Are Colleges and Universities Guilty of Usury?

Social justice warriors (SJWs) in colleges and universities are critical of bankers who charge usurious interest rates – rates they have every reason to believe that those who are taking on such large amounts of debt may not be able to pay back, or will be caused great pain if they try.

Such is the case with much Third World Debt.  A bank loans money to a Third World dictator with the “expectation” that he will invest in the economy and enrich the whole country, yet having every reason to suspect that he will likely just use the money to enrich himself and his cronies. This debt then becomes a national debt.

Let’s say the dictator is overthrown.  When the nation subsequently defaults on its debt, must the people of the nation bear that burden?  Or was the bank irresponsible in making the loan?  It was for this reason that John Paul II encouraged banks to forgive Third-World debt.  He likely should have added:  “and never do that again!”

But let’s turn that critical eye toward ourselves.  Are those of us who are involved with colleges and universities encouraging students to take out large loans that we have every reason to believe many of them either will not be able to repay or will have grave difficulty re-paying?  Is this not the essence of usury?

Here is the obvious defense:  We didn’t make the loans. And we are not getting the interest on them.  And besides, they are low-interest loans, hardly at what anyone would call “usurious” rates.

But the colleges and universities encourage and even arrange the loans, without any concern for the student’s ability to repay, never asking whether they were really prepared to take on this burden.  Would any responsible banker arrange a mortgage for a $200,000 house for the usual, run-of-the-mill sixteen or seventeen-year-old? If not, why are colleges and universities arranging loans for young people of that age, sometimes in excess of what they would pay for a house?

Since everyone knows that student loan debt at $1.5 trillion now exceeds every other form of private debt in the country with default rates reaching in excess of 10 percent while college costs have risen six times faster than medical expenses, can colleges and universities really deny their part in the problem?

How about a financial bail-out or free tuition, two offers now on the table?  This is the language of demagoguery.  Why should people who didn’t go to college finance school for those who did?  Why should those who aren’t going to college finance the education for those who choose to do so?  Why should lower-income, blue-collar workers help finance the tuition of the kids of middle-class and upper-middle-class families who go to college?


“We will get it from the rich,” say the politicians. First, “taxing the rich” never happens. There are too many loopholes. And second, even if you succeed in “taxing the rich,” it usually results in less business investment, fewer jobs, and often higher prices. And guess who gets hit the hardest by all that?  The working poor.  They get hit the hardest because, financially, they live closest to the bone. So any lack of jobs or any rise in prices tends to hurt them the most.

And quite frankly, does anyone believe that colleges and universities will take the occasion of free tuition or large-scale student loan forgiveness to reduce their ever-ballooning costs? Why would they?

Will universities begin to be socially responsible about the debt with which they are burdening their students?  I wouldn’t expect it anytime soon. As those of us who teach social justice in universities have repeatedly discovered, “social justice” is always something to be used against other people and never something we in the academy apply to ourselves and our own practices. Just ask adjuncts and non-tenure track faculty.

Some people might call that hypocrisy.  Others simply call it good business. When you buy a worthless Gucci scarf for a ridiculous price, you know what you’re doing.  You’re buying a brand.  If you buy it with credit at a 21 percent interest rate, that’s your right. When you pay $75,000 for an education that is worth less than the one your parents paid for twenty years ago at a quarter the amount, you are not “financing an education,” you are buying a prestige brand.

But we all know that if Gucci included appeals to “social justice” and “preferential option for the poor” in its advertising, it would be a pose. They sell overpriced items to rich people who want to exhibit their status.  If they were ever to talk about “social justice,” they would merely be posing.

So too with universities – especially the more expensive, prestigious ones.  All the talk about social justice and the preferential option for the poor – who could take any of that empty rhetoric seriously when they are engaged in the classic example of abuse of the poor:  loaning money at usury.

I visited a small Catholic institution in Europe this summer where they used to have ten administrators; now they have three. “Communication is easier,” said the dean, “and we don’t waste as much time in meetings.” Annual tuition: 6000 Euros (about $6600).  An elite and expensive institution in the United States recently did a survey of how many non-teaching employees they had just doing university communication. Answer: over 200.  If that sounds to you like General Motors in the 1970s, top-heavy with bureaucrats, headed for disaster, and unable to really innovate (while incessantly talking about innovation), then you’re not alone.

Dante found usurers in the circle of the violent in hell, next to murderers and sodomites.  Instead of the millstone Christ promised those who “cause one of these little ones to stumble,” they had moneybags tied around their necks on which was printed the symbol of their respective families/banking houses.  Would a modern version replace these with university logos?


Image: Purification of the Temple by El Greco, c. 1600 [Frick Collection, New York]

Randall B. Smith is a Professor of Theology at the University of St. Thomas in Houston, Texas. His latest book is From Here to Eternity: Reflections on Death, Immortality, and the Resurrection of the Body.