The Moral Responsibility of Repaying Student Loan Debt

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Earlier today, I was speaking with a friend about student loan debt. My fundamental argument is that people are more important than money. Thus,
no one should ever be driven into poverty because of some fictional “moral responsibility” to repay crippling student loan (or medical) debt.

Do I think people should pay their debts? Absolutely. Even when I could barely afford to pay, I still sent $50 or $100 to my creditors each month. It probably wasn’t even paying the interest, but it was a show of good faith. Even with that, they came after me. At what cost to ourselves and our families do we finally stop sending money to our wealthy, usurious creditors?

I’m saying student loan debt should be forgiven. Granted, I’m making this statement as a “victim” (others would argue that I’m irresponsible, a shirker, a leech on society and probably worse) of the American way of funding higher education (a little tax money and a lot of tuition).

The thing that first turned me onto looking into debt a few years ago was, aside from my own crushing debt, reading that banks will sell a $100,000 or more in debt for pennies on the dollar to a collections company. That is, your $100,000 debt could be sold for $20,000. That’s far less than it is supposedly “worth.” The buyer would nonetheless try to collect the entire $100,000 in debt.[1] But my question is: Where did that $80,000 go? The rest was written-off by the initial lender. Did it ever even exist? And, if not, why is someone being harassed by debt collectors until he or she files for bankruptcy?

That’s what I had to do. My debt isn’t quite that much, but it’s up there.

56b12fbe1800006f0080b2b21As I’ve written about before, just after receiving my first raise in this position, I received notice that Texas Guaranteed Student Loan Corporation wanted roughly $500 a month of my pay. That’s a huge hit for me. I certainly couldn’t afford to support myself and Misty on what would resulting leftovers. I can barely do so now. So, in my letter pleading for a more workable payment plan, I told them I’d have to file for bankruptcy if they wouldn’t work with me on a more reasonable payment plan. When I next called them, they said, “No.” They called a few days later and I told them they were too late. I’d already paid the lawyer.

We didn’t do Chapter 7, where all your debts are wiped out after they take anything of value. We did Chapter 13, where you pay a reasonable amount each month to the court trustee who then doles it out among the debtors for the next five years. After five years, private debts are canceled. Government debts – student loans, taxes, etc. – are not wiped away or, discharged, as they say. It’s a “reorganization” of debts and supposedly shows that you’re not a complete loser; you didn’t just walk away from everything. You’re still repaying some of your debts.

Did you know it’s almost impossible to open a checking account if you have a bankruptcy on your record? So much for getting your financial life back in order.

My friend argues that you’d better be sure you can get and keep a job before you take out student loans and go to college. And if you make the wrong decision? “And if made poorly, again – tough shit,” he says.

Leaving aside the fact that no one can make such predictions so far in advance (including, most especially, economists), let me ask you:

Was losing your job your decision? Did you show up drunk or did the factory close? One is your responsibility and the other isn’t. I bet the wealthy bankers and shareholders are profiting off all of it – your debt, your default, the sale of the factory’s real estate and the savings in labor costs of moving the factory overseas. But it’s your responsibility to pay them back. Uh huh.

Further, we’re talking about 18-year old kids here. They’re just starting out in college. How are they supposed to know whether or not the job market will be booming or in a depression or recession when they graduate?

His advice? “Welcome to life. We are not teaching these kids any personal responsibility – only that everyone is special and deserves something. Nobody deserves shit.”

He merely thinks I’m trying to shirk responsibility by claiming youthful ignorance and indiscretion. It’s true, though. I’m certain there are a few really bright students out there who understand the financial implications of college, but that’s not the case with most students. I’d love to meet the person who worked through college, paid all their college and living expenses during attendance and graduated in four years.

He says, “Eighteen- to twenty-years old is an adult. Getting really tired of everyone acting like pansies and stating they are still children – they are not.” And when I mention that fact that they can’t drink, he says it’s irrelevant. Shouldn’t one have all the rights of citizenship if he or she is56b12d321800006f0080b2ad1 to have all the responsibilities? Apparently, no.
I argue that an 18-year old shouldn’t be allowed to take out tens of thousands of dollars in loan – with or without a cosigner. There’s a reason credit card companies target college students, and it’s not to just be nice. Kids are stupid. You’ll give me money now? And I don’t have to work for it? Awesome. Sign me up.

That’s what banks’ and other corporations’ masters do – they manipulate us into buying shit we don’t need with money we don’t have. You know what? Banks do it, too, though. The government just bails them out afterward. Sorta like canceling the debt.

I’d certainly like to see American students “bailed out” instead of banks.

“It’s a simple financial contract, nothing more.[2] Again – it’s not forced, William. Nobody has to go to college. It’s a personal/individual decision.”

When I point out that most jobs in the U.S. now do require a degree (whether or not it is necessary to do the job), he says it’s too bad. Will we have to hire Mexicans for those high-skill, well-paid jobs because no Americans can afford the education to become qualified to staff them? What if they factory closes? They’ll have to retrain, he says. I ask how you retrain if you have no money? Take out a student loan?

Further, without an educated workforce, the economy would be even worse. His job wouldn’t exist because the people who created it wouldn’t have existed the way they do now.

“I do not have [a college education] and have been working my entire life. And if you don’t have a degree and one is required for a job, then you simply aren’t qualified for it and have to find something else.”

But this is where we get into my favorite part of these discussions. It’s when one shows just how deeply neoliberalism has been embedded into our society and our psyches.

“You get a loan that you can afford, or take whatever job you can find to pay your bills. Your success is nobody’s responsibility but your own.”

That last sentence. That’s neoliberalism. The belief that no one deserves help. It’s more important that bankers profit (from money which may not even be real – consider, for instance, interest) than the suffering of a poor individual or family be relieved. It’s more important I pay my student loan bills than go to the hospital, buy meds or afford an apartment.

His answer? Hna-cg916_studlo_16u_201508211809051e left a private technical school that later went bankrupt. He was stuck with his loans. Instead of going back to school, he, apparently, found good jobs and is doing fine. He avoided getting his own college education so that he might be able to help fund his son’s college education.

That’s great. If we all want to wait a generation and save up for it.

When you grow up in a society that shares his attitude, it’s no wonder Generation Z, which includes kids aged roughly five- to 20-years old, supposedly values “getting a job, finishing college, and safeguarding money for the years to come” over “spending time with friends and family, working out, or traveling.” It’s your responsibility. No one is going to help you.[3]

That same friend – while being vehemently opposed to canceling student debt – is in support of single-payer health care. You know, socialized health care. This is likely because he needs affordable health insurance.

It almost seems as if my friend and those who agree with him oppose offering others the help because they didn’t get it when they were paying back their loans. (Of course, college costs were much lower in the past, too. But that’s never taken into account.) So now it’s your turn to suffer, and, if you can’t do it, well, your mistake. Die fast.

That’s neoliberalism.

[1] John Oliver did a very informative and very funny bit on debt buyers in June. He also made history by forgiving $5 million of loan debt the same night.

[2] Though I argue that anything that can make one destitute is far from a “simple financial contract.”

[3] Unless they skip college to fund yours.

 

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