Why I Defaulted on My Student Loans
nytimes.com
nytimes.com
I went to a cheap state university and got a degree in CS. I had no debt after 3 years and my income is higher than average.
If I had gone to an expensive private liberal arts college, I wouldn't have the same outcome and could be a victim of the process.
Students must recognize they are also reaponsible for their debt.
There really should be a cap to how much debt one can take on student loans.
Loaning many tens of thousands to 18 year olds is predatory, plain and simple. To pass laws making those debts non-dischargable makes it 10 times more predatory.
We all consider title pawns sleazy, but in the case of student loans, our government and our society is the predator, and our children are the prey.
What would it look like if our government wanted to be a protector instead of a predator in this case? A law limiting student loans to a small, managable amount.
If you don't want a loan you have to pay back, then don't get a student loan get a personal loan which you can default on. Sure it won't be as much, but that's all you can get when you have a low likelihood of paying it back. Or enlist in the military and earn the money to pay for school. Or get a job and pay your way through school. Or go to a cheaper school, and get a more practical degree.
There are other options.
This is not the case, the non-dischargability in bankruptcy only came about in 2005 and there were plenty of student loans before then
Chicken or the egg.
I don't think most people making this decision understand the full weight of the choice when making it, not at that age. I certainly didn't - especially when EVERYONE around you is saying that ones NOT taking the loans and getting the degree are the silly ones.
## I'm using many in the sense of personal experience and the experience friends and family. So if you want do to a [citation needed] argument here - sure, whatever.
It was strongly implied that jobs like plumbers and electricians were for stupid people who would end up poor.
That was what I was told, my entire childhood. At what point do we start talking about indoctrination during this conversation? Because I think we should.
Meanwhile kids aren't told about other options or what the reality is about degrees. Trades pay very well, different degrees have a much higher likelihood of getting you a job or a better paying job, and of course only having a degree is no guarantee of even getting a job at all.
We need to reset expectations so kids don't get sucked in by the marketing machine that is today's higher education. Your masters degree in foreign languages does not guarantee you a job. Do your research and understand, really brutally understand the field you are trying to get work in. Don't listen to the hype, ask normal people in that field how they got that job and be skeptical. Find out how many people get degrees in that field annually, and how many new hits exist in that field. You might be surprised to find out it's a small field that simply doesn't support all the graduates produced, or that a degree alone won't get you that dream job.
Watch that to the end (or at least the end of the veteran benefits bit), and then get back to us.
http://www.washingtontimes.com/news/2015/may/8/obama-free-co...
#Edit. Linked article was just the first I found that looked semi-related to a big politician and college-romanticizing.
We do need to address the ways in which government supports lenders' predatory behaviors, while educational institutions at all levels push unprepared barely-adults into the trap. Education prior to college must include education about student loans and the dangers thereof. After all, there are minimum educational requirements for all other subjects. Why not this one?
If you fuck up, that's on you. Not anyone else.
But I also recognize that I'm responsible for putting food on my table, paying for a roof over our heads, paying for health insurance (that we should all get for being citizens of this country), paying, paying, paying.
This isn't about not being responsible. It's about the absurdity of garnering a ludicrous amount of debt in the pursuit of an education.
I applaud you for making your life work out right out of college. What makes you think anyone else could do the same thing? Why does your situation apply to me?
Yes, there is some individual reliability, but acting like it's peoples fault if they are good at something that doesn't pay well and don't have a hang for CS & math is dishonest IMHO. Not everyone can just study the subject that currently pays well and be good at it if they don't have a basic talent for it. I would definitely be fucked and miserable if I had to do something artsy if that would be what pays...
You'd be surprised at how well an analytical mind can approach the problem of getting good at an artsy field. But if you go in with the assumption that you'd be fucked, well, it might be a self-fulfilling prophecy.
So if those were the main areas where there's decent money to be made, best I could hope for is get a mediocre position to earn some money to hopefully pay back my student loans while definitely being unhappy doing something I don't enjoy. The alternative would be to go into some field that pays shit, let's say CS in this scenario, where I might be excellent at but even earn less than being a mediocre painter, and hope to still make it there and at least be happy. Now the choice is much tougher IMHO that what was initially suggested.
This is the same issue with housing. Just because the bank pre-qualified you for a $500k loan, doesn't mean you should go out and buy a $500k house. You need to look ahead and think about your current financial situation, what you can honestly afford, how much can you put away into savings, will you be able to afford maintenance and repairs?
Author could of had a lesser burden had they went to a local or state university instead of starting off at private.
Yelling "personal responsibility!" while having been relatively lucky in life (if you're active on HN, you're one of the lucky few among your 8 billion peers) feels like ostrich syndrome to me.
Edit: I'm also a bit sad that you want the author or young people like him to accept that the social situation they're born in to dictates what level of education they can afford and pursue. To me that's akin to saying "well, your parents are poor and on welfare, so you should probably just accept that your high school in your poor neighborhood has decades old text books that need to be shared." It's not entirely analogous I suppose - you'd say something about personal responsibility again - but looking at the photo negative of your statement looks to me like "only rich kids can go to rich college, you have to accept your position in cheap college."
Financial sense, however, is very important for the majority of the population. Even more so for those not-so-fortunate to win the oh-so-often-complained-about "genetic" or "parental lottery".
The inner conspiracy theorist in me would have me convinced that not-teaching such important topics is the only way to keep the economy-engine churning. Efficiency and money-sense in the general populace are not things that will drive "growth" and "GDP". But I could be wrong.
I am borrowing 200k. I will need to pay back 200k plus interest, as documented in my paperwork. I am expected to have this all paid in X years.
What is intricate about that? Don't sign something if you don't understand it, ask questions, they're free.
Does this not also apply to the banks making the loans? In other words, a bank that is willing to lend me much more than what I can honestly afford is either negligent or rapacious, but not responsible or sensible. The bank is not properly valuing the risk that I represent. If they were, I would have been denied such an oversized loan.
Perhaps the same is true of CS: we don't need everyone to be Hemingway here: plenty of jobs just need programming. I'm not sure what the alternative would be. Even if CS turns out to be above the capabilities of most people, that certainly shouldn't mean that it's a reasonable choice to spend an equivalent amount of money getting a degree that well known ahead of time to not get you a return.
Now thats of course far from the current discussion, where people are forced to get into certain debts just to study for a profession they hopefully enjoy and will be ok enough in to earn back the money they invested to learn it in the first place.
So what have we learnt? Nothing, apart from dataker is lucky to be interested in one of the few fields left that pays well and is feeling pretty smug about it.
Who says dataker's interested? Maybe dataker just wanted to make more money and so chose CS. Or became interested after getting into the field. Why does your choice of major have to be something you're really interested in?
I think part of the issue is we keep selling high schoolers on the idea of "choose what you love", but in high school your breadth of experience is laughably small. Picking a major that would pay well and then approaching it with a good attitude would probably get one farther.
Isn't this statement the exact opposite of the "follow your dreams!" mentality usually espoused on HN?
We canonize those few that are lucky and successful and hold them up as examples, but if you follow their example and fail, well, "personal responsibility" and all.
After all, your life would have been easier if you had just gotten in line.
Coming from an impoverished family, I took CS as a way out of it. Eventually, I became interested, but not the other way around.
You cannot (reasonably) file bankruptcy. The only escape is total disability. You are on the hook for the full amount even with a partial disability which keeps you from earning enough to pay it.
From the horses mouth:
Discharge in Bankruptcy This is not an automatic process—you must prove to the bankruptcy court that repaying your student loan would cause undue hardship.
If you file Chapter 7 or Chapter 13 bankruptcy, you may have your loan discharged in bankruptcy only if the bankruptcy court finds that repayment would impose undue hardship on you and your dependents. This must be decided in an adversary proceeding in bankruptcy court. Your creditors may be present to challenge the request. The court uses this three-part test to determine hardship:
If you are forced to repay the loan, you would not be able to maintain a minimal standard of living. There is evidence that this hardship will continue for a significant portion of the loan repayment period. You made good-faith efforts to repay the loan before filing bankruptcy (usually this means you have been in repayment for a minimum of five years). Your loan will not be discharged if you are unable to satisfy any one of the three requirements. If your loan is discharged, you will not have to repay any portion of your loan, and all collection activity will stop. You also will regain eligibility for federal student aid if you had previously lost it.
https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancell...
Why should there be an escape? You took the debt, and the terms are you pay it back as you earn money. It was never forced on you, you accepted it. But the dice didn't roll your way so now you want to flip the board?
The best thing we can do is teach kids/teens personal responsibility. Start with a negligable debt in their school years so they know the feeling of a repayment weight hanging over their head.
Education, not regulation.
Because there is for every other type of debt?
With other secured loans they can take your house, car, etc.
Student loans? Get a 4 year ride at a liberal arts school, end up bartending and the default. There is nothing to take away.
You can file for bankruptcy but ultimately unless disabled you will be able to resume your profession.
Nope.
Sometimes we’re expecting not-yet-adults to make adult decisions and live with the adult consequences. And sometimes they don’t have enough information/support to make those decisions.
Shouldn't the lion's share of the influence belong to them, and not some 3rd party dealing with the student via infomercial and pamphlet?
> Nope.
But could you have researched the decision? Yep, assuming you had access to the Internet or a library.
Many students who take loans don't even need them, but could easily pay their tuition by just getting a job.
At one point in my career, I worked for a bankruptcy trustee. During that time, I learned some very valuable lessons about creditors and the importance of bankruptcy/default on lending practices. If a lender knows that a debt cannot be defaulted upon and absolved through bankruptcy, their risks are substantially mitigated. They're not eliminated, but again, this about understanding the scales of risk and fault as it relates to credit.
Outside of student loans, most credit is obtained through a process that involves the lending institution weighing the risk that the debtor will be unable to pay. The ultimate risk being that the debtor will file bankruptcy, and the creditor will take a serious haircut on their principal.
With student loans, our policy is guided by the principal that higher education is of monumental importance. Rather than simply make universities part of our public education system -- because government = bad, amirite? -- a set of policies and law making resulted in a system of federally sanctioned/backed lending institutions which were granted special status within the context of the creditor/debtor relationship. Over time, these special affordances have been extended to private lenders who adhere to regulations.
And here we are today. Capital has identified this loophole and is leveraging student debtors' future in ways that is clearly predatory. With no risk of bankruptcy, student loan creditors are empowered to garnish wages at rates up to 25%. What lender wouldn't take that deal? How much would you loan someone if you knew you could take a quarter of their paycheck every week for the rest of their life?
Clearly the debtor holds responsibility to use credit responsibly, but you can't create circumstances like the ones we have today and fall back to "Well, everyone really should just be more responsible." No, we all hold responsibility for the system that we've created, and until it changes, things will only get worse.
Where would you be if everyone in existence chose a degree simply for being financially wise?
With no caveats whatsoever? Is any conceivable four-year program after high school beneficial to society?
If everyone were 'simply financially wise,' those who were <actually> financially wise wouldn't be paying for 2008.
I think you're onto something. As you say, it is simple, just not easy.
> Why does a degree have to be financially wise
For the same reason anything is considered wise, wisdom lead you to the conclusion upon which you act. Majoring in sociology with no intention of practicing sociology is not wise, unless you have another plan. If you DO intend to practice, you should have a plan. The internet at college is free, make a plan.
It doesn't, and I didn't suggest that it does.
> Do people become social workers for the money? Do teachers get into teaching for the money?
I don't know, but I suspect that most full-time social workers who are not independently wealthy do consider wages when deciding where to work. The trouble is that you seem to be implying a strict dichotomy between "doing it for the money" and "not doing it for the money." In reality, many people pursue careers that they enjoy to some extent, but they also require some level of compensation for survival and quality of life.
How is this system supposed to work well? It seems to be clearly designed to make money, not to educate people, which doesn't seem like a good way to enhance and maintain your society.
You are absolutely correct. Our educational system sets you up for failure. There is no vested interested in your success. We pay teachers a shit salary, in some cases it's not even a living wage, and we expect 99% of the population to accumulate tremendous debt, simply to get a college degree. There is a very slight chance that you'll be successful with that degree, if you went to the right college, if you got the right degree, if you finished in the proper amount of time, if...if..if.
You're screwed if any one of those legs turns out to be not right.
> How is this system supposed to work well? It seems to be clearly designed to make money, not to educate people, which doesn't seem like a good way to enhance and maintain your society.
It does work well, for certain interests. But it's the same for almost any important financial concern in America. Taxes, utilities, medical care, retirement funding, most of our important systems are intentionally structured to fatten the wallets of powerful interests at the expense of maintaining society. And it's only getting worse, as the trade deals currently under negotiation clearly demonstrate.
It would be better if it was 100% of course, but it's not like most people leave school and have to fight a desperate battle against debtors. For most people it's just a temporary drag on their income that gets paid off relatively quickly if they earn enough to pay over the minimum.
The reason it sort of quasi-works in the U.S., but seems inconceivable in Europe, is likely the differences in the labor markets. In general the U.S. doesn't have the same kinds of problems (or as severe) with youth employment and underemployment. For example, during normal economic periods, youth unemployment in the U.S. is around 13-15%, during the recession we considered it to be a major crisis when it went to 20%. By contrast the EU youth employment rates (not unemployment) sits at around 30% (with Germany being a notable exception at ~8%).
Furthermore, it's generally considered acceptable in the U.S. to job-hop for higher salaries every year or two, meaning that your earning potential 5 and 10 years out of college will be much higher than directly after graduation, further improving your ability to pay your loan off.
In other words, it's more possible in the U.S. to take on loans for education, and have a reasonable expectation of graduating out of college into a full-time job, where you can further expect to have increased your earning ability and thus pay the loans off.
It's interesting you use those words, as I've lately come to realize that's how the majority of institutions in America function.
Health care / insurance: Screw as many as possible. Profit is king.
Education: Screw as many people as possible. Profit is king.
Car Insurance: Screw as many people as possible. Profit is king.
etc, etc.
Student-lenders want the profit without the risk. Given the manner in which American colleges have been turned into profit-centers, I am not sympathetic to their problems. I'm in agreement that a mass-default and hastening of the collapse of the current student loan status quo would be a good thing for students and for higher-ed.
While you are blaming Class of '94, Class of '19 is signing papers. Stop them.
You can try to reform the system, but it'd probably do a lot of good to prevent more financial wrecks in the meantime.
As painful as it may sound, I personally think that you should only be loaned a certain amount of money based on the degree you're getting and potential earnings in the future. If companies wish to loan you more money believing that you're good risk and charge you a little more interest along the way, that's fine, but you could also end up defaulting on your loan and the company could lose out on their bet. Their needs to be accountability and risk on both sides of this transaction.
My two cents worth....
> Self-disgust and lifelong unhappiness, destroying a precious young life
Even if we accept all the rest, this part is ridiculous. There are plenty of jobs that pay better than writing and don't induce self-disgust, and even the worst jobs generally aren't likely to destroy a lifetime. Plenty of people endure a few years e.g. of military service, even though they don't enjoy it, and then move on to completely different things that they find more fulfilling. The author seems to think that nothing other than writing is an acceptable career choice, and that he has an absolute entitlement to such a career. What total bollocks.
There are plenty of problems with our college-loan system, but the fact that Lee Siegel can't make good choices is a problem only with Lee Siegel.
What isn't so easy is to admit to yourself, that not everybody has the same choices available to them as you.
It's unfair that some people have to make such compromises while others don't. I've written plenty about that. Nonetheless, those who choose poorly deserve no sympathy from those who were faced with the same or equivalent choices and still managed to do the right thing.
As I stated, it’s relatively easy to sit on the sidelines and have the benefits of hindsight, to call someone out on their choices.
What’s unfair is the absurd cost of college and why it’s primary ethos has been to make money.
We are all sitting on the sidelines of each others lives. I am no more a part of your life, than you are of mine. But what I was suggesting is that it’s easy for us to sit in judgment of the choices he articulated, as well as the outcomes of those choices, and say that he, “can’t make good choices”.
It doesn’t matter what you think your background was in comparison to his. You’re still projecting your reality and the outcomes of your reality, onto another complete stranger and coming to negative conclusions about his life. I call this judgment. Each of our lives is nuanced enough to affect outcomes even given very similar circumstances or “choices” as you call them.
Because Siegel’s outcomes ended in him defaulting on his student loans and articulating that, doesn’t mean he can’t make good choices.
"Years later, I found myself confronted with a choice..."
It wasn't his first job, it was a career you want him to give up.
"Forty years after I took out my first student loan, and 30 years after getting my last, the Department of Education is still pursuing the unpaid balance. My mother, who co-signed some of the loans, is dead. The banks that made them have all gone under. I doubt that anyone can even find the promissory notes. The accrued interest, combined with the collection agencies’ opulent fees, is now several times the principal."
Unless I'm reading this wrong, educational debt is still debilitating 40 years later. After a repayment plan of over a mortgage's worth of lifetime.
But if he had a better attitude...
Go read it again. That "years later" comes immediately after the part where he mentions transferring to a different school, and before he mentions working at The Wild Pair immediately after college. So yes, it was his first job and not a whole career as you supposed.
"Unless I'm reading this wrong, educational debt is still debilitating 40 years later."
40 years is a long time. It's long enough to have had many opportunities, even as a writer, to stem the accrual and compounding of that debt. As I've said over and over, there are serious problems with our student-loan system. Those problems weren't nearly as bad 40 years ago, and they're only "debilitating" now because of continued poor decision-making well after the fact. Whining about an outcome that's largely, even if not entirely, under the author's control doesn't help to solve today's student-debt problems. Au contraire.
If you default, hit your credit, and get your wages garnished, you'll be in a worse spot.
The author appears to have private loans, which are much more burdensome than federal loans for the debtor[0].
This is why federal loans are said to be subsidized and are counted as financial aid, even though people sometimes complain that it's "not really" aid because you have to pay money back. It's aid because the rates are well below market rate, which means the government (acting as a bank) would expect to make a loss on all loans issued, as the number of people who default would outweigh the amount of interest collected on the remaining loans.
[0] Also, only undergraduate loans are subsidized - graduate loans are not usually (never?) subsidized.
As far as I know, you can't get out of paying a federal student loan even if you file for bankruptcy.
I would also add that there are significant benefits that follow from keeping one's word, from not defaulting on the obligations one chooses.
Tell that to companies.
How many people, during the credit crunch, had their house defaulted on even in spite of never missing a single payment? The bank just decided the physical property was more valuable than the debt, and kicked them out.
I will absolutely keep my word when dealing with other people. I don't care about companies and businesses, because they are amoral and I will be amoral towards them. You're a fool if you treat companies like they're people, they don't treat you that way...
>
Are you saying people paid their debt, but the bank was still able to take property the borrower owned? Can that actually happen?
Any sources where I can read more about this?
Parent post also implies that during the foreclosure crisis the value of houses increased. The opposite occurred.
On the one hand, you say that you will absolutely keep your word when dealing with other people. On the other hand, all bets are off when you are dealing with companies and businesses, "because they are amoral."
How do you square these two claims with the fact that "business" is just another name for a collection of people who have decided to work together to achieve some outcome?
For example, if I'm a contract software engineer (in fact, I am) and you hire me to write some code for you, will you pay me when I deliver the work I agreed to deliver, because I am a person, or will you default on the payment because I am incorporated and therefore also a business?
Have you ever tried to sit down and have a nuanced conversation with a mob? Or given a speech in front of an audience? Those are both pretty loose, flat organizations of people and they behave radically differently to an individual (and to each other, though one can sometimes change into the other). A company is a much more complex structure that absolutely deserves different treatment than an individual.
Surely you understand this. Have you never, or would you never be friends with someone who worked for a company you didn't like? Clearly there is a difference between an organization and the individuals who compose it, though the distinction is fuzzier in your case since presumably the corporation consists solely of you. I suspect that your corporation is also less likely to engage in the kinds of amoral hanky-panky that the large organizations get up to.
The argument is not that these entities should be treated equivalently, but rather, whether an individual should drop considerations of morality in dealing with them.
The morality that I follow (rational egoism) serves my life. It's not a hindrance, but a help. Morality helps me achieve the things I value; it's not a millstone around my neck.
I don't agree with the advice that when I'm in some particular context I should throw my morality overboard, which would be tantamount to saying that when dealing with companies, or mobs, or audiences, I should act irrationally.
In the UK the interest rate is 1.5%. You're forced to repay a minimum based on your income. Below £17,335 (approx. $26,500) you pay nothing, and as your income grows as does the minimum repayment (so people making more repay faster).
PS - UK University is also much cheaper. It varies by course, but £9K/year ($13.7K) is typical. If I look at the first State College on Wikipedia (University of Alabama) $19,652/year (based on 4x semesters, inter-state resident) is what they charge. Then there is other fees: $325 mandatory dining fee, $400 enrollment fee, $100 parking, and so on. I've also heard that a US student pays $1K in books (!) which is insane (I purchase three books total which cost about £200 over the entire course).
The current interest rate for new undergraduate debt is 4.29%.
I took out student loans right out of high school because I was raised by a mother who lived on welfare most of my life. I saw a college degree as the ONLY way for me to end the cycle of poverty that I grew up in. But what I didn’t count on was paying an absurd amount for out of state tuition and despite being in forbearance, the loans accumulated interest. So my $30,000 in student loans has blossomed into approximately $60,000 (even with a bankruptcy), with little to no hope that I’ll be able to ever pay it back. I will die with student loan debt and it’s ridiculous.
People who don’t understand the cycle of poverty in this country, like to throw around terms like “entitlements” or “self indulgence” or “lazy” and it’s bullshit. Quit applying your situation to every other situation in existence. If anyone in this thread is self indulgent, it’s you.
Colleges set you up for failure. They are money making machines who whose main purpose is garnering new students at whatever cost. Most are not interested in your success (in school). Most aren’t even interested in the quality of your education. Our country needs to wake the fuck up and realize that a quality education, free of encumbrances, is the only way that we’ll ever make this world work.
Knowledge is power and the fat cats in power are so afraid of empowering everyone with knowledge, that they have made the entire system into a house of smoke and mirrors. There is a plethora of resources available to everyone. Life isn’t a zero sum game. There is plenty to go around and we should all share in the benefits.
And what the fuck kind of concept is "out of state" tuition anyways? Seriously?
Huh? You and your family didn't pay the taxes that allow for the in-state rates. Why should you be able to move there and take advantage?
Also, if you were in CA why not just go to one of the fifty UCs or CSUs?
- At best, it's for the state to make money in the long term by reducing the brain-drain of great students moving to other states.
- At worst, it's for the university to make more money short-term via price discrimination, by operating under the assumption that people who travel further often tend to have more money to spend than those who stay in state.
Yes, because my primary motivation for moving to Nebraska (from California) was to "take advantage". You got me.
I attended three colleges in California. I'm not sure what the point of your last sentence was/is.
I lived in an area where even the cost of rent, exceeded what one could make at the low income, part-time jobs available in that area.
How do they determine if you are from "out of state"?
Surely you can find a way around it - i.e. just lie and say your family just moved to said state right after you graduated HS, etc.
And there are people who are neither, such as myself.
I don't think that the discussion about how crappy our system is and how to fix it should be owned by any one of these groups. Maybe the article's author is the not the poster child for financial responsibility, but that doesn't make his arguments about the broken state of our system any less valid.
So how do you change things? You can change the rules of the game, but the rulemakers are tight with the gamemakers. You can refuse to play, but playing the game is seen as the only way out for many. Or you can refuse to pay and break the game permanently. I don't advocate any particular approach, but I understand those who do.
How?
Better because of the experience of paying off your debt?
Better because of your experience in the military?
Both? Something else?
I mean, I've certainly paid off my fair share of debt in my lifetime (fortunately, where I live, tuition isn't nearly so astronomical, so my student debts were modest and everything subsequent to that has been manageable consumer debt), but I'd never have considered debt repayment a personal growth opportunity.
The Army gave me the discipline I needed to convert my passion into business opportunity, and allowed my family and I to build a solid foundation for the future.
No offense, but to assume all people should make the same life decisions you did, and to hold no sympathy for those who don't, is pretty myopic. Believe it or not, not everyone can or should join the army to solve their financial or personal problems.
I'm not suggesting everyone join the Army; I'm suggesting that they do the right thing and pay their debt, regardless of what it takes. For me that meant joining the Army. For others it could mean something entirely different.
Basically, yes. Lots of people who are better off financially than this guy somehow go to state universities and survive.
I had to borrow almost all the money to go to college a couple decades ago. I went to an "affordable" state school. I screwed up my student loans by not following up while in grad school and ended up defaulting too. However, once I got a job, I paid hundreds of dollars extra every month and paid off my loans in under 4 years. I missed out on a few vacations, bought a $1000 vehicle then drove it until it started falling apart.
Anyway, once a generation decides not to pay off their loans, the following generation won't get a way out of lower income. Don't go to that expensive small private college, if you can't afford it.
In my country the two options after highschool were either to pay through the nose in student fees or not get an education, wind up in a shitty job. I chose the third way of taking the loan, getting a first class education then living in exile.
The baby boomers got a pretty sweet deal when it was their time to be educated but I don't think there is a great conspiracy to defraud our generation. There is however defiantly a rampant political shortsightedness as evidenced by many nations de-prioritizing education so as not to piss off retiree voters. When a such a large generation votes along self interested lines the resulting society is obviously warped to meet their needs, which aren't necessary the needs of the nation at large. I bet the current gilded era of retirement will be long gone before we get there.
Education is of immeasurable value to both the individual and to society, politicians are blind if they cant see that. I agree with the spirit of this article; that it's up to us to educate ourselves by any means necessary.
The elites ruling over the boomers were terrified of domestic communists. They talked about defrauding their generation whe they were young (rolling back the new deal, etc.), but they felt too threatened to actually do so.
The elites of today do not feel threatened.
*The Boomers
A) Lobbyists for the financial industry and for profit college industry
B) Your Grandma
>But I have found, after some decades on this earth, that the road to character is often paved with family money and family connections, not to mention 14 percent effective tax rates on seven-figure incomes.
The role of government is not to have everyone enter and finish college. You need people with other (less qualified yet as important) jobs, too.
In economy nothing disappear. If he didn't payed next generation will. Increasing cost of education is mostly because some lousy liberal arts graduates choose to cheat their way.
The student loan system is a predatory system that practically forces young people into debt. The upside is not comparable: schools in the US are not That much better than any other developed country, and most of those countries provide an undergraduate education for free. Even Oxford and Cambridge, comparable to the top undergraduate education in the US, are only $14000 per year for UK students.
The terms are draconian, and practically enslave a student into indentured servitude. It is not hard to think that serves (as Chomsky calls it) a disciplinary measure to stop students from being too independent.
What I'd like to see is EVERY student in this country refuse to pay student loans. Just fucking refuse. Let the lenders collapse, it would serve them right for making predatory loans.
I think 2008 proved that this won't happen.
Liberal Arts is not a codeword for 'interdisciplinary studies'.
> If people groaning under the weight of student loans simply said, “Enough,” then all the pieties about debt that have become absorbed into all the pieties about higher education might be brought into alignment with reality.
This would absolutely happen, but the first step towards that would be a 2008-like situation all over again, because banks would suddenly have to absorb massive unexpected losses (as they did in 2008), and all of these would cascade.
And remember that, unlike mortgages and car loans, student loans aren't backed by any reclaimable asset - you can't repossess someone's degree! While foreclosures in 2008 were undeniably terrible for the people who lost their homes, the situation would have been even worse if the bank had no assets to repossess in any of the defaulted loans.
Since the government bailout money has to come from somewhere, it will simply add to the national debt and (at some point) come out of future taxes. That's not really solving the issue. It's tantamount to replacing all private loans with the existing tax-subsidized federal loans, which doesn't solve the problem; it just kicks the can further down the road.
Except student loans in America are almost nothing like regular loans. Until 2010 they were backed by the government which made issuing them as a bank as easy as printing money--you collect the interest while it's paid and then let Uncle Sam take the losses when someone defaults. (Even in this article notice that it's the DOE that's coming for the loan. ) Post 2010 the loans are issued by the government so you cut out the middleman taking all the profit. Either way there won't be a 2008-like situation.
The same kind of loans-- not all loans, but the same kind as were before-- are still backed by the federal government.
What happened in 2010 was that the government took out the middleman ie the banks, saving taxpayers around ~$7B/year.
> Post 2010 the loans are issued by the government so you cut out the middleman taking all the profit.
Is this a sort of step towards civil disobedience? If enough people took this step, would the system change? For the better?
Although I do wonder if the system would change quicker if people refused the costs, refused the loans and made it without higher education until things are reformed.
Neither path is very smooth for the person doing it. Not sure if either will help change things.
I've been a well-compensated software engineer for three decades. Even more lucky in my case because I was on track to be a journalist and the only reason I do what I do now is that my parents sent me to a school where I happened to stumble on a mainframe I could play with, and later bought a home computer I could continue to learn on. I had nothing to do with either decision. It was just luck. Before you judge the outcomes that others have to deal with, and the paths by which they got there, you should think back on your own and consider all the little inflection points in your life that you had nothing at all to do with. That exercise should be enough to whack a couple of inches off of your estimation of your own merit and entitlement.
And one last thought: perhaps the most damaging effect of the very high cost of education in America is that it means we can only have one kind of education: the kind that results in making a lot of money. All the other kinds of value seemingly have no value. We don't need artists, for example, because most of them won't make enough to pay for an education. Ditto philosophers, writers, most teachers, many scientists, etc. If you were a parent now, as I am, and considering colleges for your child, as I am, how could you possibly encourage him or her to attempt to study the arts or sciences at a first-class school? The odds of ever being able to pay back those loans in those professions are small and dwindling. The arts and sciences will, I think, end up as the hobby careers of the children of rich families who can afford to pay for school out of pocket. Maybe it's always been more that way then not, but I can't help but contrast our approach to that of Denmark or Germany, where everyone goes to school at no or low cost. Which society is more likely to make the most of it's human potential?
checks Wikipedia
> Lee Siegel (born December 5, 1957)
I also am pretty certain that from a macro standpoint it's obvious that American universities are doing something very right. I hear the frustration in many of these comments and the desire to rant, but hyperbole doesn't really make for interesting discussion. American universities and colleges are not universally bad, they do in many cases actually succeed in providing a valuable education, 99% of the population does not in fact accumulate tremendous debt simply to get a college degree, etc.
As for student debt in general, I personally think of it as just another variable tax rate on the middle class. The middle class is absolutely strangled by progressive taxes, and FAFSA is just another cog in the machine to claim $0.95 of every dollar you earn from $30k to about $120k of MAGI.
What is the solution? Who is John Galt? In many cases the correct answer is to just stop earning regular taxable income beyond about ~$30k MAGI. Suddenly your health care is free, your groceries are free, your kids college education is free, and your tax rate is negative (Treasury sends you the checks) and you certainly won't be servicing that old student loan either. I'm not saying to stop contributing back to society, I'm just saying, consider stepping off that squeaky spinning wheel first.
Any progressive system, by definition, will have parts of the curve where marginal utility is reduced. Some people (apparently like the author of this op-ed) manage to step directly into the worst part of this curve, which at many points demand in excess of $1.00 for every incremental $1.00 you earn. Very few people have even a basic understanding of the tax code and social welfare programs of the U.S., so it's impossible to expect people will make "good choices" under the current system. It's unnatural for someone to realize that job they are working feels like it's paying a wage, but over 10 years actually costs significantly more than it pays! This is all a result of the current system of which nondischargeable student debt plays just a small part.
The most annoying part of the article is that it appears the author actually found the solution, but just continued ranting like the solution didn't exist, and didn't bother explaining the actual mechanics of it so people might actually learn from it. It's also worth pointing out the author is not a current student (not dealing with the current system which is much different) but living with loans from a past era. The part about mom co-signing the loan, for example, was a huge red flag.
In the history of the US there has never been a time where it is easier to take on debt. There has been so much tampering with the natural order of the financial system that many natural checks and balances have been altered, levitated, and in some cases nearly removed.
Please bear with me here, this is not an anti-government screed.
In 2007, per Federal Reserve Flow of Funds; Household Debt to Disposable Income reached 138%. There are also many other data points that show that since around 2006 we reached economic outlier territory. For comparison, in 1964 this number was just over 65%, and in 1991 was just over 80%. So it kind of went up like a rocket.
Their information shows some normalization since 2009, but there is grey area there as they began adjusting their methods of measurement when they varied so far out of norm (in their defense this is what any good statistician would do).
Even if you have no doubt in those measurements though there is a solid area of outlier in almost every financial measurement of activity since ~2006.
This was actually the Fed Reserve goal, so they were successful in what they set out to do.
The issue is that money is inextricably tied to national and individual personality. There will be knock-on effects there, and those aren't or can't be measured.
In summary, and reaching my point, I would say that this person was one of many victims that the Fed knows will occur on the way, while making things overall better for the many. His personal response to that event is also IMHO normal. I would do it myself if I could (I have over 80k in student debt).
That said, in all economic measurements, there is no account for changes in attitudes towards bankruptcy. In fact, bankruptcies are considered a static number in financial equations, X per year, with some variance as the availability of borrowed funds increases.
Therein lies the rub. It is really not possible, or at least extremely difficult, to account for knock on effects that may be deleterious to attitudes. I would suppose this is why they don't include those; they are either considered side cases and too small to account for or like in the case of attitudes towards bankruptcy, not possible to measure.
It is perfectly reasonable to fix things that seem broken. It is not realistic though to make changes in vital things like money with measurements taken in a vacuum. Particularly in things so deeply tied to attitudes and personality.
Final words, if you can't measure it but you still know it's there, you must make sure you do not affect it. We are too far in human history now and know too much to continue to pretend that changes in critical things don't make a difference except in measurable and temporary ways.
So author assumes he shouldn't have to work a job he doesn't like, even temporarily, to pay back all the money he borrowed? It would have destroyed his precious young life? WTF?