In this episode, we delve into the pressing issue of the student loan debt crisis, a topic that has sparked significant debate across political lines. Vance Crowe explores the historical context of student lending, tracing its evolution from private bank loans in the 1970s to the current state where the majority of loans are held by the government. This shift has led to skyrocketing education costs and a system where students are burdened with debt that is nearly impossible to discharge through bankruptcy. The host argues that the current system discourages entrepreneurship and family formation, and proposes solutions to address these systemic issues.
The episode also touches on the cultural and corporate factors that have perpetuated the cycle of student debt, such as the role of HR departments in requiring degrees for employment to mitigate discrimination risks. The host suggests that removing bankruptcy protections for student loans and eliminating government involvement in lending could be viable solutions. Additionally, the episode briefly mentions the importance of legacy interviews, encouraging listeners to preserve their family histories through recorded interviews, especially with Mother's Day approaching.
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Unknown:
Welcome back to the podcast. I'm glad you're here. Today, we are not gonna talk about tariffs or the stock market or the price of things because there is an issue that I brought up on x that really hit a nerve with people, and I thought it was worth exploring some more. So even though we're looking at all the chaos that's going around about finances and manufacturing, I wanna throw a little bit more on the fire. But this time, I think I have a solution to a major problem that nobody's talking about And it's one of those solutions that should be bipartisan. We should be able to get everybody on board with that. And that is the problem of the student loan debt crisis. Right now, we hear about this talked about all the time. The left comes and says, hey, there's so many there's over a trillion dollars of student loan debt.
The average borrower has over a hundred thousand dollars in student debt, and we should just declare a jubilee. We should say, no. We're we're getting rid of those, loans. We're gonna let you free. And the right says, no. No. That's not fair. I paid off my student loans or I didn't take on those loans. How come you're giving them money? What are you gonna give me money for something else? And so the fight goes on and we spend a lot of political energy and attention on this but nothing ever gets resolved. And I would actually make the case that even if you did the jubilee and let people out of their student loan debt, we would go back to this problem almost immediately unless you solve the systemic issue. Now, just to start from the offset, I had student loans and I paid them off and it was no easy thing. It required a lot of resources and, my wife and I painstakingly took this on and I'm so glad to be out of student loan debt. But when I look around at the world, I realize that this issue, even though it wouldn't benefit me to have all of these things absolved, in the short term, over the long term, I think it definitely would to get rid of so much debt that people can't get out from underneath.
But before I throw out my solution on what I think should happen, we should talk about how did we get here. Because how we got here really kind of illuminates why this is such a big issue and what the only actual solution could be. In the nineteen seventies, almost all student lending was done by private borrowers. So you would have a bank that would, find, somebody that needed a loan to go to school, this person would go to school and they would presumably pay back these loans. But the banks would realize really quickly like, hey, there's no collateral here. If a person gets a good education and then they decide after they're done to quit paying, we can't go back and take the land or take the tractor or take, you know, some collateral thing that they have. So congress, we want you to help us out by saying it's much harder to declare bankruptcy on something like a student loan. So in the seventies, congress helped out the bankers and this presumably, lowered the amount of risk that those bankers were were taking on by giving out the student loans so they started giving more.
And we start watching price of education go up, up, up in the seventies, in the eighties, and they continue the bankers continue to go back to congress to ask for more and more provisions to make it harder and harder to declare bankruptcy. Well, in the early two thousands, the Bush administration hearing that there were so many people, that still needed to get access to college education, he did a couple of things. One, he started to increase the amount that the federal government was actually doing of the lending, and he created some provisions that said, it's pretty much completely impossible for you to be able to declare bankruptcy on your student loans. And so overnight, we watched, the cost of education go way up and the number of administrators at a university go way up and the number of students going to school. And this is because now effectively handing out money to students that were gonna spend it on college was a risk free loan. Plus, the government was there so they weren't actually tying up capital that they could be using for other resources And, the state we're in now, almost 90% of all the lending is done by the American government, and you can't declare bankruptcy on it. And so the government is not only able to garnish your wages or, or make sure that you are, contributing to those student loans no matter what.
If you get all the way into your sixties and you haven't paid off your student loans, they're just gonna take it right out of social security. And so this is a big situation and we have a lot of people that are suffering under this and when they suffer under it, it means that they're not able to start businesses, they're not able to, maybe start families, they're afraid of it. And it's very easy for people on the on the other side of this issue to say, yeah, well, that's your fault. You chose to take out these loans. And I appreciate that. Right? I have avoided trying to take out loans. I've tried to pay off all of my debts, but there's something bigger going on here. Right? Think about our education system where every person, if you're in a public school, was educated by a person that went to college. And predominantly, those teachers make more money if they go on and get a graduate degree. So many of them have a master's degree. They're totally bought into this system and they were telling generations of kids, hey. If you want a ticket out of lower middle class or factory work, you need to go to college and, get this piece of paper so you can go on to, get a good paying job.
Now Mike Rowe points all this out. This is not anything new to anybody here. But one thing you may not realize is that it's it's not just the fact that culture was pushing people this way. Another issue is that the corporations had HR departments. And those HR departments were designed to mitigate risk for the companies. And one of the ways that they mitigated risk was to avoid discrimination lawsuits. So what they did was they said, hey, if you're gonna hire, a new person or somebody that's been in their job for a while, you can't just go off of like, you know, I had a really good feeling about this person. What we should pay them based on what I think they can do. Instead, they would say, well, that leaves us vulnerable to somebody saying, oh, you gave that person a job because of their race or their sex or their sexual orientation and not me.
So the HR departments start saying, you have to have this piece of paper and depending on where you got this piece of paper from, then we can pay you based on that. So now the corporations can say, well, it's not us. We're not making arbitrary decisions. This is because this is what the paper said to them. You know, the the universities now become an accrediting situation where now in order to be able to get a good paying job, you have to get past the HR department who's trying to mitigate risk of discrimination so that piece of paper does it. And so the students that are using these degrees to be able to get into these jobs, they aren't acting irrationally. Now, of course, we can look at the spring breaks and the classes that people are taking and the degrees that they're getting and you could scoff at that and say, well, that's so terrible. But keep in mind, as these loans, became risk free, universities took on 60% more administrative cost. They added hundreds, thousands more administrators.
They started adding people and programs and new ways to get people to come to their school because as long as you came to the school, the government would write out a check and send that to your school and now you were getting money, the student was taking on all that risk, and they can't discharge the loan in bankruptcy. So I'm going to give you what I believe is the solution for us to get out of this and to never allow it to happen again. But before we do, I do wanna mention that we are four weeks away from mother's day and I know for myself, I actually haven't done a legacy interview with my parents.
So this next weekend, I am driving up to my hometown and we are going to record my mother and my father doing their own individual interviews and then an interview together where they're talking about their life stories. Where did they grow up? How was it? What were their parents like? What did they wanna be when they grew up? What was it like to raise us? And as I was telling my mother that I was gonna do this and I wanted to do it for mother's day, she did what a lot of moms do. She was excited for herself, but really she was excited that we were gonna record my dad. And we were gonna make sure that his grandkids and someday great grandkids were gonna get to hear his voice and see him laugh and smile. So it's really fun that my mother recognized that this is one way to get my dad to do a recording was to give her this gift. If you're interested in having me sit down with your mother or your mom and dad to record their life stories, go to legacyinterviews.com to find out more. And it is a wonderful gift. If you can get it in in the next couple of weeks, we'll make sure you have a booklet that describes what a legacy interview is and prepares your mother with the questions that we're gonna ask during the interview.
Alright. What can we do to resolve this problem? Well, the first thing I would do is I would point out that we do not want the government to have loans, against the American people. The government can print money and you can do nothing to hold anyone accountable. So I think that we should absolutely get the government out of lending. We should maybe make it a constitutional amendment that they cannot loan, to individuals in the economy. You know, the thirteenth amendment was, included that we couldn't have indentured servitude. And one of the things when you go look at indentured servitude was that people were saying, hey, I'll work for you for a period of years and then when we're done, not only will I have my freedom and we will have paid for my passage from the old world to the new world, but oftentimes those people would then get land. Well, now a student loan might last twenty, thirty, forty years, whereas indentured servitude was only seven years and it was so abhorrent because it captured people, it made them, unable to start their lives in order to be able to contribute to society, that it was included in on the thirteenth amendment, that it was something that we aren't allowed to do. The other thing that I think is imperative is we need to make it so even though a student loan cannot be collateralized in the typical way, we should not allow banks to say you can't declare bankruptcy on them. Bankruptcy is a critical feature of the lending economy.
We've known from Roman times to different, religious traditions that seven years is as long as anybody should hold debt. And if you're holding it longer than that, you're putting people in a position where their entire lives might be shaped by being in debt. So I believe that we should get rid of any bankruptcy protections from student loans. And, yes, if somebody wants to get rid of their loans because they are in, dire financial straits or they know that they can't get out of it, then allow them to declare that bankruptcy, take the hit on the balance sheet, and then make it so that, everybody that is, doing that, taking that bankruptcy, it does hit their credit. It's not a fun experience. They now have to pay the consequences of having their, bankruptcy hit their ability to, buy a car or, get get a house, things like that. But without it, if we can't declare bankruptcy on student loans, then those loans stay risk free and it is in everybody's in interest, the banks, the administrators, the government to keep handing out as much money as we can to students, encouraging them to be irresponsible in their younger years and that ultimately keeps them from having the freedom to start businesses, to start families, to be able to contribute.
So I know that there are a lot of people out there that don't wanna see a jubilee happen. Well, this is a nice middle ground and I think as you are, thinking about what you're gonna advocate to your legislators and where you're gonna push this out in the future, think about saying, I demand that student loans be possible to be discharged in bankruptcy. Alright. That's gonna do it for today. I wanted to do this one because it was such a hot button topic on x. We will be back on Thursday. I've got quite a bit of talking to do about the tariffs and what's going on with, supply management up in Canada. After last week's show, I got a ton of feedback from people about what I got wrong and what I should understand about NCBA and the check off programs.
So we will catch up on all of that on Thursday. And if you've been thinking about doing a legacy interview, don't put it off any longer. I know I personally have stressed that until I get up next weekend to do that, I'm gonna be worried that something might happen that I'm not gonna get it done. So go to legacyinterviews.com and sign up to have me record your loved ones telling their life stories so that you can have it forever. Alright. That's gonna do it. We'll talk to you later.
Welcome back to the podcast. I'm glad you're here. Today, we are not gonna talk about tariffs or the stock market or the price of things because there is an issue that I brought up on x that really hit a nerve with people, and I thought it was worth exploring some more. So even though we're looking at all the chaos that's going around about finances and manufacturing, I wanna throw a little bit more on the fire. But this time, I think I have a solution to a major problem that nobody's talking about And it's one of those solutions that should be bipartisan. We should be able to get everybody on board with that. And that is the problem of the student loan debt crisis. Right now, we hear about this talked about all the time. The left comes and says, hey, there's so many there's over a trillion dollars of student loan debt.
The average borrower has over a hundred thousand dollars in student debt, and we should just declare a jubilee. We should say, no. We're we're getting rid of those, loans. We're gonna let you free. And the right says, no. No. That's not fair. I paid off my student loans or I didn't take on those loans. How come you're giving them money? What are you gonna give me money for something else? And so the fight goes on and we spend a lot of political energy and attention on this but nothing ever gets resolved. And I would actually make the case that even if you did the jubilee and let people out of their student loan debt, we would go back to this problem almost immediately unless you solve the systemic issue. Now, just to start from the offset, I had student loans and I paid them off and it was no easy thing. It required a lot of resources and, my wife and I painstakingly took this on and I'm so glad to be out of student loan debt. But when I look around at the world, I realize that this issue, even though it wouldn't benefit me to have all of these things absolved, in the short term, over the long term, I think it definitely would to get rid of so much debt that people can't get out from underneath.
But before I throw out my solution on what I think should happen, we should talk about how did we get here. Because how we got here really kind of illuminates why this is such a big issue and what the only actual solution could be. In the nineteen seventies, almost all student lending was done by private borrowers. So you would have a bank that would, find, somebody that needed a loan to go to school, this person would go to school and they would presumably pay back these loans. But the banks would realize really quickly like, hey, there's no collateral here. If a person gets a good education and then they decide after they're done to quit paying, we can't go back and take the land or take the tractor or take, you know, some collateral thing that they have. So congress, we want you to help us out by saying it's much harder to declare bankruptcy on something like a student loan. So in the seventies, congress helped out the bankers and this presumably, lowered the amount of risk that those bankers were were taking on by giving out the student loans so they started giving more.
And we start watching price of education go up, up, up in the seventies, in the eighties, and they continue the bankers continue to go back to congress to ask for more and more provisions to make it harder and harder to declare bankruptcy. Well, in the early two thousands, the Bush administration hearing that there were so many people, that still needed to get access to college education, he did a couple of things. One, he started to increase the amount that the federal government was actually doing of the lending, and he created some provisions that said, it's pretty much completely impossible for you to be able to declare bankruptcy on your student loans. And so overnight, we watched, the cost of education go way up and the number of administrators at a university go way up and the number of students going to school. And this is because now effectively handing out money to students that were gonna spend it on college was a risk free loan. Plus, the government was there so they weren't actually tying up capital that they could be using for other resources And, the state we're in now, almost 90% of all the lending is done by the American government, and you can't declare bankruptcy on it. And so the government is not only able to garnish your wages or, or make sure that you are, contributing to those student loans no matter what.
If you get all the way into your sixties and you haven't paid off your student loans, they're just gonna take it right out of social security. And so this is a big situation and we have a lot of people that are suffering under this and when they suffer under it, it means that they're not able to start businesses, they're not able to, maybe start families, they're afraid of it. And it's very easy for people on the on the other side of this issue to say, yeah, well, that's your fault. You chose to take out these loans. And I appreciate that. Right? I have avoided trying to take out loans. I've tried to pay off all of my debts, but there's something bigger going on here. Right? Think about our education system where every person, if you're in a public school, was educated by a person that went to college. And predominantly, those teachers make more money if they go on and get a graduate degree. So many of them have a master's degree. They're totally bought into this system and they were telling generations of kids, hey. If you want a ticket out of lower middle class or factory work, you need to go to college and, get this piece of paper so you can go on to, get a good paying job.
Now Mike Rowe points all this out. This is not anything new to anybody here. But one thing you may not realize is that it's it's not just the fact that culture was pushing people this way. Another issue is that the corporations had HR departments. And those HR departments were designed to mitigate risk for the companies. And one of the ways that they mitigated risk was to avoid discrimination lawsuits. So what they did was they said, hey, if you're gonna hire, a new person or somebody that's been in their job for a while, you can't just go off of like, you know, I had a really good feeling about this person. What we should pay them based on what I think they can do. Instead, they would say, well, that leaves us vulnerable to somebody saying, oh, you gave that person a job because of their race or their sex or their sexual orientation and not me.
So the HR departments start saying, you have to have this piece of paper and depending on where you got this piece of paper from, then we can pay you based on that. So now the corporations can say, well, it's not us. We're not making arbitrary decisions. This is because this is what the paper said to them. You know, the the universities now become an accrediting situation where now in order to be able to get a good paying job, you have to get past the HR department who's trying to mitigate risk of discrimination so that piece of paper does it. And so the students that are using these degrees to be able to get into these jobs, they aren't acting irrationally. Now, of course, we can look at the spring breaks and the classes that people are taking and the degrees that they're getting and you could scoff at that and say, well, that's so terrible. But keep in mind, as these loans, became risk free, universities took on 60% more administrative cost. They added hundreds, thousands more administrators.
They started adding people and programs and new ways to get people to come to their school because as long as you came to the school, the government would write out a check and send that to your school and now you were getting money, the student was taking on all that risk, and they can't discharge the loan in bankruptcy. So I'm going to give you what I believe is the solution for us to get out of this and to never allow it to happen again. But before we do, I do wanna mention that we are four weeks away from mother's day and I know for myself, I actually haven't done a legacy interview with my parents.
So this next weekend, I am driving up to my hometown and we are going to record my mother and my father doing their own individual interviews and then an interview together where they're talking about their life stories. Where did they grow up? How was it? What were their parents like? What did they wanna be when they grew up? What was it like to raise us? And as I was telling my mother that I was gonna do this and I wanted to do it for mother's day, she did what a lot of moms do. She was excited for herself, but really she was excited that we were gonna record my dad. And we were gonna make sure that his grandkids and someday great grandkids were gonna get to hear his voice and see him laugh and smile. So it's really fun that my mother recognized that this is one way to get my dad to do a recording was to give her this gift. If you're interested in having me sit down with your mother or your mom and dad to record their life stories, go to legacyinterviews.com to find out more. And it is a wonderful gift. If you can get it in in the next couple of weeks, we'll make sure you have a booklet that describes what a legacy interview is and prepares your mother with the questions that we're gonna ask during the interview.
Alright. What can we do to resolve this problem? Well, the first thing I would do is I would point out that we do not want the government to have loans, against the American people. The government can print money and you can do nothing to hold anyone accountable. So I think that we should absolutely get the government out of lending. We should maybe make it a constitutional amendment that they cannot loan, to individuals in the economy. You know, the thirteenth amendment was, included that we couldn't have indentured servitude. And one of the things when you go look at indentured servitude was that people were saying, hey, I'll work for you for a period of years and then when we're done, not only will I have my freedom and we will have paid for my passage from the old world to the new world, but oftentimes those people would then get land. Well, now a student loan might last twenty, thirty, forty years, whereas indentured servitude was only seven years and it was so abhorrent because it captured people, it made them, unable to start their lives in order to be able to contribute to society, that it was included in on the thirteenth amendment, that it was something that we aren't allowed to do. The other thing that I think is imperative is we need to make it so even though a student loan cannot be collateralized in the typical way, we should not allow banks to say you can't declare bankruptcy on them. Bankruptcy is a critical feature of the lending economy.
We've known from Roman times to different, religious traditions that seven years is as long as anybody should hold debt. And if you're holding it longer than that, you're putting people in a position where their entire lives might be shaped by being in debt. So I believe that we should get rid of any bankruptcy protections from student loans. And, yes, if somebody wants to get rid of their loans because they are in, dire financial straits or they know that they can't get out of it, then allow them to declare that bankruptcy, take the hit on the balance sheet, and then make it so that, everybody that is, doing that, taking that bankruptcy, it does hit their credit. It's not a fun experience. They now have to pay the consequences of having their, bankruptcy hit their ability to, buy a car or, get get a house, things like that. But without it, if we can't declare bankruptcy on student loans, then those loans stay risk free and it is in everybody's in interest, the banks, the administrators, the government to keep handing out as much money as we can to students, encouraging them to be irresponsible in their younger years and that ultimately keeps them from having the freedom to start businesses, to start families, to be able to contribute.
So I know that there are a lot of people out there that don't wanna see a jubilee happen. Well, this is a nice middle ground and I think as you are, thinking about what you're gonna advocate to your legislators and where you're gonna push this out in the future, think about saying, I demand that student loans be possible to be discharged in bankruptcy. Alright. That's gonna do it for today. I wanted to do this one because it was such a hot button topic on x. We will be back on Thursday. I've got quite a bit of talking to do about the tariffs and what's going on with, supply management up in Canada. After last week's show, I got a ton of feedback from people about what I got wrong and what I should understand about NCBA and the check off programs.
So we will catch up on all of that on Thursday. And if you've been thinking about doing a legacy interview, don't put it off any longer. I know I personally have stressed that until I get up next weekend to do that, I'm gonna be worried that something might happen that I'm not gonna get it done. So go to legacyinterviews.com and sign up to have me record your loved ones telling their life stories so that you can have it forever. Alright. That's gonna do it. We'll talk to you later.
