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Writer: "Why I Defaulted On My Student Loans"
schwit1 writes: There are some valid points raised in Lee Siegel's 1,100 word rant against college loans (if not so much against college education). There are also some bad ones. But two things are clear: the words "personal" and/or "responsibility" were used precisely zero times. Siegel, who described himself as "the author of five books who is writing a memoir about money," is hardly a glowing advertisement for the return on nearly a decade in university just to achieve a Master of Philosophy degree.
Siegel says, "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. ... 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."
Siegel says, "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. ... 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 plenty of groups that had vested interest in killing socio-economic mobility, but colleges weren't really one of them. While the colleges and universities in our country have plenty of faults to them, it is not their fault if students decide to major in philosophy and leave without good job prospects. What did this guy expect to find for employment?
Damn_registrars has no butt-hole. Damn_registrars has no use for a butt-hole.
Need money for education, need money for health, need money to not starve to death. Look at civilized countries, they better serve their population and they have less debt as a country too. Stop your silly wars on drugs and oil protection. You have enough money but you are wasting it on stupid things. No war on drugs means prices will just drop and criminals will have less money and less power. No oil means you will switch to cleaner sources of energy that you can do on your own land, keeping even more money inside your own country.
Famous for sockpuppeting his own online threads.
Scott Greenfield adds some valuable additional commentary. The horror! He had to drop out of a "small private liberal arts college" and suffer the indignity of attending a public university. And this in an era when tuition was vastly lower than it is now.
I have a fair amount of sympathy for modern college students and graduates who are subsidizing a bonanza of administrators with no attendant benefit to themselves. But for Siegel to set himself up as one with such people is deeply deceitful. He wears his deadbeat status as a badge of honor.
Dog is my co-pilot.
Actually if he's transferring his student loan debt to the credit cards the advice is brilliant.
If he wants to rant against anything it should be the fact that they accept 100-10,000 Philosophy majors for every "Tenure-Track" teaching position available. I think he should shut the fuck and go teach community college students on the public dime.
If he was unemployed with a M.S. in Electrical Engineering due to an H1B visa taking his job I would be more sympathetic. Abusing his philosophy education to justify in his own mind defaulting on debt? No wonder nobody wants to hire him! He spent 10 years studying philosophy and that is his magnum opus? "I was able shirk employment for 10 years thanks to tax dollars, and now that it's time to pay the piper: I want everyone to unite in solidarity so I can put off paying back those loans perpetually/relieve the pain of default"?
Cry me a fucking river. Least sympathetic advocate for a legitimate cause EVER.
Color me "shocked" his latest scheme to avoid employment is writing books and "blogging"(not a business plan moron)...
You realize that no one gets to choose what "their tax dollars" are spent on, right? Otherwise I wouldn't spend a dime on things like drones and NSA data centers.
Given the option, I'd rather pay for a million people to go to college than a single Predator drone.
An enigma, wrapped in a riddle, shrouded in bacon and cheese
Many people are not aware, but it's been known for a number of years amongst physics education researchers how to actually measure the change in conceptual comprehension (actual assimilation of new concepts into the part of the mind that does real-world problem-solving) that results from a semester-long class. Force concept inventories (FCI's) can be administered both before and after a class, and these tests have already been given to tens of thousands of students. These tests have revealed very serious problems with public comprehension of science that starts on day 1 of the first mechanics physics course, suggesting that it is the lecture and problem set approach which is causing the problem. Eric Mazur has made a name for himself by discovering this problem at Harvard. What he found, by studying his own students, is that the plug-and-chuggers can ace their rote memorization exams, and yet still completely fail conceptual questions in the same exact domain/topic.
See Confessions of a Converted Lecturer, or the first two devastating paragraphs of the abstract here.
The college loans are not the only scandal happening at the universities. We should also be seeking to make sure that our straight-A students actually understand the materials they are memorizing, by instituting the FCI's. This would also help parents to determine the effectiveness of the various programs, and programs would once again compete on instruction.
"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 accumulated in college and graduate school."
You want to be a writer but you can not pay off the debt you created getting a doctorate?
Really? You want into to debt getting a Phd in Philosophy?
Sorry but a lot of people have to take jobs they do not want to pay of debt or even to feed a family. You decided to spend a lot of borrowed money getting a degree and a Phd in a subject that does not pay well at all.
"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. "
Well yes it is. State schools are a lot cheaper and community colleges even cheaper. Get your required course out of the way on the cheap and then move on to University.
" I thought I deserved better, and naïvely tried to turn myself into a professional reader and writer on my own, without a college degree."
Talk about a sense of entitlement. You did not try to turn yourself into a anything on your own. You tried to use other people's money to live a fantasy. Who needs to pay a "professional reader". Wow. I just do not know what to say except pay up dead beat.
Wow this does so much harm to the idea of student loan reform that it almost seems like a right wing plant.
See my blog http://ilovecookes.blogspot.com/ for light hearted technical information.
Funny how when a corporation defaults on its debt and files for bankruptcy so that it can break union contracts and pay workers less, it's seen as a sharp business move, a recognition that their expenditures have come to surpass their income in a structural and unsustainable way. But when an individual decides the same, perhaps after coming to the conclusion that an investment in a home or university education wasn't as lucrative as it seemed it would be at the time, people start thundering about the moral necessity of paying back loans.
I can't blame the universities for the mess the higher education system is in. They're just responding to market forces. Really, everybody is. It's just that the market has been circumvented by a well-meaning government.
The problem is that unlimited money is flowing into the higher educational system and there is no negative feedback loop to limit it. It's just one big positive feedback loop driving up attendance and cost.
1) Take as a given that "you have to go to college or else you'll have a shitty job." More on this later. The number of students going to college has been steadily increasing since forever. Part of this is because of the nature of our increasingly specialized and technical world, and partly due to social changes, like the progress made by women and minorities. I'm not in any way implying that's bad, I'm just saying there are more people going to school.
2) The government first issued direct loans to poor students in 1958. This method upset congress, though, because from a budgetary standpoint it showed as a loss the year the loan was issued, even though it would be paid back later. Instead, from 1965-2010, the government guaranteed student loans made by private lenders. If the student defaulted, the government would make the lender whole. This makes the rule that student loan debt cannot be discharged by bankruptcy especially petty. The lenders were at no risk, anyway. From 1993 on the government also issued loans directly. Also, as time has gone on, loans have become increasingly easy to obtain. Originally only poor students who could show financial need qualified for government-backed loans, but those requirements were dropped in the 80s.
3) Since there is no risk to the private lender, there is no incentive not to grant any loan request. As for government loans, there's no political will to deny students seeking money for education. So, there's no brake on the money flowing into the system. And the lenders aren't necessarily doing anything wrong here. There have been some scandals involving kickbacks to schools, but it's mostly unnecessary as people are lining up for these loans. Why would the lender say no? They'd just get called out for ruining some kid's dream of an education.
4) If the lender had to take a risk, they would be careful about issuing loans. Today a D student seeking a degree that might land him a $30k/year job (if he's lucky) can get a loan for $40k. With risk involved, the lender would consult actuarial tables. What are the student's chances of completing the degree? What are his chances of getting a job? What's his expected income? What's the chance of default? No such brake exists. (Note, I'm not saying degrees not tied to a high-paying job are worthless. More on this later).
5) Without the loan, the D student would go learn a trade, instead, or get a job that doesn't require a degree, like say work in a call center (yes, I'm aware of the current situation in which ads for low-level jobs like call center work have starting requiring degrees. It's part of the loop and I'll get to it later). A student seeking a degree that costs more than what's reasonable given their earning potential would also be turned away (this would be an incentive to keep tuition costs down. If liberal arts students can't get loans, your school doesn't get their money).
6) Since the number of students and amount of money they can borrow is unbounded, there's no incentive to keep tuition costs down.
7) How are students with options deciding what school to attend? We would hope they would decide based on the quality of the education, but that's difficult to measure objectively. Generally it just has to be "good." Also, many students don't know what they want to major in when they arrive, anyway, so it's difficult to make a decision based on the quality of a program. As long as they're reasonably confident in the quality of the education, they're making their decision based on amenities. How nice are the dorms? The recreational facilities? How pretty is the
We don't have a state-run media we have a media-run state.
I already read this story and a bunch of comments on it, when it was shared on a friend's Facebook feed over the weekend. When I saw it here this morning, I have to admit I suspected a lot of people would try to make arguments supporting the guy's decision. (Lots of college age folks on here, after all, presumably suffering with high tuition and challenges finding good paying jobs, fresh out of school. Also a lot of liberal thinkers on here who I imagined would be all for free, govt. funded college educations.)
But no ... I see overwhelming dissatisfaction with his article, which IMO is exactly how it should be!
If nothing else, it strikes me that early on in his article, he encourages others to consider refusing to pay what they owe, just like he did. Yet he goes on to explain his circumstances, which are probably a lot different than many students are in right now. First off, he's talking about his dad going bankrupt after his mom co-signed for his loan. An awful lot of students I know received Federal loan assistance that didn't require a co-signer at all (and actually have pretty low interest rates compared to any other unsecured bank loans you'd take out). If you go in and sign for one of those, you have nobody to blame but yourself if it turns out it's difficult to pay off afterwards! You can't really argue that your parent(s) drug you into the bank and pretty much told you to "get one of these" without you having much of a clue, as they signed along side you on the paperwork.
But second, yeah.... it's kind of tough to feel sympathy for this guy when he's complaining that paying down his loans was going to be so difficult a decision because it would require taking a job other than the one he preferred being in! Hello?! What about the college grads with PhDs in Physics who take a job at Burger King for a while, to pay the bills? You're going to discount their dedication to doing the right thing and paying what they agreed to pay in a written contract because YOU think it's better to ditch your personal responsibility if it means doing a job other than being a writer for a while? Guess what? If I was hiring for one of these career positions and had a candidate with a high level degree with work experience like that, I'd choose him/her over the candidate with nothing! It says things about the person's character and willing to follow through on what they commit to.
The housing bubble that started in 2005 resulted in my purchasing a rental property precisely at the height of the market. I had to, it was part of a deal. So when the bubble burst, the market value went to about 40% of loan balance in 2008, and stayed there until 2012.
I didn't 'walk away'. I endured countless calls from the lender's 'home retention team', or 'home affordability team', or whoever if they, THEY, processed my payment either on due date or mere hours later. They were deathly afraid I would do the rational thing and walk away.
But the property had positive cash from from day one. It made business sense for me to keep it. As of this year, it has equity value. Not much, but that's pretty good.
As an aside, I could have bought the neighboring property for $50k in 2011, which at that time was really fair market value. Same layout, a mirror image, but it needed a new roof, major remodels inside, and had no tenants. It looked like 30% down (commercial loan for income property), $30k of work, about $45K cash to buy and rent out a $50k property. Not very attractive.
But back to the story, I rented to one man who bought a home in early 2005, escaped most of the bubble here, but had a 3-year ARM that drove his payment from $1,500/mo to $3,800/mo. He walked way when it adjusted. No bank could fix this in 2008, for obvious reasons, and he also was working in commercial construction, which dried up. His income plummeted, and he eventually could not even pay rent.
'Lots' of people I know walked way from mortgages that far exceeded property value. It was a business decision, prompted by both buying at inflated prices, the subsequent collapse of the market, many had ARMs that went sky-high, combined with post-2008 layoffs, credit card debt that forced them into bankruptcy, and in many cases their being given a loan for over-priced homes appraised by unscrupulous appraisers in collusion with mortgage bankers and realtors. Yes, Realtors.
For a graduate who chose a major with no job prospects, and no ability to find alternative work that can pay the bills, default may make sense. If these defaults impact certain institutions more than others, perhaps we will see market pricing for either student loans or for programs. Let me explain:
If defaults occur for certain institutions, a market pricing approach would raise interest rates for those schools that suffer more defaults. This is bound to impact enrollment for some of these.
However, if defaults impact certain majors (philosophy and art being favorite examples), perhaps then lenders inquire about the student's course of study, and price it according to experience.
There are several possible outcomes to these actions:
- Some institutions may lower tuition. Unlikely at first, but if enrollment suffers because students can't finance their tuition, they may adjust.
- Some majors may become so unpopular that tuition has to drop. Maybe.
- Lenders may be asking more questions of students - job prospects, ability to pay, blah blah.
- The government may, just may, get out of the business
Consider this. In 2005, mortgage lenders started making loans that were literally indefensible. NINJA loans, Sallie May and Freddie Mac underwriting loans with dubious or nonexistent documentation, inflated values, collusion that is obvious in hindsight. Easy money that resulted in defaults when the real estate market corrected, and the economic downturn forced borrowers to make hard choices. Many 'walked way'. Now, five years later for the last of those, they find that they can in fact get a loan - the banks figured this out. Tighter requirements now for sure, but more like normal for the long-term market.
Now we have the federal government underwriting student loans for tuition that is increasing much faster than the CPI, with less value than ever, and borrowers have limited prospects for repaying these loans. Schools claim they offer value, but even seemingly good bets like MBAs and engin
deleting the extra space after periods so i can stay relevant, yeah.