http://mobile.nytimes.com/2015/06/07/opinion/sunday/why-i-defaulted-on-my-student-loans.html?_r=1&referrer=
By LEE SIEGEL
JUNE 6, 2015
ONE late summer afternoon when I was 17, I went with my mother to the local bank, a long-defunct ins ution whose name I cannot remember, to apply for my first student loan. My mother co-signed. When we finished, the banker, a balding man in his late 50s, congratulated us, as if I had just won some kind of award rather than signed away my young life.
By the end of my sop re year at a small private liberal arts college, my mother and I had taken out a second loan, my father had declared bankruptcy and my parents had divorced. My mother could no longer afford the tuition that the student loans weren’t covering. I transferred to a state college in New Jersey, closer to home.
Years later, I found myself confronted with a choice that too many people have had to and will have to face. I could give up what had become my vocation (in my case, being a writer) and take a job that I didn’t want in order to repay the huge debt I had ac ulated in college and graduate school. Or I could take what I had been led to believe was both the morally and legally reprehensible step of defaulting on my student loans, which was the only way I could survive without wasting my life in a job that had nothing to do with my particular usefulness to society.
I chose life. That is to say, I defaulted on my student loans.
As difficult as it has been, I’ve never looked back. The millions of young people today, who collectively owe over $1 trillion in loans, may want to consider my example.
It struck me as absurd that one could amass crippling debt as a result, not of drug addiction or reckless borrowing and spending, but of going to college. Having opened a new life to me beyond my modest origins, the education system was now going to call in its chits and prevent me from pursuing that new life, simply because I had the misfortune of coming from modest origins.
Am I a deadbeat? In the eyes of the law I am. Indifferent to the claim that repaying student loans is the road to character? Yes. Blind to the reality of countless numbers of people struggling to repay their debts, no matter their cir stances, many worse than mine? My heart goes out to them. To my mind, they have learned to live with a social arrangement that is legal, but not moral.
Maybe the problem was that I had reached beyond my lower-middle-class origins and taken out loans to attend a small private college to begin with. Maybe I should have stayed at a store called The Wild Pair, where I once had a nice stable job selling shoes after dropping out of the state college because I thought I deserved better, and naïvely tried to turn myself into a professional reader and writer on my own, without a college degree. I’d probably be district manager by now.
Or maybe, after going back to school, I should have gone into finance, or some other lucrative career. Self-disgust and lifelong unhappiness, destroying a precious young life — all this is a small price to pay for meeting your student loan obligations.
Some people will maintain that a bankrupt father, an impecunious background and impractical dreams are just the luck of the draw. Someone with character would have paid off those loans and let the chips fall where they may. 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.
Moneyed stumbles never seem to have much consequence. Tax fraud, insider trading, almost criminal nepotism — these won’t knock you off the straight and narrow. But if you’re poor and miss a child-support payment, or if you’re middle class and default on your student loans, then God help you.
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.
Even the Internal Revenue Service understands the irrationality of pursuing someone with an unmanageable economic burden. It has a program called Offer in Compromise that allows struggling people who have fallen behind in their taxes to settle their tax debt.
The Department of Education makes it hard for you, and ugly. But it is possible to survive the life of default. You might want to follow these steps: Get as many credit cards as you can before your credit is ruined. Find a stable housing situation. Pay your rent on time so that you have a good record in that area when you do have to move. Live with or marry someone with good credit (preferably someone who shares your desperate nihilism).
When the fateful day comes, and your credit looks like a war zone, don’t be afraid. The reported consequences of having no credit are scare talk, to some extent. The reliably predatory nature of American life guarantees that there will always be somebody to help you, from credit card companies charging stratospheric interest rates to subprime loans for houses and cars. Our economic system ensures that so long as you are willing to sink deeper and deeper into debt, you will keep being enthusiastically invited to play the economic game.
I am sharply aware of the strongest objection to my lapse into default. If everyone acted as I did, chaos would result. The entire structure of American higher education would change.
The collection agencies retained by the Department of Education would be exposed as the greedy vultures that they are. The government would get out of the loan-making and the loan-enforcement business. Congress might even explore a special, universal education tax that would make higher education affordable.
There would be a national shaming of colleges and universities for charging soaring tuition rates that are reaching lunatic levels. The rapacity of American colleges and universities is turning social mobility, the keystone of American freedom, into a commodified farce.
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. Instead of guaranteeing loans, the government would have to guarantee a college education. There are a lot of people who could learn to live with that, too.
Never understood the social stigma in the US when a person defaults on debt... it's funny too, because it's only with people, not with companies...
Also, it's crazy you can't discharge a student loan an a bankruptcy proceeding. That borders on usury, IMO.
Lol. It's too late for me I already paid mine but I guess I should've just defaulted according to this guy. Mean greedy ppl want me to pay back the money I voluntarily borrowed
Typical en led lib begging for a handout. Don't go to college if you can't afford it. Go to trade school and learn a useful skill instead of wasting your time and (nonexistent) money on that Feminist Studies degree.
If there was no stigma involved in defaulting on debt, nobody would ever loan money because they'd never get it back.
Even a Commie rag like Slate is calling this got out
But it doesn't work like that. No judge is going to let you go through bankruptcy proceedings if you have enough money to pay the debts off.
Lending is an investment, and much like any investment, it can go sour. Companies default all the time without any stigma attached to the company owners or CEOs.
Plus, people default anyways despite any stigma attached to it. So the rationale that personal loans wouldn't default without a social stigma attached to them is simply wrong.
Two things.
1. Companies aren't people. Capitalism requires companies to take risks. Sometimes those don't pan out. But we don't shame companies for risk taking because that's what the system needs to grow. We have different expectations for individual finances. The expectation is for people to be financially responsible, not risk averse.
2. Where are you getting the sense that there's no stigma for corporate defaults. Businessmen develop reputations, and if they're constantly filing for Chapter 11, people are less prone to invest and/or do business with the
.
"Companies default all the time without any stigma attached to the company owners or CEOs."
In middle of the Banksters Great Depression, the ing Mortgage Bankers Association walked away from, defaulted on their office building. MBA got dinged? no.
Not according to Citizen's United... but I digress. A loan is a loan is a loan. You'll have certain "ratings" on them, and then derivatives on top of them based on those ratings, etc etc etc, but it's still a loan. That people built a house of cards based on those "ratings" or expectations, well, that's up to the people that built such precarious expectations, not the borrower. People go through different situations in life, there's no guarantees of anything, IMO.
Plenty of companies that went through Chapter 11 and now everything is apparently forgotten: Delta, United Airlines, PG&E, Chrysler, GM...
Which is fine, IMO. That's what should happen after bankruptcy proceedings.
I don't sympathize with the OP, because he made his own bed... but I do think the student loan system should be reformed or government should just get out of the loan guarantee business.
TheSanityAnnex
Did you hear this on The Dave Ramsey show yesterday?
agreed, tbh
I'd love to stop paying my student loans like OP but I'm not a whiny got who feels it's okay to over the people who loaned me money to persue a goal. that guy he's an absolute piece of and what is wrong with a lot of college aged liberals today, they lack all responsibility. No one forced his got ass to get three worthless degrees at Columbia. I hope his name is smeared so badly he's never hired again to be paid for a written piece.
Never heard of him. Only radio I hear is Jon and Ken of KFI AM 640 and that is for all of five minutes on my way home from work.
He basically has a show talking about how to lower/eliminate your debt...
Anyways...he read this entire letter yesterday on his show. That's why I asked.
gotcha. Is his show any good? I just go off a book I read a long time ago "rich dad, poor dad". Was simple enough for me to understand when I read it then and still follow it today. Always looking for new financial guys to check out.
Yeah it's pretty good...I would recommend if you like that kinda thing.
99% of the time I listen to sports talk radio though....but I catch his show when I hear him on.
I don't know anything about the OP, but the student loan situation is terrible. I have no sympathy for him because there's plenty of community colleges.
I'd love if you never have to choose between paying your student loan and eating or paying rent. But that happens sometimes. A lot of people get the loans thinking they'll have a normal life and they'll be able to handle it, but sometimes temporary bad situations happen, and you have to deal with them. That's why we have chapter 7 or chapter 13, where your lenders try to recoup what they can, and once the process is over the loans are discharged, and you're allowed to start again financially (after some prudential time). But that doesn't happen with student loans. Unless you're ing disabled, you're gonna have that hanging over your head forever. On top of that, it's a scam. The loans are guaranteed by the government, the lenders incur in basically zero risk. It's a government sanctioned racket.
We were just talking about Germany simply deciding that education is too important to leave it to loan sharks. You might agree or not with that solution to the problem. But this half-assed system we have right now, with over a trillion dollar in loans isn't working, and at this rate, it's going to tip over sooner or later.
what a ing leech
Who would have thought when you subsidize something the price goes up? lol.
My dad knew a guy who took out a student loan and invested it in Apple. Our govt did not even require much in the way of where the money was going back then. This guy had plenty of money to pay for school. Yes he made a bundle off the Apple stock. Mortgages were like 15 % back in those days and this guy was borrowing money interest free and buying frrgn stock with it. No guilt.
I agree with you on how ty student loan situation is, but how do you not know anything about the OP? Did you not read the article? He's a piece of who was too good for community college/state schools and decided he needed three degrees at Columbia that he wasn't going to pay for because his ty life choice job wouldn't pay back the loan. He is everything wrong with the young liberal generation.
I bought a few guns with some of my student loan money
There are currently 1 users browsing this thread. (0 members and 1 guests)
Posting Permissions
Reply With Quote
