What is a ‘Loan’?

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June 9, 2022

News commentator Matt Walsh has just released a documentary titled “What is a Woman?” He interviews many in the woke establishment, asking for a clear and concise reply to this simple question. The answers are full of academic gobbledygook and politically correct jargon about social constructs and “gender” identity. None of those he interviewed gave him a straightforward answer about what a woman is.

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Mr. Walsh should do a follow-up documentary with a different question. Something simpler. Instead of sinking into the impossible quagmire of “gender” ideology, maybe he could deal with something much more practical and urgent: an economic question.

The question would be: What is a loan?

The Urgent Matter of Student Loans

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It should not be difficult to get a straight answer since it involves a simple agreement between two consenting parties. Most people should know what a loan is. Americans have abided by the rules for generations.

However, the roaming scholar wandering around governmental and academic offices seeking clarity and definition would probably face a similar Matt Walsh trial. Today, many waffle in their definitions. This especially applies to student loans.

What makes the matter urgent is the $1.75 trillion in student loans now owed by some 46 million Americans (as of April 6, 2022).

Most students found these loans to be the easiest way to secure a degree from which they expected an excellent job. The mechanics of these loans are also relatively simple. It involves money being advanced to a student that must later be paid back with interest. The government has facilitated these transactions for decades.

However, government officials today have forgotten what a student loan is. They are attributing characteristics to these loans that they never had before. Moreover, the administration threatens to forgive student loans by executive order just in time for the midterm elections.

The Different Types of Loan Deniers

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 It is not the loan but the people that have changed. Indeed, many people, especially liberals, have become loan deniers.

The more rabid loan deniers believe that loans are instruments of injustice. They cause people to suffer because they must be paid back. Loans are unfair. Anyone who does not secure an excellent job after studying four years of anthropology is a victim. Because of the grave injustice suffered, the loan agreement becomes null and void.

Greed also invalidates loans. Greedy banks, unscrupulous university recruiters or for-profit educational institutions must be made to atone for their sins of avarice.

In this scenario, students are always the victims of injustice, the oppressed, the exploited, and the marginalized. The oppression in the system forced them into signing the loan agreement. They should not be obliged to honor it, especially at their tender age. It is a matter of justice and fundamental human rights.

Loans as Subsidies

Another kind of loan denier is less radical in his demands. These advocates call for partial forgiveness of the debt obligations. To them, the loan is a subsidy given by the government to help students who are the victims of injustice and hardship.

Thus, it would be nice if the government could partially eliminate the total student debt load. The present proposal to give each graduate a $10,000 write-off would be an excellent gesture to help struggling adults who would undoubtedly be grateful…  until the demand for the next subsidy.

To the subsidy crowd, a loan is a financial fiction that people sign, knowing that they do not have to pay it back entirely. All that is required is for the graduate to make some effort (however minimal) and then let the taxpayer pay the rest.

Loans as Bribes

To the more politically-minded, loans are excellent incentives for participation in the political process. It is no secret that many liberals are talking about student loan forgiveness as a way of attracting young people to the midterm elections. A benefit given at the time of an election to attract people to a cause is the definition of a bribe, not a loan. In years past, local government offered free rides to the polling station, free pizza or other food on Election Day. Today’s government officials think on a grand scale:  $10,000 in student loan forgiveness.

To these bribe/loan deniers, the State’s role is not to facilitate the common good but to benefit the individual. If the government offers benefits/bribes, the individualists reciprocate, showering their gratitude on (casting their votes for) the more generous politician. Votes and benefits go hand in hand. It makes people happy.

Loans as Social Constructs

Finally, there will always be those academics who will claim that a loan is a social construct. It’s YourLoan and MyLoan, the financial app for YourTruth and MyTruth. A loan involves a payback obligation only to the extent that the loan recipient thinks it does.

The social construct argument is an easy and irrational way to deny reality, especially when that reality is attached to a $100,000 obligation to repay. Thus, just imagining the loan away is enough to invalidate the contractual agreement.

A Metaphysical Reality

The problem with the question “What is a loan?” is not the “loan” part but the “is.” When saying something “is,” the nature of a thing is addressed. Rights and obligations are deduced from that nature.

If something is a loan, it cannot be something else, no matter how much anyone imagines the contrary. If something is a loan, it must conform to its nature of advancing money in exchange for an obligation to return the principal with interest.

If something is a loan, then it is a contract between two parties that assumes that both have honor and will abide by the terms of the loan agreement.

To break the agreement is to bring dishonor upon a person. And this dishonor is much more the problem than the dollar amounts attached to the loan.

Indeed, any loan that violates its nature is a lie, and the offending parties are shameful liars. 

Image: Marco Verch Professional Photographer

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