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Should we forgive car loan debt of young people who bought the pitch of salesmen?
Dennis Wyatt
Dennis Wyatt

This is a tale of two 19-year-olds.

They both obtained fairly decent paying jobs and have been working for a year. They are making $18 an hour working 40 hours a week

Both are living at home essentially rent free.

Each has saved up some cash to buy their first set of wheels. Both got their parents to agree to co-sign so they can get the best loan rate.

They both research cars. They ponder their dream wheels. They see what their friends are driving including many that are better off financially. They visit car lots. They listen to the pitches of sales personnel.

Their parents tell them to think long and hard as this is a four- to seven-year commitment depending upon the loan program. In both cases a frugal aunt tosses in her two cents’ worth saying when it comes to resale value down the road dependable and economical has more durability than glamour and flashiness.

One opts for a 2020 Nissan Versa that comes to $14,730 before tax and license. His rationale is simple. He comes to the conclusion he simply needs basic transportation and even though he has been earmarked as someone who could be an assistant manager he doesn’t feel comfortable spending money he doesn’t have on the assumption bigger paychecks are just four or so years down the road.

The other goes for a loaded 2020 Mustang costing $31,400 before tax and license. He also has been told he could he’s capable of becoming an assistant manager. Fatter paychecks are dancing in his head.

Three years down the road both of them go up to $20 an hour as they are firmly on a management path with bigger pay days ahead.

Each is itching to get out on their own, even if it means sharing a place with a friend.

The owner of the Versa, while not flush with cash, doesn’t have crushing debt. He is able to pay half the rent on a decent apartment.

As for the guy with the Mustang, he’s not going anywhere for a long time as he owes his soul to Bank of America.

This brings us to the question du jour of this political season: Should the government bail out the young Mustang buyer because his car loan debt is an impediment to his entering the housing market?

You’d be hard-pressed to find a single presidential candidate willing to make that a part of their platform. The main reason is that those buyers of the Nissan Versa and other similar models would be highly unlikely to vote for a candidate who wants to penalize them by using the taxes they pay to get the Mustang buyer off the hook who knowingly took on a heavy debt load to pursue their dream car out of the gate.

But when it comes to higher education, by all means we should forgive the debt, they say.

This is not a weak analogy even if it was for one reason and one reason only – the salesman part.

When students are deciding on a career path they tend to get the equivalent of the salesman pushing the Mustang. Even when a community college or a state college will do, they are told you want the fully-loaded education because, quite frankly, it’s a bit prestigious and flashy to say you went to USC or Stanford. That’s not to say you can’t get a high-octane education from such schools and tear up the course of life. You can. It’s just that for most people they simply need a basic and dependable education to succeed.

Driving the Mustang will expose you to new experiences and perhaps “open your mind up” when you open the throttle on the open road. But the reality is relatively few careers require a fully-loaded education to get started.

What has happened though was more and more people piled on the upfront options at the persuasive insistence of salesmen – educators, if you will – that it has gotten to the point nothing separates much of anyone after a four-year degree, meaning master degrees and such are done more and more “upfront” before people even start their careers.

It’s funny that the political battle cry is to make healthcare less expensive and more efficient but not to have the government cover existing debt patient care debt; but when it comes to education there’s nary a peep about making it less expensive and more efficient yet the big demand is that the government wipe out all debt.

More than a few folks wanting to occupy 1600 Pennsylvania Avenue when January 2023 rolls around want to forgive student debt. We are told student debt is dragging down the economy. It is unfair that someone who has a masters’ degree who failed to land a job that justified the financial investment in college can’t buy their own home at age 35.

The real fix isn’t dismissing debt – it’s refusing to continue to prop up an education system that has failed miserably beyond the 12th grade to re-invent itself.

And how should college and other post-secondary educational institutions do that? Good question. One thing is for sure it will never happen in a system where there is, for all practical purposes, no hard limits on student loans which means there is no limit on the amount of money universities can vacuum up from the pockets of students.

Scholarly professors wax eloquently about the disruptive economy and how the dynamics led to the creation of a device such as the iPhone that keeps getting cheaper in comparison to what you get with each new model and even has led to extremely functional Smartphones at a quarter of the price. But then you look at the university and college business models with bloated administrative salaries, old school operations, professors often stuck in a 20th century approach with 21st century pay when it comes to how an education is “delivered” in terms of time and structure.

To make it all the more bizarre, politicians reach out to professors who have a history of doing what they do that involves no disruptive gestures – sorry but switching Blue Books for iPads is not disruptive as it is just an extension of going from parchment and ink to ballpoint pen and paper – to create white papers on healthcare.

Yet healthcare in reality based on the high level of quality care we get today and what medicine can address that it could not even 25 years ago is arguably more cost-efficient and effective.

The same cannot be said for higher education.

Enriching and educating yourself is priceless. That is indisputable.

The question is whether someone else should be saddled with the cost for your enlightenment.

This column is the opinion of Dennis Wyatt, and does not necessarily represent the opinion of The Ceres Courier or Morris Newspaper Corp. of CA.