Misplaced Jubilation Over Student Loans
Religion & Liberty Online

Misplaced Jubilation Over Student Loans

On June 29, both Houses of Congress passed, and President Obama signed, a law maintaining Stafford student loan interest rates at 3.4 percent for one more year – two days before they were scheduled to double. A number of human rights groups and religious communities have praised this development. The Jubilee USA Network, a coalition of over seventy-five churches, has been pushing for passage of this bill, and now celebrates it as a living-out of the Biblical practice of periodic forgiveness of debts. Even the organization’s use of the word “Jubilee” in its name is a reference to a practice God commanded for the Israelites in the Old Testament: “Thou shalt sanctify the fiftieth year, and shalt proclaim remission to all the inhabitants of thy land: for it is the year of jubilee,” (Leviticus 25:10). Similarly, the Catholic Church has a long tradition of periodically holding a Jubilee Year celebrating forgiveness. There’s no question that the concept of pardoning debts out of pure mercy is certainly a Judeo-Christian one. But intellectual honesty requires us to ask whether any particular event is an example of a given principle. Is maintaining the current Stafford student loan interest rate actually a Christian “jubilee” event?

The first Church-wide jubilee was proclaimed by Pope Boniface VIII on February 22, 1300, granting indulgences and remission of the penalty for sins to all the faithful who would make a pilgrimage to Rome and Saint Peter’s Basilica. As the concept of the Jubilee was gradually being developed, the details continued to change over the next hundred and fifty years (various lengths, such as 25, 33 and 100 years were proposed as the time span between Jubilees) but beginning in 1450, the Church has held Jubilees once every 50 years up to the present day, with only three omissions.

It is important to remember a number of things here: this Jubilee was proclaimed by the Pope, not by any secular government. Secondly, through their participation the faithful obtained what may be called a waiver from penance for their sins; the Jubilee did not have anything to do with monetary debts contracted voluntarily by borrowers; in fact, it was not concerned with temporal obligations of any kind. For these reasons the action of the President and Congress cannot entirely be called an example of a jubilee of Christian mercy.

It is also beneficial to keep in mind the negative consequences of this new law. First, this law only benefits borrowers to the extent that it harms lenders, who were expecting a certain rate of return on the money that they lent. Secondly, in the future, lenders may be wary of lending money when they know that the government may intervene and change the terms of the loan on which they and the borrower had mutually agreed, merely because the borrower is no longer satisfied with the terms, or cannot currently meet them. The consequences of that for would-be borrowers in the future are anything but merciful.

While there is little doubt that the government had good intentions towards borrowers while passing this law, and that Christian mercy and the concept of the “jubilee,” when rightly understood, are blessings to society, it is important not to assume that good intentions alone are sufficient to bring about desired results.