Thursday, March 21, 2013

Deuteronomy, Debts, and Student Loan Reform

In this post, I'll blog about Deuteronomy 15:7-11.  The passage states (according to the King James Version):

"(7) If there be among you a poor man of one of thy brethren within any of thy gates in thy land which the LORD thy God giveth thee, thou shalt not harden thine heart, nor shut thine hand from thy poor brother: (8) But thou shalt open thine hand wide unto him, and shalt surely lend him sufficient for his need, [in that] which he wanteth.  (9) Beware that there be not a thought in thy wicked heart, saying, The seventh year, the year of release, is at hand; and thine eye be evil against thy poor brother, and thou givest him nought; and he cry unto the LORD against thee, and it be sin unto thee.  (10)  Thou shalt surely give him, and thine heart shall not be grieved when thou givest unto him: because that for this thing the LORD thy God shall bless thee in all thy works, and in all that thou puttest thine hand unto.  (11) For the poor shall never cease out of the land: therefore I command thee, saying, Thou shalt open thine hand wide unto thy brother, to thy poor, and to thy needy, in thy land."

I have three thoughts:

1.  The passage tells the Israelites to lend to their fellow Israelites who are poor.  It's interesting that the passage does not talk about giving, but rather lending, which implies that the poor Israelite would have to pay back the person lending to him.  I say that because v 9 refers to the seventh year, during which debts were cancelled, and I don't think that the seventh year would be mentioned here if the subject of the passage were gifts rather than loans.  Of course, if the lending occurred at a time that was really close to the seventh year, then the loan would practically amount to a gift, since the lender would lend the poor Israelite money, and the poor Israelite's debt would soon be cancelled and he wouldn't have to pay the lender back.  But, in many cases, we're not dealing with free money.  The idea is probably that the poor Israelite ordinarily would get off his feet and would be able to pay back the lender, by working for the lender as an indentured servant, or by finding some way to gain enough wealth to pay the lender back.

This is not to say that there are no handouts in the Torah, for there are: there are gleanings for the poor or the widows and orphans (Leviticus 19:10; Deuteronomy 24:19-21), the command to leave the corners of the fields for the poor (Leviticus 23:22), and the exhortation to share with widows and orphans during the festival (Deuteronomy 16:11).  There was supposed to be a safety-net.  But not everything was intended to be free, for God exhorted Israelites to lend to the needy.

One verse that has long given me problems is Matthew 5:42, which states: "Give to him that asketh thee, and from him that would borrow of thee turn not thou away."  So I'm supposed to give to everyone who asks me for money?  What would prevent people from taking advantage of me?  But the second part says "borrow", so is there a presumption that I'd get paid back?  Not so fast, for Luke 6:34-35 commands that people lend without expecting to be repaid.  I'm all for giving something to a needy person who comes to me, such as a sandwich or a meal.  But I'm not willing to give indiscriminately to everyone who asks of me, for then I could go broke.  I'd prefer to give to charities, for I have more confidence that they will spend the money appropriately.  Is that a violation of Jesus' teachings?  Or is there a more common-sense, less absolutist way to interpret what Jesus is saying?

2.  Something that I've long wondered: If debts are cancelled every seven years, what would keep a debtor from not paying for seven years until his debt is finally cancelled?  I don't think that happened, and the reason is that Deuteronomy 15:9 says that Israelites are supposed to lend to their poor brethren even if the seventh year is near.  That tells me that, when the seventh year was further off in the future, the creditor felt that there was a greater chance that he'd be paid back.  Perhaps the creditor could appeal to courts to make the debtor pay back at least some of the debt.  Even with the seventh year, there are still loans and debts, at least for six years.  But the seventh year was most likely intended to ensure that Israelites were not weighed down by debt for long periods of time, such that they became perpetual slaves with little hope of paying their creditors back and getting off their feet.  Moreover, according to Deuteronomy 23:20, Israelites were not to charge usury when they lent to their fellow Israelites, and so indebted Israelites would not be weighed down by rapidly and massively accumulating interest as they sought to pay back their creditors.

3.  My hunch is that the likelihood that, during six year periods, indebted Israelites would be expected to pay back their creditors would ensure that people would lend, since they'd have an expectation that they'd be paid back, on some level.  Or perhaps it worked better back then than it would now (assuming that the policy was ever implemented), for, today, debts are so huge that they take much longer to pay back.  I think of mortgages and student loans.  Even in the first century, there was a rabbinic attempt to circumvent the seventh year debt cancellation (see here), which may show that the Sabbatical year was impractical even then.  But was it always impractical?  I'm hesitant to say that.

But would people lend if they couldn't charge interest?  After all, don't bankers make their money from interest, in part?  I don't see anything in the Torah about banks, and so the idea was probably that private individuals rather than institutions would lend.  And Deuteronomy presents a scenario in which the lenders would not need to charge interest in order to support themselves, for the Israelite lenders would already be wealthy on account of their crops.  My impression is that Deuteronomy has a prosperity Gospel sort of mindset: lenders wouldn't even have to be worried if they lent close to the seventh year and thus didn't get paid back, for they'd have plenty of wealth.  But they had to obey God to get that wealth, and one element of being obedient to God was lending to the needy, even when the seventh year was at hand.

Can we apply any of these principles to today?  One important principle is that people should pay off their debts.  But another important principle is that debt should not become a form of perpetual slavery or a burden that keeps people from getting off their feet, and so exorbitant interest rates are wrong.  In light of these principles, I favor some elements of President Barack Obama's student loan proposals, but I have problems with other parts.  (And I'm writing this post on December 1, 2012, so my understanding of the proposals in this post is based on how they were conceptualized then.)  Cancelling the student loan debt after a certain number of years may be problematic, for the government would have to take the loss from people not paying back all of their debt.  But imposing a high interest rate on student loans, even though that brings the government revenue, can become an undue burden on the debtors, and so I agree with President Obama's desire for interest rates on student loans to be low.  I believe that people should pay off their loans as long as it takes, based upon their income, and that the interest rate should be really low.  Of course, if this country were booming with prosperity, perhaps it wouldn't be a problem if the government cancelled student loan debt after a certain number of years, the same way that Deuteronomy envisioned a situation in which a lender could practically give somebody money and not be hurt if he wasn't paid back.  But would that ever happen?