There are very few circumstances wherein someone could be considered solely a victim, with no culpability for their circumstance at all. To categorize circumstances like student loan default in to these buckets -- sole victim vs sole culpability -- is to create a false dichotomy. Not saying you are, but arguments like these tend to polarize to these two endpoints quickly.
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.
First of, that's a false dichotomy. The choice is not between expensive liberal art colleges and cheap CS universities. The outcome of a guy going to a cheap liberal arts college would still have been much worse than yours!
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...
There are a few factors involved but most of the burden comes down to the person. What ever happened to personal responsibility and learning some financial sense?
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.
Properly understanding intricate financial arrangements while also being able to see far into the future just to make sure you will get a well-paying job and never get sick or get laid off, and to make sure there won't be a banks-created global financial crisis, and wrapping your head around the default-interest-fees schedule that can have you owing 5x your loan 20 years later if something unexpected DOES happen - is difficult at best for someone with decades of adult life experience. Now you want 18 year olds to have that understanding and mystical future vision.
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."
But history, grammar, chemistry, physics and all those other subjects "are", according to most school curriculae. Arguably, those subjects are really not that necessary for most of the population to function in day-to-day situations, and yet we drill and drill it into students incessantly.
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.
> What ever happened to personal responsibility and learning some financial sense?
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.
I have mixed feelings on this. If I lend somebody money without any reasonable due diligence on my prospects to be repaid, it is true that the borrower still owes me, but it's the height of entitlement for me to go complain to the government that I need special treatment under the law (bankruptcy...) because I made a poor lending decision.
It's unclear whether this is true or not. Prior to literacy bring widespread, it may have been looked at similarly: "I'm good at tailoring, you can't expect me to learn to read and write like a monk". But as it turns out, most people are actually capable of literacy. It's doesn't mean they become hemingways, but it allows them to do all sorts of jobs they wouldn't otherwise be able to do if we believed that literacy was a matter of personal taste or what you're "good at".
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.
That is a valid point and definitely we can acquire a lot of skills. Still there is natural ability and personal preferences and I would think a society where everyone can learn and do what they feel like they are good and and would enjoy - even with that changing over time - would be a way better society.
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.
> 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.
Lets further constrain it then to singing or painting, both areas where I was always horrible (and my guess would be a lot of people in tech are). I just don't see myself getting good enough at those to be anywhere competitive with other people and I definitely wouldn't enjoy it.
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.
No other loans carry the same terms as student loans. There is being responsible, and then there is debtor's hell.
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.
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.
This is a myth and not true. While it may be difficult it is possible.
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.
There are few fields today where you can walk out into crazy salaries, but CS is one of those fields.
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.
> dataker is lucky to be interested in one of the few fields left that pays well
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.
Also the idea that people in CS should be doing it because they love it, not just for the money. I wonder how many people on HN really want more developers who aren't really interested in it.
You shouldn't make it sound like dumb luck. It's very easy to look up salary statistics for various university programs, and things didn't usually change drastically in the four or so years it takes to get the degree.
Sure, I’m responsible for my debt because it’s in my name. Did I know that as a naive 18 year old trusting my not-financially-savvy parents that this was a wise decision that wouldn’t wreck my ability to produce wealth for the next decade?
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.
And its not even a matter of expecting not-yet-adults to make good decisions. They are raised in a system that teaches them that college debt is good debt and then they graduate and are courted by predatory lenders to take out way more loans than they should for their school loans with no guarantees that they will come out and get a decent job in their field. Schools should be more on the hook for that debt if they breeze someone through a program that they are not a good fit for or that has no job prospects.
Reasonably I'd expect these "not yet adults" to have been shaped by the adults in their lives such as parents, mentors, close family friends, etc. and to be supported in their decision making process by them.
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?
I don't think a person that can't understand loans is ready for college.
The creditor gives you money and you have to pay them back, if you ask for too much then it'll be much harder to pay back your loan.
Many students who take loans don't even need them, but could easily pay their tuition by just getting a job.
> Sure, I’m responsible for my debt because it’s in my name. Did I know that as a naive 18 year old trusting my not-financially-savvy parents that this was a wise decision that wouldn’t wreck my ability to produce wealth for the next decade?
> Nope.
But could you have researched the decision? Yep, assuming you had access to the Internet or a library.
Because the students chose to pursue that degree. They're the ones who signed the debt paperwork, they're the ones responsible for making sure that decision was worth it.
Here's the problem, though: since student loan debt is one of the ONLY types is debt that is almost impossible to discharge through bankruptcy, banks and colleges have almost no incentive to do proper underwriting. They are pretty positive they'll get their pound of flesh, come hell or high water. If there were better rules around getting rid of these debts in bankruptcy ("You loaned 200k to someone who wanted to get an English degree at a low tier, private college? Then you, the lender, deserve to lose."), these ridiculous loans wouldn't be made in the first place.
Then no one will issue loans to those students, who have a very high likelihood of never paying it back. You're right back to cheap schools and only issuing loans for degrees that will pay a very high salary. The whole point is to make it possible for people who can't get loans otherwise to get them, the inverse is that they have to pay them back. It's a fair trade, you want to borrow 100k for something that isn't tangible. You have no income, and a very high likelihood of defaulting, and the thing that was purchased can't be resold by the lender. That's a pretty awful deal for any lender. So if you make it possible to default then you won't see those loans being made anymore. Why issue the loan?
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.
Except one of the motivations for making unsecured loans available to everyone is the idea that kids should go to the best (most expensive) school independent of their parents' ability to pay.
Maybe. I mean - at the time of getting loans most people are around age 18 and legally adults responsible for their decisions, so sure there's that. But we're not talking about living with the decision to grow a mustache or try the paleo diet - we're talking about the decision to borrow thousands and thousands of dollars at huge interest rates, the kind of money most kids haven't seen in their entire lives at that point.
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.
What other choices are they unable to make at age 18? Are they unable to choose whether or not to get a tattoo which may last for a lifetime? How about whether to join the military and potentially die for their country?
I'm not meaning to imply they're babies who can't make life decisions. What I'm saying is that 1) many## people aren't informed when they make the decision to take out such a large sum of money, 2) the consequences of the decision don't set in until 4 or 5 years after making the decision (bring on the cognitive dissonance!), and 3) there's incredible social pressure to do it. For many families, the degree is the Golden Ticket, which should be obtained no matter the cost.
## 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.
At least once a week since I was 5 until I was 18, I was told that if I didn't want a job flipping burgers at mcdonalds, I had to go to university.
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.
Indeed. This is what's led to the skyrocketing costs of college degrees, the irrational belief that without one you're financially doomed. So any degree is presumed to be better than not having a degree, which is pure bunk. So everyone "knows" you have to get a degree, no matter what.
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.
Absolutely. I was devastated when I realized my life-long expectation of an academic career would have to be deferred or cancelled for financial reasons. I was furious that others around me seemed subject to no such restriction - including those I felt were less suited to or deserving of such a position. We do set kids up for failure by focusing so much on the benefits of college, while shrugging off the costs and risks. It's easy to understand how someone in an emotional turmoil like mine might see all of this and convince themselves that they owe nothing to a fraud.
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?
This is very true. As much as I understand that people need to be responsible for their own decisions, there are also unknown unknowns. If the message one receives is constantly: get a degree, it doesn't matter what, employers like to see the stick to it ness, etc. (the messages I got growing up) how are you supposed to know you are REALLY supposed to discard that bombardment and everyone has it wrong about plumbing? Some are reckless, some are just following the instructions despite their reservations.
In addition to that, people like to be optimistic. Many college graduates (even from not-very-prestigious ones) end up in careers that pay much more than plumbing, or at least have less middle class stigma attached.
One of the things that really pissed me off was that when the shell finally cracked about 3/4 of the way through my degree and I started looking at these things, I realised that actually, plumbers can earn way more than a lot of university professions.
You will never get those that believe that the poor are "lazy" to admit that they're easy prey for student loans, payday advances and high interest loans.
That's great. So some assholes are following me around and downvoting me for having an opinion. If you disagree with what I'm saying, how about having the gumption to argue your fucking point?
The more I think about it, the more I think this is right.
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.
Not so fast. My first lectures to freshmen deal with precisely this issue. This problem comes from, and could not survive without college administration. One problem with that is that the students have already been led to the slaughter by the time they hear any of this.
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?
Something is wrong if we've reached a point where only the very rich (or the very poor) can go to a nice school. And something is wrong if only certain fields of education are valued enough to cover their costs. Economic theory says that the cost of education in the less valued fields should drop, but the easy access to loans for the study of anything, which can never reasonably be paid off, prevents that from happening. Depending on which side you're on, this is a feature, not a bug.
I think the system we have here in Australia, is terrific. Students accrue a debt to the government, covering tuition, but no payments are necessary on this until you attain a certain income threshold. Right now, that's A$53000 of which 4% is taken to repay (increasing with income). If you make less, you're not financially burdened. Furthermore, no real interest will be applied with the principal simply keeping pace with inflation.
How so? It sounds to me like it would incentivize going to university and choosing a degree regardless of the likelihood of that degree being a financially wise decision in the long term.
Excellent point. I'd also add that it's important to look at this from the giver's (i.e. government's) perspective. It's beneficial for society if everyone is educated. Yes, there will be some who take the opportunity and do nothing with it to benefit either themselves or others. There will also be some who use it not only to enrich themselves but also to enrich society and even improve the economy. If the "hits" outweigh the "misses" then it's a good investment overall. Much like VC, in fact. Most startups fail, but a few succeed to a degree (heh) that makes up for it. Sometimes it's worth taking a risk on people.
That's a good point, which I didn't address only for the sake of brevity. Yes, there are exceptions. No, they don't change the value of the statement as it applies to the matter under discussion.
> 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.
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.
I'm an European and I cannot grasp that education system in US. Granted, most of my knowledge comes from rants like John Oliver's or this one, so I guess it's hardly objective, but it looks like a pile of the worst possible solutions gathered together just to screw up the highest number of people. A few days ago there was also an interesting article here about US students discovering that they can go to Germany and have a high quality education without going into any debts.
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.
The American system is fairly broken, true. But it's important to remember that the vast majority of people (a number around 90%) who go to university (even expensive private ones) here in the U.S. manage to navigate this system and go on to productive, non-bankrupt lives after graduation.
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 refreshing to see the occasional reminder, such as yours, that our situation in America is unusually bad.
> 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 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.
When some business venture goes sour and the entity responsible decides to cut bait in order to save the rest of their business, that's usually considered by most to be a good thing, a wise, if unfortunate business decision; there is always risk in business, right? They saved their other investors' interests and their business lived to fight again another day. They made the best of a bad situation. When an individual does the same thing with a mortgage or with their student loans, it's a moral outrage. The default-ors are shamed socially, and thrown to often lawless wolves, (debt collectors) nobody wants to defend them against the reprehensible behavior from even the worst of these debt collectors becuase they can't pay, and because they 'deserve' shaming because they are 'deadbeats'. The same kind of social pressure can't/won't usually be applied to the 'deadbeat' business though. That kind of publicity might harm the their ability to repay their other creditors, keep paying staff, 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.
I think that, fittingly, educating high school students about the financial aspects of college, choosing a major, taking out loans, etc. would go a long way.
You can try to reform the system, but it'd probably do a lot of good to prevent more financial wrecks in the meantime.
High schools are already educating their students about taking out loans. In fact, they're being paid really well by the loan providers to teach their students that they should take out loans for college. The problem here is that the incentives aren't aligned - their ex-students getting mired in student debt a few years down the line doesn't cost them anything, but replacing the mandatory sales pitches for student loan programs with proper financial education would.
Problems at the high school level are, not coincidentally, linked to what we're discussing at the college level (that is, they are the result of unusual structures imposed by moneyed interests). I think the best way to prevent financial train wrecks from misaligned incentives is to realign incentives. A post above about the Australian student loan system is a good example of what this could look like.
I would predict that doing so would become a political issue, since educating young people could have a negative impact on corporate bottom lines. The less experienced and educated, the easier to take advantage of.
The student loan system in the United States is broken at both ends. The students have no incentive to shop around and keep costs down while going to school. The companies that loan money to students don't really look at whether or not they are a good risk.
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.
I dont understand this sentence at all - "The students have no incentive to shop around and keep costs down while going to school." . There is a direct financial incentive to shop around and save on the cost of an education, which in most cases is one of the larger financial outlays in a persons life.
There's a lot of rationalization and sophistry in that article, but this was the most egregious:
> 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.
It's relatively easy to sit on the sidelines of someone's life and compare the choices they've made, to your own, especially when we're aware of the consequences after the fact.
What isn't so easy is to admit to yourself, that not everybody has the same choices available to them as you.
Oh, I'm well aware of that, but thanks for the ad hominem. I came from a background no more privileged than his. I had to make some hard choices, which among other things is why I don't even have a degree. I'm sure Lee Siegel had different opportunities and different aptitudes than I did, but those don't seem to have been the dominant factors here. Even with those opportunities and aptitudes, a better attitude would have allowed a better outcome without the need for a loan default. He wasn't willing to compromise on his choice of college or his choice of a first job. Other people who do make such compromises often do just fine, and eventually get into the career they wanted, despite an equal level of opportunity or aptitude.
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.
"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.
"It wasn't his first job, it was a career you want him to give up."
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.
When you tried to imply that I had "sat on the sidelines" that was ad hominem. It suggests that I'm unqualified to have an opinion, which is not only inherently fallacious but also absurd in light of how closely my own experience actually does match that of the author. Next time, instead of making assumptions and then using them to undermine the source of a statement, try addressing the statement itself.
I wasn't suggesting that you were unqualified to have an opinion.
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.
Conflating circumstances and choices is absurd. Siegel's default wasn't the inevitable result of circumstances. It was a choice. Whatever the outcome, he can't deny agency. He can't say it was all somebody else's fault, and that he only did what he had to do. He had to do one of several things, and he chose one. Millions of people, none of them in identical circumstances but statistically close enough, made different choices and had those choices work out fine, without the life of self-loathing Siegel predicted for himself if he had chosen differently. That prediction was convenient, but ill-founded in fact.
If you have federal student loans this is shitty advice. The loan payment programs are very generous. 10% of your income (minus 150% of the poverty level), which is probably more like 0-7% for most people, each year.
If you default, hit your credit, and get your wages garnished, you'll be in a worse spot.
What is the APR on that "only 10% of your income?" It isn't really "generous" if 10% only ever pays the years interest without repaying the original sum.
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).
Interest over your payments are waived for the first three years, after that it is capitalized. After twenty years, ten if you work in the government or charitable sector, the remaining balance is forgiven.
The current interest rate for new undergraduate debt is 4.29%.
There are regulations that say the public service forgiveness (10 year) is not taxable income. The ordinary forgiveness (20 year) is taxable under current law, but IBR/PAYE hasn't been around long enough for anyone to have triggered it yet. There are proposals to exempt it.
Very generous compared to what, any other federal student loan system? Its extortionate when you compare it to similar countries, think 30k for a 4 year engineering degree with interest at CPI - or in many places free.
It isn't like he didn't know how much money he was borrowing when he took out the loan. He wanted something, so he took out a loan to get it. Regardless of what it is for, he made a deal.
> If you have federal student loans this is shitty advice. The loan payment programs are very generous.
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.
The private loans were still backed by the feds which is why the DOE was coming after the author. Writing student loans was a nice guaranteed profit for a while (it changed in 2010 when they started cutting out the middle man).
> 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
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...
> How many people, during the credit crunch, had their house defaulted on even in spite of never missing a single payment? The house just decided the physical property was more valuable than the debt, and kicked them out.
>
Are you saying people paid their debt, but the bank was still able to take property the borrower owned? Can that actually happen?
Generally, no, it can't. Mortgages are contracts. By their typical contract terms, the lender can't foreclose unless the borrower is in breach of the contract. That means falling behind on payments. Could you write a custom mortgage to allow the lender to foreclose anyway? Sure, but then the problem is whether it would be securitizable or in compliance with local law. Unlikely, thus, a bank would not do that. The average mortgage and note are form contracts with some variation, but not this 'steal your house' term.
Parent post also implies that during the foreclosure crisis the value of houses increased. The opposite occurred.
> 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...
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?
> 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?
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.
Mob, audience, company, business, corporation, etc. All are concepts that have individuals as an essential element of the concept. None exist as tangible entities in the real world. For example, you can't point to a mob without pointing to the people who make it up, and neither can you point to an audience without also pointing to the people who define it.
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.
Self-indulgent me generation, using sophistry to justify defaulting on a loan. Because, mostly, he didn't want to work for a living. First-world crybaby.
This is such patently absurd rhetoric, that it almost doesn't deserve a response. Almost.
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.
Because I lived in a rural area of California and moved to a different state, where the cost of living was less absurd. I paid out-of-state tuition for 1 year. That tuition rate was twice what in-state residents were paying.
And what the fuck kind of concept is "out of state" tuition anyways? Seriously?
- 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.
I only skimmed the article so I don't really deserve to comment but this was my impression. He took private loans to go (initially) to a private college then went to acquire more debt in graduate school and then thinks that it's the System's fault. He straight up says he thinks the affordable path that most of us take was beneath him and that he deserved to go to a private college.
Don't fucking lump us all in with this asshole. I worked through school and I chose not to go to a more expensive out of country option that I could have gotten into (MIT). There are tons of shitty jobs that pay very high wages, like northern Canadian diamond mines, for example) that this person could have done. Bankruptcy should be for completely unforeseen circumstances, like early life medical problems, not because someone wants to be a writer.
Well said. There are people who are screwed by the system, and there are also people who just screw themselves. I think it's important to hear from the first group, which might help to affect change. The second group should STFU. Yes, these kids are only 18 when they make these decisions. Yes, they're ill informed and vulnerable to much more sophisticated people trying to manipulate them. I'm sure there are many sad stories to tell, but telling them isn't constructive. It only reinforces the stereotype of all student loan defaulters as being irresponsible and overcome with their own sense of entitlement like Lee Siegel. That reduces sympathy, and therefore reduces the likelihood of positive change. The assumption that every story needs to be told doesn't stand up to scrutiny. Some just don't.
> There are people who are screwed by the system, and there are also people who just screw themselves.
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.
But he doesn't just make an argument about how broken the system is. He also makes an argument for what people should do in response. It's an illegal, questionably moral, and quite often risky response. That's the part that's wrong, and in advocating for the second part he undermines any effort to do anything about the first part.
Perhaps it is questionably moral and risky, but why should it be any more so than a corporation filing for bankruptcy? The difference is that bankruptcies are, to some extent, priced into the system. If they weren't and if personal bankruptcies, for example, weren't allowed, we'd see problems with personal and housing loan underwriting standards dropping to the level of students loans. It's no coincidence that there has been a strong push towards making all personal loans exempt from bankruptcy. Being setup to fail is profitable.
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.
A lot of commenters are zero'ing in on the author's experience, and I think they're missing the broader point. It isn't about what the author should have done, it's about a system of financial aid and rising educational costs that is broken, and that irreparably punishes people like the author for making mistakes while letting others off the hook. Depending on how you look at it, he was meant to fail all along (principal + ballooning interest = more profit, right?), and that is the point.
I could not afford my loans...I was basically unemployed (looking for work) with loans on permanent forbearance. It took a 4.5 year stint in the Army to pay mine off (student loan repayment program), but I did, and I'm all the better for it. I have zero sympathy for this person.
Not questioning your decision at all, but I'm curious, you say you're "all the better for it".
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.
I didn't join the Army for the sole purpose of having my loans repaid; it was just icing on the cake. I also received a sizable signing bonus, and was able to convert my degree into an automatic promotion to E4 (Specialist instead of Private).
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.
Sooo... you have zero sympathy because they didn't decide to join the military like you did?
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.
You're being ridiculous and taking my words out of context.
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.
"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"
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.
Why not attend community college for two years and then state college for two more? The financial burden would seem much lower. Why attend an expensive private school if you can't afford it, unless that school is offering something that is clearly worth the cost delta.
It takes courage to admit that you are in the dirty default club, good on him. I am in the default club too, here's why:
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 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.
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.
>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.
Author finished a Ivy League, Columbia University and write for Times but refuse to pay back loan that gave him all that?? I have no words for this person.
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.
When the social contract is not working for you, there is absolutely no reason to honor it.
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.
Why aren't we asking why this is even a degree? It's not an expensive form of entertainment, it was designed as a fallback mechanism for the college to make money.
Well, at the school I went to (and did not graduate from), CS was offered through the College of Liberal Arts and Sciences. Along with Mathematics, Chemistry, Economics, Biology and several other useful disciplines.
Liberal Arts is not a codeword for 'interdisciplinary studies'.
I use it as a blanket term for history, English, literature, philosophy, foreign languages, art, American studies, etc. Anything non-technical. I'm surprised your school was organized that way.
I wish people who know nothing of liberal arts education would stop dismissing it outright. It makes them seem petty and foolish. We need experts of all types in this world, not just nerds stuck behind a keyboard.
Not necessarily disagreeing with your core point, but your point about needing experts of all types in the world would be better served without a type of expert outright.
I think he's a contemptible ass. His mother is the cosignor on the loan. I would work my ass off to pay that back rather than let the negative effects of defaulting land on my mother.
I'm highly critical of the current student loan situation. That said:
> 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.
> 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.
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.
> Good! Should we just allow it to keep getting exponentially worse? Smaller correction now, or massive correction later?
You're painting my comment as rather black-and-white. All I'm saying is that encouraging mass defaults on private loans is probably the most disastrous way to correct. In fact, encouraging mass defaults is letting things get exponentially worse; it forces the government to pick up the burden of these increasing costs without simultaneously addressing the reason that these costs are rapidly increasing.
A correction will ultimately result in banks having to write off some of their loans, but forcing them to do so in a sudden and unpredictable way without addressing any of the other problems (inflated tuition costs, federal subsidies, etc.) simultaneously is putting the cart before the horse.
Not to mention the real solution to this problem is to not have so many people take loans they can't pay for an education that isn't worth what they're paying for it. It's a lot easier economically to just not go to college than it is to advocate everyone steal money to go to college.
There's been a lot recently about the explosion of tuition burdens. And the ways in which the student loan system is mostly setup to benefit the banks (and to the Feds it's also a positive revenue source).
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.
The one thing that can be reliably expected from any debate of this kind is that those who fall on the fortunate side of some line between a good outcome and a poor outcome will be all about personal responsibility and making good choices, and those who fall on the other side of that line will be all about injustice. I don't really give a shit how hard you worked to become a well-compensated software engineer. It was still mostly luck. You were lucky to be born at the right time, lucky to have a brain that works the right way, lucky to have access to the tools and materials you would need to learn, lucky to have time to learn them, lucky to have a stable-enough environment in which to learn them. Lucky, just like me.
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?
When I first attended college back in 1985, I was shocked at the number of institutions who camped out in the student union to hock their cheap plastic trinkets if you would just fill out this credit application.
Opinion: No character is built on quitting and lack of forethought. This generation needs to be wise enough to take a proper loan with the idea of paying for it. Times are not like they used to be.
Personally I know that college was a complete waste of time for me. I gained very few skills in the classroom I would not have picked up myself, and have zero need for the credential. Sure, I wouldn't mind getting the $100k I spent back. But it was a choice I made based on the information I had at the time.
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.
Debt, particularly student debt, is a loaded issue. So at the risk of karma, I am posting.
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.
> 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.
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?
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.