, of course, is that when you borrow money you are accepting a fixed negative rate of return on the loan (the interest) in exchange for what you believe will (eventually) be positive returns from your investment exceeding the negative return associated with the loan and any relevant administrative or opportunity costs. Therefore, it is incumbent upon the borrower to ensure that the investment vehicle to which the loan will be applied (his or her education) is solid enough to offset the risks. Failing to conduct such an analysis is financial incompetence.
No lender, to my knowledge, includes a clause in his contract that abdicates the borrower of responsibility for paying back loans in the event that the borrower’s investment vehicle (whether it’s education, a small business, equities, etc.) does not perform as anticipated. Therefore, the fact that these individuals’ education has not turned out to be as profitable as they expected does not relieve them of their financial obligations. Furthermore, and most importantly, the act of borrowing money with the intent to pay it back only if the intended investment is profitable is an act of bad faith. It is unethical, and no lender would agree to those terms if they were made explicit unless the interest rates were astronomical. These “righteous” fifteen, rather than calling out a supposedly immoral system, have actually revealed their own immorality and are worthy of all the scorn that can be heaped upon them.
So, what it comes down to, is that these people got on the government’s education gravy train and are surprised that it derailed and left them stranded. Now, they want the rest of us to absorb their financial ineptitude through “loan forgiveness.” Doesn’t sound so righteous now, does it?
On another note, I make the observation that anyone who would risk financial peril for a degree from such a disreputable institution is almost certainly incapable of performing to any reasonable standard of higher education anyway.