The debt collectors' lawyers didn't arrive prepared to win, because most people didn't show up. If you can win 85% of cases just by showing up, why bother.
A court system that allows these dynamics to dominate isn't serving well.
The volume-based attorneys often exclusively practice in one area and rarely face an attorney. The few times I defended people, it really threw a monkey wrench into the process.
Unfortunately, there is no money in being a white knight in most areas of little people law.
It got worse over time as the collection agencies sell bad debts at a discount, and the bottom feeders when the debt is close to aging out are awful.
I had a small unsecured debt that was put into collections and then I was served an order of execution by the marshal to appear in court. I went to court and the judge made me sit down with the debt collectors lawyer and a mediator and we worked out a repayment plan at about 60% of the original balance.
I really don't understand what "win" means in this context besides avoiding a default judgment.
Debt collectors often don’t play by the rules, or don’t keep good records that are required to legally collect the debt. Even if they do, it’s not like the lawyers are likely to spend time tracking down the info for a single case to prove it.
“Win” means the debt is found invalid due to one of these reasons.
Most defendants don't know anything about the case. They've been avoiding collection calls for years as agencies sell and resell their debt. Piles of unopened mail, etc.
For their part, the agencies tend towards sloppiness. Some debt sells at <5% of face value, and comes with virtually no information or documentation.
Thinking about this is a matter of justice is ridiculous. It's not a justice driven process, it's an economics driven process. The agencies do this as their business. They work repetitively, create a process and pursue cases as long as average revenue exceeds average court costs. If a defendant shows up and wins, it's a small cost. Most defendants don't show up, so they don't bother spending legal time making cases good.
And yes, it is the courts responsibility to put a stop to it. For one thing, resolving debt humanely (or not) has been a court function since ancient times and still is. Secondly, debt collectors have basically turned these courts into their own shady place of business. It reflects badly on the court, besides clogging it.
Most of the defendants (which were small or large companies, some local and some national) in these citizen-brought cases didn't even show, but those who did typically brought a lawyer to deny the charges, and were usually asked by the magistrate to work out a settlement in the hallway.
Excluding the local small claims plaintiffs such as myself, about half the docket consisted of national credit card companies suing local debtors. The lawyer for say BOA would come in with a list of 10 local people being sued for amounts under the small claims threshhold. Maybe 1 in 4 defendants in these cases did show up, and were asked to work out a settlement in the hallway. If the local person being sued didn't show, the default judgement was for the credit card company with treble damages, putting these people further in the hole.
Filing answers is relatively simple and doesn't cost anything.
Depending on the jurisdiction, filing an answer basically puts the brakes on the case because it is not worth it for the debt collector to pursue it any further. Their business model is based on default judgments.
Eventually, after a year or so, if no action has been taken, the court is likely to dismiss the case (or you can ask them to).
Also, debt collection law has a lot of federal consumer protections and often more protections at the state level. Thus, it is not uncommon to run into debt collectors that are violating fed or state laws. Raising such issues also makes the case go away.
Of course, your mileage may vary depending on local laws and the nature of the debt or contract breach. But when I practiced little people law (before I sold out and went into IP law) I did this a few times and it worked without issue.
Thinking about it now, I guess a debtor-side lawyer should be involved, but defending such cases require hardly any effort on the part of the lawyer, so again I wonder why there are not debt relief orgs doing this. I believe fighting back just a little would significantly reduce the predatory practices of the volume debt collectors.
I imagine debt relief agencies don't fight because I think many are funded by the credit industry. So they direct debtors into payment plans rather than trying to shut down the predators.
Or they require money up front to help you. They already know you are (likely) a default risk, so “cash in advance, please”. And as you allude to, a lot of times the “real” value in services like this is relief from the stress of the calls and letters. They’re not passionately involved or connected, they just have the calls directed to them and put up with it and give you a settlement offer that you could have reached in the first place.
Still in consumer debt collection, even if they can prove the debt, predatory/volume collection firms tend to fold if an answer is filed. Not always of course, since as you know many factors may come into play.
https://leginfo.legislature.ca.gov/faces/codes_displaySectio....
It's a two step process. First your get the default entered if they don't respond, then you ask for judgment for damages. Maybe that's where the confusion lies. The default is entered by request almost automatically if they don't respond. Getting your judgment for damages requires evidence to prove your case.
I might make a guess that the efforts of our corporate overlords to force everyone into nonjuducial arbitration has something to do with it.
And I imagine most of us agree collection should be pursuant to due process.
I don't really see any other options.
Even in a simple terms, it hurts people's sense ethical and societal obligations. Why should I deprive myself of consumption and be a responsible economic participant, when I can spend money I don't have and then have my debt forgiven?
Ill try a perhaps stupid example I guess..
If I agree to borrow my car to you I kinda want it back eventually? In bankruptcy it becomes a conversation about who needs my car more? uhh??
Others should learn from that not to allow anyone else to drive their car (even if they badly need it) and that having the keys mean you don't have to give it back.
Banks creating money out of thin air does change the topic a lot.
I'd like to see a [small] basic income that pulls a substantial number of people out of the paycheck-to-paycheck horror movie.
And remember, there is no free lunch here. Making life easier for borrowers who can pay but won't just means the rest of us have to pay more for out legitimate borrowing.
Should someone build a small company to defend all those people solely based on some contingency fee (well a tiny percentage of what they owe or would pay if they lose).
If I owe $5,000, a lawyer takes the case, and prevent me to pay the $5,000 for a $500 fee, and I never hear again about the debt collector, that seems a win-win.
Those debt collector would start to think twice before going to court, and if really working, debt collector would start to think twice before buying debts at the first place.
It could be automated, with a single website, where I enter few details about my case (or the website contacts me based on scrawling the dockets), give me free advices to fight it myself (e.g. ask debt collector for all communication to only be done by mail, as allow by law, ask them for proof of debt, etc.). And if it escalate to court, then a lawyer would be assigned to represent me.
Looks like some software could fight this court scaling issue, by fighting before it goes to court, and then making it less predictable for debt collector to go the court route.
It's both great to know "man, that dollar went a long way"... and still feels like a tiny drop in a very large bucket.
Compare the sheer toil of using food stamps vs using the mortgage tax deduction.
Texas leads the USA in judicial transparency! Sacramento, you got some 'splainin to do.
debtor: good lender: bad
I have empathy for the horrific stories author shares, but my logic was seeking the obvious topic that never came (in those two chapters). What if lenders decided to not lend? Wouldn't that leave those poor souls in Madagascar in even worse position?
The book is propaganda.
It's hard to put the genie back in the bottle.
If people didn't have debt as a way to access these things, there might be more energy for addressing the income inequality and lack of class mobility we have, that's being obscured by the access to debt.
The problem everyone has getting their mind around debt collection is that they focus on the after-the-fact situation, instead of the whole picture. If companies cannot collect on debt, they will be less willing to extend credit. When you "help" one person who can't pay their debt, you're hurting several people in the future who won't be extended credit.
Student loans are a good illustration of this. People clamor to make student loans dischargeable in bankruptcy--citing examples of people with hundreds of thousands of dollars in crippling debt. But the median American doesn't have any student debt, and the median debt for people who do is just $30,000. Now as a practical matter, student loan forgiveness would just impact taxpayers, since almost all student debt is owed to the federal government. But if it was a normal debt market, making student loans--which are offered without any security--dischargeable in bankruptcy would cause student loans to dry up for everyone, even the vast majority of people who take on modest, manageable debt.
Let's take your example of student loans. We can both agree that making student loans dischargeable in bankruptcy and not owed to the government would cause the student loan market to contract. What if you think that this kind of debt, being non-asset backed, is not just unethical but unsustainable inside a functioning free market? What if you think that many institutions have made use of debt inflation to bloat their bureaucracies, facilities and other non-academic investments via a bubble that can and should pop? What if an alternative financial product should exist that forced institutions to put skin in the game towards the permanent economic future of the students that they are ostensibly responsible for and selling a product towards advancing?
I think that we need to remember that debt is primarily a mechanism for moving around value, and that the intrinsic value (liquidity) that it provides is distinctly marginal. We as a society in America should question whether it is a robust long term strategy for the country's economic future to even allow for the option of selling an education with debt-based financing without some kind of a positive outcome guarantee. Otherwise, the incentives are almost guaranteed to result in bad actors exploiting the disenfranchised. Outside of the moral hazard here, the more unavoidable hazard is the market hazard of overleveraging assets whose intrinsic value cannot support the bonds they back, causing an unnecessary macroeconomic financial shock that could be avoided with foresight.
The only reason they change that much is due to the ability of loans.
A bankruptcy would simply automatically put all your assets up for a same-day auction. Any unlisted items would be auctioned as a lump, for anyone willing to research what you actually owned to play 'Storage Wars' with. Anyone could bid on those assets (including your friends buying your stuff to give back to you). All proceeds of auction would be claimable by anyone you owed a debt to in a fully automated manner.
In such a world, any time you woke up in the morning and decided the auction value of your assets was below your debts, you could text the number, re-buy things you really cared about for probably cents on the dollar (nobody wants your dirty laundry), and carry on your day worry free.
There's actually a good startup opportunity here. Many of these debt collectors are unethical. You could buy these bad debts for pennies on the dollar, settle them for a very modest margin, and help the poor people fix their credit without filing for bankruptcy.
There are different levels of debt collection. The first level is generally done by the guarantor. Someone falls behind on a bill, service is shut off, and the company tries to get the consumer to pay the bill. The next level is when a company sends the bill to an outside collection agency to attempt to collect on it. The collection agency will get some commission on that if they manage to collect. The debt is maybe 6-12 months old at this time. If the first agency fails, sometimes it will get sent to a second or third agency to see if they have more luck. At some point in time the company will decide that the debt is unlikely to be collected and they will write it off. It’s at this point that debt may get sold. The debt is likely years old at this point. The company that buys it will buy for pennies on the dollar (it’s like any market, sometimes it’s more, sometimes it’s less). They are then the owner of the debt and any money they collect they get to keep. They’re able to settle for much lower amounts. If you have a $1000 debt that was bought for $50, you can settle for $250 and still make a profit. The consumer is able to clear the debt from their credit report for a fraction of what they owed (though it still shows they paid it to a collection agency and that still hurts their credit, but not as much as an unpaid debt).
Long answer to your question, but yes there can be good money in it, and there is probably an opportunity here to do some good.
Most blanket statements have flaws in them...
https://www.econlib.org/archives/2012/07/hummel_on_graeb.htm...
> I have read David Graeber’s Debt: The First 5000 Years thoroughly and despite Graeber’s readability, scholarship, and erudition, it is a very bad book. Its tone is much too polemical. More important, when it gets to the more recent history that I know well, it is riddled with errors and distortions. Beyond that, it suffers from serious conceptual confusions, and in his excellent critique, Robert Murphy has only scratched the surface.
https://www.bradford-delong.com/2012/02/gabriel-rosser-on-da...
>> How the poor debtors still sell their daughters, How in the drought men still grow fat « Code and Culture: At Unfogged there’s a review (and a very funny comments thread) pointing out that the following sentence contains six factual claims all of which are incorrect:
> Apple Computers is a famous example: it was founded by (mostly Republican) computer engineers who broke from IBM in Silicon Valley in the 1980s, forming little democratic circles of twenty to forty people with their laptops in each other’s garages
The above is a quote from Debt about Apple.
Here is the index of posts about errors in Chapter 11.
https://www.bradford-delong.com/.services/blog/6a00e551f0800...
I see this as similar to the payday lending debate. Payday lenders aren’t creating demand, they are responding to it. What happens when we eradicate that form of lending? Most things start from good intentions.
No bicycles, motor bikes or Hondas. If you can’t afford a Mercedes you can walk.
The average price of a new car is around $30,000. What percentage of Americans can afford a $10,500 down payment and a $900 monthly payment? I’d guess less than 15% but it’s just a guess.
Patio11 also wrote about talking to debt collectors with regards to identity theft. https://www.kalzumeus.com/2017/09/09/identity-theft-credit-r...
I get an average of 1-2% off of almost everything I buy simply because I can use a cash back rewards card to do it. It's sickening.
Before you go to court the debt collector has to send you proof they served you papers for your debt. They have to send you proof of the chain of debt from the original creditor on down. For a $3,000 debt I was sent a packet of at least 80 pages with tabbed chapters and detailed photos confirming service before I had to go to court. I did not request this information, they were required by law to send it to me.
These are not optional. These records are necessary to get a judgement.
Debtors ARE at a disadvantage in the courts if they do not have the money for a lawyer to fight or they don't have the time to show up on their own. This is an injustice. But saying that debt collection is being illegally enforced in the courts I believe is just untrue. If you do not owe a debt and contest it in court you prevail. But if you do owe a debt and through neglect or ignorance you end up with a default judgment or negative consequences that is on you.
At the bottom end of the debt collection pool, one strategy is to buy debt with a high chance of no-show and win cases that way... no need for meticulous and expensive lawyering. If people aren't answering their phones or opening any official looking mail...
It's not the only strategy, but it is one.
I think it's a mistake to look at these things too moralistically though. At an individual case level, maybe you're right. It is on you.
What we're looking at here though is an industry. It is built on knowledge about how certain people behave under stress of debt and exploits it. It's also dirty all the way down. Mostly, by the time these go to court the debt has been resold multiple times at small fractions of face value. Crazy interest has been applied.
Economically, it is really going for the last drop. Companies selling off bad debt... it's a pretty marginal income. On the other side, these collection agency debts basically eject a decent portion of the population from good standing in society. It's harmful, and it is happening in a court.
Scale, circumstance... when it gets this big we need to look at it systemically.
You took on the debt. You decided not to show up in court. Are debtors just never accountable for their actions?
Also to quote a comment by a lawyer in this thread
>I am licensed in California and Texas, and in both states one must "prove-up" a default before judgment is entered by presenting a "prima facie" case. In other words, you must prove your case before a judgment is entered, even if the defendant does not show up.
So in some circumstances even if you don't show up the debt collector must fight to get a judgment as if you were there. I really suggest you look into the resources available to low income debtors in most states. In my state there are entire systems set up to support people who feel beset by debt collections.
The vast majority of jurisdictions do not require creditors to provide this information in most cases.
NYC's rules came into place within the last decade, after patterns of serious abuses by creditors.
These are debts sold at >10% of face, often smallish debts that have accrued massive interest. Some agencies specialise in persistent calling. Some specialise in deal-making. Some specialise in legal proceedings. These are the ones we are talking about.
To work, they need to keep legal costs low. They often don't bother to have a case, because they're happy to win just the no shows. That's the formula. Buy 100 notes. Take them to court. 80 or so will no show. You can then try to seize the their assets. The whole thing is premised on the fact that these defendants don't open their mail. Either side making a case to a judge is rare.
It's a misuse of the legal system, and the court shouldn't allow it.
There has to be proof in court that a debtor was served papers to get a judgment. There's a term called 'sewer service' where some shady collectors try to fake this service. If you get lucky your debt collector might try this on you, it's a great way to get debt wiped clean by a very angry judge.
But they will absolutely try to claim 4-6 hours of legal work at $275/hr, for mail merging a Word document to send you.
I really don't see how.
They file a case. They present an argument. The other side doesn't. What should the court do? Keep asking the other side to bother to show up? If they did that you could block any claim forever by just not showing up. That's not justice.
Our whole society's legal basis is 'show up and present your case and have it judged'. It's called the 'adversarial system' - look it up.
If it's a genuine debt, and it sounds like it is, then either pay up or argue your case in court.
Can you give an example how the rich benefit from programs like social security, Medicaid, food stamps?
Before anyone jumps on me, I'm not saying letting their children starve is a valid solution.
But anti-poverty programs unquestionably allow illegal immigrants to work for wages less than it would take to support their families lifestyle, which encourages them to come to the US.
Upper middle class and wealthy people benefit from that.
The other issue with food stamps is that it's pretty common for poor people with drug problems to turn them into cash by buying steaks / meat and selling to restaurants.
So the hallmarks of the wealthy Cali lifestyle end up indirectly subsidized by food stamps.
Basically, a hiring class benefits from a healthy and safe hitting pool. For mostly obvious reasons.
It seems quite fitting here that Goodheart’s Law came from an economist.
Not necessarily.
Consider savings, for example.
Are high savings good for an individual? Well, yes, of course, they are! But every dollar saved is a dollar not spent. If everyone starts saving as much money as they can, this will damage the economy, lower spending, and will make everyone poorer (it's difficult to save money when your income derives from other people spending it.)
Debt is the opposite of savings in this respect. If you go into debt, and spend, it's good for me, as the person deriving income from your spending. Vice versa, if I go ahead, and spend that money, it will eventually be good for you, as your income is another person's expenses.
Does this mean that we should all max out our credit cards tomorrow? Well, obviously not... Just like we should not all become wealth-hoarding Tolkienesque dragons.
It's not clear where exactly the optimal point on the savings-spending axis lies. It certainly lies on different points for different people, depending on your personal wealth, skills, social class, luck, or your personal value system, etc. Some people benefit a lot from a healthy economy. They obviously want everyone else to spend more. Some people benefit very little from a healthy economy. They obviously want to spend less.
It's not a trivial problem to solve. I personally think there are some kinds of debt that are way worse than other kinds of debt. High-interest debt is problematic. High-burden debt (Like mortgages) is also problematic. Debt that inflates asset prices (Like universal student loans) - also problematic. Medium-low interest, medium burden debt (Like most car payments)? It seems less problematic to me.
Bloomberg: https://www.bloomberg.com/news/features/2017-12-06/millions-...
NYT: https://www.nytimes.com/interactive/2014/08/15/magazine/bad-...
OK but with the exception of fraud and incorrect identity then the rest of the people have a real original debt right? The debt might be sold at a fraction of it's original amount but that's because the debt collector takes a risk to put in time and legwork in exchange for collecting a real legal debt.
I am against exploitative debt fees/interest and I realize the debt collection world is full of shady figures but the narrative of the debtor as victim is a bit oversold.
If the choice is between clocking up an insane credit card bill at astronomical rates or not having your family thrown out onto the street for another month or two because maybe your job search will finally pay off, what would most people pick?
Some people get into debt because they can't manage money. A lot of people get into debt either because they're not paid enough, or they're not paid regularly enough. or the economy fell apart around them for reasons that are nothing to do with them.
And anyone who freelances will tell you stories of clients who refuse to pay for 3-6-9-12 months past due. (Yes, you can always find better clients - if you have enough of a lead time.)
Debtors are debtors because they're at the bottom of the power pile. Many aren't "guilty" of anything except getting screwed over by a business culture which is driven entirely by inhumane feral greed.
The same goes for fraud in debt collection. As I mentioned in previous comments, tactics like sewer service by debt collectors are a great way to get your debt dismissed.
Many people with lapsed unsecured debt know they owe that money, they simply prefer to pretend the debt will go away if they ignore it. If they don't know they owe the money then they definitely know they're being sued because in court they can't get a judgment against you without you knowing about it. On top of that many states require the debt collector to prove you owe the money even if you completely neglect engage with the system at all.
For instance determining whether or not a house is a homestead and whether or not the debt is therefor effectively non-collectible or not is something that requires a court.
Nah, not really. Depends on the debt, honestly.
Maybe a concrete example would help.
I'm talking about a business model whereby an agency systematically buys "no show debt" at a tiny fraction of face and mass produces personal bankruptcy. As the article shows. This business model (subsidised by the state, which provides the court), in 2020, is civil law.
That business model is not something the courts should play ball with. Lawyers and judges will stay within the legal rules.
In any case, I think there needs to be a debt regulator...
The standard of evidence in civil court is "the preponderance of the evidence". Would you propose changing that standard, so that a debt collector's unchallenged word isn't good enough to prove their case? What exactly do you propose to do about the fact that most people default?
Should we make participation in civil cases mandatory and issue bench warrant when defendants fail to appear? Should we reduce how much income can be garnished so that garnishment is effectively useless? Should we require that every update in the case be personally served by a process server?
The business model would collapse overnight if debtors began challenging creditor plaintiffs en masse. I don't see how the failure of a defendant who has been properly served to defend their case reflects a systematic failure on the part of the courts or the law.
"court they can't get a judgment against you without you knowing about it"
... in theory, but in practice there are several ways to "serve notice" that don't involve the other party actually receiving the notice. Sure, if you can hire an attorney you may be able to get the default judgement overturned if you find out about it later, but again, it isn't all roses.
I'm not an expert on every states laws, but I don't think that the standard of proof for an uncontested claim isn't particularly high in most jurisdictions.
I guess my point is that the legal protections against harassment do exist but are not effective. It's not even my debt and I have a master's degree and generous income and I ended up changing my phone number in order to stop multiple calls per day. So to whoever ends up getting that number assigned, sorry about Esteban's $8k in back tuition and good luck.
The irony is that my new phone number also gets calls from debt collectors, but far less often. It seems the debt was either smaller or sold into a less predatory corner of the industry.
often, even if you have the intent to pay the debt, paying to any agency other than the originator of the debt is risky. debt collectors roll over debt en masse to keep them legally fresh and will not honor any promises that haven't been duly signed and served.
you can often find low-cost, non-profit defense organizations to help if needed.
I really dislike how when debt collection gets talked about, the debt collectors are the evil ones. Never mind the person who signed a contract to pay x interest in return for y money and didn't pay it back.
[1] https://www.bankrate.com/personal-finance/debt/how-overdue-c...
Those are usually pretty predatory contracts. Consumer credit isn't like my mortgage, where someone reviewed my past five or more years of finances and decided my income and assets actually justified the loan. Hell, my mortgage has a much lower interest rate than most consumer credit (eg: car loans, credit cards, etc.).
Those high interest rates are rationalized as reflecting the risk of default on the debt. Ok. So if someone is going to default, you charge the next sucker more interest, because I don't see why you should be made whole off garnishing someone's paycheck when you choose to make predatory loans to risky borrowers.
De facto, the whole thing is just privatized taxation with extra steps: the "borrower" pays a monthly tax to the "creditor" for the privilege of existing while poor, and in exchange, they are kept, deliberately, in perpetual debt.
The only loans that the government should help you collect on are those designed to be paid off in full in the first place.
> the rest of the people have a [legitimate] original debt right?
> the narrative of the debtor as victim is a bit oversold.
When in fact the narrative of the debtor as victim is significantly undersold, and many (I suspect, but won't assert, most) original debts were incurred due to usurious and predatory lending.
I wouldn't argue that debt collection enforcement is outright unethical in general, but their cases tend to very flimsy, and if people realize they can easily knock them down... good for them.
If the contracts are usurious and predatory then they probably will not stand up in court if challenged. Most collection agencies settle for 50-70% of the balance of a debt without question anyway.
Debt collectors have to provide proof that you know about your debts and that they are legitimate in order to enforce collection of them. If they can't do that then there is no judgment.
That's exactly what netcan was saying upthread.
Not all people chose to take on debt. From the linked article:
> Medical debt can be particularly devastating and accounts for more than half of all collections activity.
I don't think we can realistically characterize medical debt as a choice for most individuals. If someone is ill and and has medical debt, is it right to issue a default judgement against them for that debt? What if their illness is the reason why they couldn't show up to court in the first place?
To the original lender, 5% of the defaulted debt generally just covers the cost of writing off the debt and maybe a bit more. It does not move the needle at all for loan availability.
No-dischargeable private loans are such a small portion of the problem that they are effectively irrelevant.
But intentionally trying to ensure that poor people are never given loans is not usually the arguments that I hear, surrounding student debt.
And what happens when that debt is $117 from Comcast because you "didn't return their cable modem" and they lost a class-action lawsuit about this?
Did I document that I returned their cable modem 4 years earlier because I used my own? Probably. Did I bother keeping that record for 4 years after it didn't appear on any of my bills? No.
So, when I moved and I didn't have a cable modem to return and they charged me for it and then turned it over to debt collectors (and magically never notified me before it went to debt), I wound up with a stupid-ass $117 judgement that I'm going to have to hire a lawyer for, force Comcast to disgorge 4 years of records, and put it on a docket.
And then Comcast will finally not show up and I'll win. After spending WAY more that $117 of resource and time.
Or I can ignore it for 3 years and file to drop it with the credit agencies and then they'll get rid of it.
And, often people mistakenly rely on the advice of friends or family who suggest the debtor wasn't served properly, the debt is too old, they spelled your middle name wrong, or whatever.
There are tons of legal myths out there, such as, non-competes can't be enforced, it takes months to evict someone, I can pay my rent after the three-day pay or vacate date passes, or the like.
Also, in my experience people unfamiliar with law seem to be susceptible to spinning a story in their head that they think will exonerate them only to find out too late that their imagination doesn't carry much weight in court.
At the risk of going off-topic: would you happen to have more reading on this?
Search for non-compete enforcement in the states you are interested in. You should find plenty of articles put out by law firms.
I'm mostly taking issue with people who are threatened with a default judgment for a real debt but pretend it isn't happening and then turn around and cry abuse by the system.
The original lender has written the debt off, probably gotten a tax break from the government, and moved on.
People and companies break contracts all the time. Moralizing over it is just a distraction from the economic and juridical forces at play.
If there's anything I've noticed about higher education after working in/with it, its that they're constantly behind the curve in just about everything that's not sports/research related.
I would be very scared of having a second-rate experience due to a college (and professors) not being prepared for this to the point I would sit a year out and crank out gen-eds at home in already established online programs.
Take this all with a grain of salt... Maybe I'm paranoid, but I just don't see schools being ready for this and having a solid experience ready for new students by fall unless they've already practiced remote learning/class programs.
Hopefully at the end of all this we realize that community colleges can teach the majority of a 4yr degree and even have labs already set up.
Your debt might not be real or moral but you still legally have to pay it so what does that change.
That cost likely also takes into account the money they can get for selling the debt of defaulters. Otherwise the bank down the street that does this more accurate calculation would be able to undercut them by offering a lower rate and take all their business. There's no free lunches.
Your argument could be applied equally to say that anyone who buys a share of stock in the open market (not during an IPO or secondary offering) hasn't actually made an investment in the company because the company didn't get those exact dollars.