Student Loan Debt Forgiveness: A Rant

 

I’m not sure what is wrong with me this week. I don’t know, maybe I’m just crabby. Maybe I’m tired of hearing my kids whine. Or, maybe, I’m just fed up with crap. Whatever it is, I’m getting riled up over everything lately…and nothing irritates me more than people making poor financial decisions and not taking any responsibility for it.

Is it me, or have we decided that everybody who makes a bad decision in this country should have the opportunity to blame it on somebody else? We harbor this gigantic victim mentality, helping us to rationalize why our mistakes are never our own doing. Since it is never our fault, we’ve come to believe that we should never have to suffer any of the distasteful consequences for our poor decisions. It is beginning to make me crazy.

 

I’ll Take the Diamonds and the Car…For Free Please

Student Loan Debt Forgiveness

The current discussion about forgiving student loan debt has pushed me over the edge. To me, forgiving loans is utter nonsense. What does that say to people who fulfill their obligations and pay their loans on time? Should everybody just stop paying on everything they ever financed and couldn’t afford? In particular, not paying back a student loan is similar to not paying back a car loan…and getting to keep the car. It is ridiculous.

Look, you can rationalize it any way you want. You can try to argue the definition of “responsible” until my ears bleed. But the fact is, if you took out a student loan, it is your obligation to pay that loan back. If you refuse, you have stolen money. Period.

 

Finding Ourselves Through Student Loans

Look, I’ll even sympathize with you. I understand how you can find yourself in a position where you may be overwhelmed by student loan debt. I really do. When we are young, few of us know what we want to be doing for the rest of our lives. When we graduate, an easy choice for those of us who are still confused is to further our education. Afterall, the first four years were so much fun! Why not “find” ourselves and get a degree while we are at it?

I almost made the same decision, and I’m glad I didn’t. Why? Because finding yourself through schooling comes at a cost – a literal cost. The financially astute and/or fortunate people are able to pay for their education using cash or grants. The rest of us have to use loans – which we all know we are required to pay back when we sign up for them. Thus, the term “loan” and not “grant” or “gift.”

Borrowing money means that you are assuming some risk. The money will come due at a predetermined date, and it is borrower’s obligation to pay that money back. The borrower knows this before signing for the loan. Therefore, it is the borrower’s responsiblity to find a way to pay for it before it comes due.

 

Warning: Political Commentary Ahead

Maybe its the politics of the thing. Maybe it is simply a way to try to secure votes. However, what we are doing in this country is creating a class of “victims” who didn’t even realize that they were victims. We are telling people, “Hey, somebody took advantage of you,” when – in many cases – it was simply a matter of the borrower making a bad decision. Yet, we’ve become eager to blame anybody but the individual who asked for the money in the first place.

There was a time when I was proud to be a hardcore liberal. Not anymore. If being a liberal means supplying excuses for poor choices, then count me out. Don’t worry my Democratic friends. I don’t buy the conservatives’ whole “cut taxes on the rich so it trickles down to create jobs” argument either. But, I digress.

 

Taking Responsibility

Don’t get me wrong, I’m not feeling sorry for the banks here. They make gagillions of dollars off borrowers every year. They certainly aren’t hurting. I’m not even saying that the rules governing student loans shouldn’t change. Do I think you should be able to discharge the loan following bankruptcy? No. That would be like keeping the car. Do I think you should be able to refinance them at lower rates like other loans? Yeah, that seems pretty fair to me.

What I’m trying to say is this: It is time for us all to take some responsibility for our own financial lives. We can’t keep bailing everybody out of their financial mistakes. We can’t keep creating a new class of victims every time some of us make a bad financial decision. The majority of people who have made better decisions should not be saddled with their debt. That isn’t to say that we shouldn’t be monitoring for fraud or bad practices; unfair lending practices should be fixed and frauds should be prosecuted. It means that, sometimes, you have to let people succeed or fail on their own accord.

So, I’m not sure what is up with me. I guess I’m just sick of all of the excuses.  I think it is time for us to seriously think about where we are headed. We’ve become a nation of excuses and bailouts. Our personal finances are starting to mirror our government’s. In both instances, it has become “normal” to deny responsibility for our poor spending habits. Well, guess what. Normal is broke.

 

 

(Image credit: TaxCreditsCalculator.co.uk rel=”nofollow”)

 
About Greg

Greg Johnson is a proud husband, father, and debt crusader who is in the process of becoming debt free. He is the co-founder of the personal finance website Club Thrifty, where he brings the awesome sauce each and every day.

Comments

  1. This is great! I completely agree that there’s this weird victim mentality when it comes to debt. I hear all the time that credit cards are evil – but, in fact, they’re not! The people who use them unwisely (continually racking up debt and not paying them off) are really the ones at fault. Credit cards can actually be a good thing if they’re used responsibly and paid off at the end of each month. What’s with this victim mentality? Just take accountability of your finances and you’ll be better off than just playing a victim.

    Great post :)

    • If you believe that mistakes aren’t your fault, you don’t have motivation to change your habits. In order to fix the problem, you first have to take responsibility for your actions:)

  2. Greg – Preach on brother!!! Sometimes I feel like the only normal, bill-paying-on-time guy left in America. One of my neighbors were able to to get their mortgage principal cut in half due to a similar program, meaning they’re off the hook for $80K! For real?? $80K? And so because I pay my bills on time and do things the right way, I’m not entitled to that luxury? Oh man, it really makes me upset!!

    I DO 100% agree with you that there is a growing sub-culture of people playing the victim. Forget that you didn’t have enough money to buy whatever it was. Forget that you didn’t take the time to understand the terms of the loan. We’re going to wipe all that away and give you a do-over. And the do-over will be at the expense of regular folks like you and I.

    • It gets old doesn’t it? I just get tired of hearing excuses.

      It isn’t like I don’t want to help people in debt. This website is desinged as a way to give others advice that has worked for us. However, in order to help yourself payoff and avoid financial mistakes, you have to take responsibility for them. Only in that way can you change your behavior so that you don’t make the same mistakes again.

    • Hey at least they have to pay taxes on that $80k… unless they found some way to get around it… oh wait there are ways to get around it… woohoo free money!

    • EXACTLY!!!! My son grew up with a kid whose parents lived in a million $ PLUS home (with 5 mercedes in their over-sized driveway). When it came time for college, we had scrimped and saved since he was a little kid so he could go thru debt-free. Want to know what happened to his friend? Parents got divorced, he went to school on the taxpayers’ dime (including a lot of ours ’cause his parents sent him off without so much as a dime for groceries etc). And now, we’re trying to finish off the mortgage and fully fund our retirement while our son is delivering pizzas and living at home, saving up for law school. Meanwhile, his friend who grew up in all that luxury is getting a full-ride “scholarship” ’cause he’s an illegal. No sh##!!!!! And our son out-scored him on the lsat about a gazillion times over. Now it’s going to cost us just under (hopefully) $200,000 to fund that. Bye-bye retirement. Hello illegals – again!

  3. I agree with you on the victim mentality, but I think student loan forgiveness is a bit more nuanced because there are so many different types of it.
    For example, I was briefly a STEM teacher in a title 1 school. These positions were incredibly hard to fill, particularly by people who had advanced degrees in these fields. However, because of union negotiated contracts, STEM teachers (despite their higher demand relative to supply) were not eligible for more pay than a gym teacher.
    To compensate for that, the state offered a loan forgiveness program for these “high needs area” teachers. Teaching in these needed subject areas in hard to staff schools would earn a certain portion of your student loans paid off each year (with a cap).
    I didn’t feel I was a victim because I had student loans. But with the small loan forgiveness “bonus”, I felt like I was being slightly more compensated for having skills that were highly in demand. It also helps that the loan forgiveness program was funded through the same primary source as the rest of my paycheck at the time – the state education department. There were no federal tax dollars involved, and the money was already allocated by the state to education – they just found a way to move it around more to adjust to the supply/demand curves.
    Anyhow – sorry for the mini rant… I just thought you were painting with a pretty wide brush. =)

    • Thanks for the comment Mrs. Pop! I don’t think that accepting an incentive or tax break that is offered necessarily qualifies you as a victim. If I would have been offered the same thing, I would have taken it. You’d be silly not to. If you feel that you’ve done the moral and right thing, you probably are the exception anyway. I think one of the problems is focusing on these small exceptions though. It takes the focus away from the greater problem at large – an attitude of entitlement.

      With that said, I’m not really sure that is what I’m talking about here. What I’m fed up with is the growning chorus of graduates who insist that they should be bailed out because they either are unempolyed or underemployed. I’m sorry, but I have little sympathy for the person who took on $150,000 in student loans to earn a degree at a private university that they could have gotten at a state or community college for 10% of that cost. I’m sorry that someone can’t find a job with their masters degree in art history, but they should have thought about that before they decided to devote tens of thousands of dollars and six years of their life to that pursuit. In my opinion, it is not the job of the government – funded by the citizens – to pay for the decisions that individuals make. It is time for us to stop placing blame and handing the responsibility back to the individual.
      *jumping off soap box now* :)

      • haha, I guess I just get a little defensive since I don’t want to be grouped in with people shrugging off mortgage or student debt responsibilities – even though I did technically get about $1K from a Florida student loan forgiveness program. (And could have gotten a bit more had I taught longer.)

  4. Amen! Well said! We’re way underwater on our mortgage because we foolishly bought it at the wrong time, but I would never consider one of those “strategic foreclosures” for this very reason. As long as I can physically pay the mortgage, it is getting paid, because I entered into a contract and that matters to me.

    • Mike, I am sorry to hear that you are underwater. That really sucks. However, I admire you for paying your debt. That takes character, and I’m sure it is a difficult decision to make. It just goes to show you that using debt to finance our purchases is a risky business.

      Thanks for dropping by and leaving a comment! I hope that your situation turns around soon!!!

  5. If you just look at the United State’s financial situation, where we are trillions and trillions of dollars in debt and over 1/5 of our annual spend goes to paying INTEREST on our debt, you have to wonder how forgiving student loans is getting serious consideration. It would only transfer the debt to everyone else (and we already have a LOT of collective government debt).

    With that being said, my wife and I have a lot of student debt from private colleges. While paying ~$1,000/month is definitely a challenge, it is debt we owe and something I will gladly pay because it was our decision to go to private school.

    Forgiving student loans would create a moral hazard where students will load on debt expecting for their loans to be forgiven in the future as well. It makes no sense whatsoever.

  6. I’m confused. I thought student loans weren’t dischargable and that forgiveness programs involved someone (the government, for example) paying the student’s debt in exchange for the student doing something at low pay that needed doing. (Like in Northern Exposure, the guy going to nowhere Alaska in exchange for them paying down his medical degree bills.) No big banks being hurt. Debt forgiveness, but at the price of having to work in an inner city school district in the South at very low pay for a few years instead of a Northern CA suburb at high pay.

  7. Here’s a chart I created as part of an infographic on debt (we’ll see if my artistic talent carries this endeavor through LOL). It uses the New York Fed’s interactive charting and data, and looks at the 4 main types of non-mortgage debt. Just look how student debt has rocketed from last place to first in the last nine years:

    http://dropdeadmoney.com/join/wp-content/uploads/2012/09/NY-Fed-Debt-by-type-2012-Q2.jpg

    Scary, no?

  8. Amen! I think you need a rant every week. The new American Dream, get a house you can’t afford and an education you can’t afford and have your debt forgiven because it somehow wasn’t your fault.

    • I don’t know about a rant every week:) I think people will get tired of my soapbox…if they aren’t already. I’m gld you enjoyed it though!

  9. Thanks for the rant, Greg, and telling it like it is. It’s ridiculous how much we try to shift the blame. We see it in our personal lives, in our careers, and even with the government. Nothing is ever placed on the consumer and it’s ALWAYS their fault. Sure, you can put some blame on others (the mortgage industry, the colleges, etc), but reality is that I’m responsible for all of my stupid mistakes, and I have to pay for them. Forgiving student loan debt is outright craziness and it just goes to show the terrible path our country is headed. Long live socialism.

    • Yeah, it is tough for people to admit when they are at fault – including me (just ask Holly). Still, we can’t make things better until we accept that the mistake was ours to begin with.

  10. It’s pretty simple, isn’t it? Did you know how much school was going to cost? Did you sign up for the debt? Please explain again how you were taken advantage of?

  11. Like every other poster here I agree with your position. I think student loans are a valuable tool, when used responsible, to bridge the gap between what you can pay and what the school costs. I just think some people don’t think about what they are signing up for. I am not trying to talk down on any choice of study, but sometimes it doesn’t make sense to take out many thousands of dollars of debt for a career path that is low earning.

    If it looks like this is ever going to make it to a vote, I know I will be writing my congressman to urge them to NOT forgive student loans. Someone has to put their foot down and make Americans learn that actions and choices sometimes have poor outcomes.

    • I have a degree in Theatre Arts…I wasn’t thinking about how I was going to make money at the time. In fact, I didn’t even care. I wish I would have been because I may have studied something else. Luckily, I stopped myself before I decided to go on to grad school. That would have been catastrophic.

  12. Haha Greg, really enjoyed this one. You’re right there’s really no difference between a car loan & a student loan. It’s not fair to people who work their butts off, budget, develop a spending plan and ultimately pay off their loan in its entirety. There’s already different types of student loan aid that’s available today, just as their is with any other type of loans.

    • I just don’t see how we can justify that sort of loan forgiveness. It doesn’t make sense to me, and it certainly isn’t fair:)

      Thanks for stopping by Kevin!

  13. It’s not you. I think everyone should be responsible for their actions, especially the wrong ones. Whining about it or passing the buck to others is not only shallow but acting irresponsibly to the utmost.

  14. Interesting view. I have to say I agree…sorta. Being a 20 y/o college student right now, working my butt off to pay off my loans while in school, and having decided to go to a suburban university instead of the Georgia state university or SCAD, I would be pissed off if others got their loans forgave. What happened to being smart and thinking ahead? You make these un-financially savvy decisions and still come out on top with a better degree because I decided to go to a cheaper lesser known school?!?

    But I will say there was a time that I wanted to go to a 30,000 dollar a year art school for painting and drawing. :/ thank god I wasn’t able to get the financing. But it’s so easy to look at the numbers abstractly when you’re young. I mean really, you 17-18 when you sign those papers. I wish more parents and even school college advisors went more into the logistics of picking colleges and the financing involved with choosing certain schools. Even alternative ways. Like i didn’t hear about the phenomenon of going to community college for your first 2 years then transferring after until i was a sophomore. Can you imagine how much money would be saved?!?!

    I totally agree with taking responsibility for your mistakes, but I think this whole problem would be better fixed by finding a solution to the problem of the lack of knowledge that goes into college choices. I think back to when I was 17 and just shake my head to how stupid I was.

    • I agree. Most problems are better fixed before they become problems. If parents were to be more active in their child’s choice of schooling, it would probably be beneficial. Unfortunately, that hasn’t happened yet.

      I did take out a bunch of loans to pursue a theatre degree. That was a mistake…:)

  15. Thank you! It annoys the crap out of me when people make poor financial decisions and expect to be able to bailed out of it. Seriously? It’s a bunch of BS. I graduated with 16,000 in student loans. I worked hard and saved money for the first 2 years of working to pay that debt off asap. It’s crap that some people need to pay that money back while others don’t.

  16. I couldn’t agree more! I went through school with zero debt. I went to city college first, then transferred to a four year. I received financial aid the last year (around 8k), went to grad school and received more aid (about 15k over 3 years), worked while in school, and lived at home. I even went on a free study abroad program… I owe no one anything. I was offered admission (prior to going to a state college) at a private school to the tune of 75k for 3 semesters. When I saw how much it was going to cost me I told them forget it. It isn’t worth it at all. It was the best decision I made in my life. I have friends who are foolish enough to get loans out ranging from 15k-300k to go to private school…. But they will be paying for the rest of their lives, even with “good jobs,” which inadvertently become bad jobs because they have no income left over.

    • Awesome job Mickey! It looks like you had a good plan and followed through with it. Man, it feels sweet to not owe anything, doesn’t it?!?

  17. Great post. You speak your mind. This is a blog i can follow.

Trackbacks

  1. [...] Greg over at Club Thrifty sure is!  And he expresses his disgust for this irresponsibility in Student Loan Debt Forgiveness: A Rant.  Preach on [...]

  2. [...] Student Loan Debt Forgiveness: A Rant on Club Thrifty [...]

  3. Carnivals, Mentions, & Weekend Reading #28 — WorkSaveLive says:

    [...] Student Loan Debt Forgiveness: A Rant by Club Thrifty. [...]

  4. [...] So the battle continues, what is your opinion… [...]

  5. [...] My hope is that, when our kids reach college age, we will be able to help them avoid the crushing student loan debt that many young adults are burdened [...]

  6. [...] out how to pay your bills. Then, it came time for me to begin repaying my student loans. Yep, I financed my entire education – an education that I could have gotten for close to nothing had I went to work in the [...]

Speak Your Mind

*