Willy Walker is the chief executive officer with the commercial financing and invest group Walker & Donlop. A recent interview with him by the Commercial Observer is just his opinion but it shows a different point of view on who is to blame for student loan debt. He also lays out who is going to help save drowning debtors – nobody.
From the Interview
The reporter is in bold.
But what about to alleviate the student loan debt?
No, I do not. I think that there’s a real issue on our hands as it relates to student loans. But at the end of the day, these people made a very direct decision, to get an education to further their careers, in the hopes that it would pay off. In some instances it has, and in other instances it has not. But to create some type of big debt relief program surrounding student debt—it’s just not the way our government has run. And you could say, well, we did mortgage relief. But we did mortgage relief on delinquent loans. We held very hard on the majority of outstandings and just had programs to help people get back above water.
But they haven’t even had any programs like that for student loan borrowers. They aren’t getting a write-down and arguably the lending practices were just as bad. The market can’t really sort it out because people can’t declare bankruptcy. We can’t even see what would be happening in this market—it’s become artificial—because there is no bankruptcy.
I do think we have a very significant issue with regard to the amount of student debt that’s outstanding in America today, but I just don’t see the federal government stepping in there.
Well, maybe they should step out.
It was privatized for a period of time, and then they decided to step back in and say, “This is how we should do this.” Also, I wouldn’t be surprised if the Trump administration took a very different tack on new student debt. We’ll see. It’s a big issue; it’s keeping a lot of people renting and not able to shore up the equity they would in a home. And as a public policy issue, a lot of these people who would have been creating equity for retirement—you’re not going to get that.
Wow, the reporter got the bankruptcy issue wrong. There are bankruptcy opportunities for both federal and private student loans.
But what I found so very interesting here was the alternative big business view of the hope for students. Look, I see issues from the lens of the consumer. The current government and business see these issues from the side of business. The business side has the power.
When Walker observed, in the mortgage crisis they “just had programs to help people get back above water” but what does above water mean? It could mean the power brokers of business would be happy to see people getting back to treading water and making minimum payments, not get ahead.
Walker postulates government is not going to step in to help student loan debtors in a meaningful way. But he also observes the looming retirement crisis that is brewing because people drowning in student loan debt are not able to buy homes and build equity towards retirement. Walker says, “a lot of these people who would have been creating equity for retirement—you’re not going to get that.”
So what’s the solution here. We either deal with the student loan debt crisis today and the government writes of loads of federal student loan debt or we wait till the future when scores of people will be retiring on little funds and need support from the government to just live.
Pay now or pay later but at the end of the day the schools won, the students lost, and the crisis is only beginning.