The Thinking 

Who Shall Pay this Debt?

October 24, 2012


INTERESTING comments have been added to the discussion about an Alaska woman who is too impoverished by student loans to join a cloistered convent. In that entry, David C. tells the story of a female friend who recently graduated from a top university with a degree in Latin American studies. Leaving aside the issue of what this degree has done to her intellectual development, David explains that she is already considering defaulting on her $75,000 in loans, with her parents’ approval.

David writes:

I’m 26 years old. My friend is a few years younger than me and graduated recently from a prestigious university with a degree in Latin American studies. Total cost: $75,000… almost totally financed by student loans, one of which has, I believe she’s told me, an 11 percent interest rate. She is currently unemployed and is certainly having difficulty finding work in her field. The most realistic opportunity she has found so far is work as an au pair for a family in Spain, which she may be able to do next year.

Last night, she was telling us that she had called her student loan company and asked for a forbearance because she will not be able to pay her loans any time soon. She was told that in order to obtain the forbearance she would need to submit a letter, signed and dated, outlining her plan to put herself in a position in the next few years to be able to pay the loan on a consistent basis. My friend has no such plan. She has never, as far as I am aware, so much as attempted, even for a moment, to formulate one. She told us she is trying to do the ‘responsible’ thing by asking the student loan company for a forbearance. After all, her only alternative is to default. Her father said something to the effect that the student loan company wouldn’t be able to do much to her if she defaulted. When I replied that they could, in fact, devastate her credit score, he said, “No big deal. She’s young.”

“I’m trying to do the responsible thing and get a forbearance.” The responsible thing, as if $70,000 in debt is something that mysteriously happened to her, was beyond her control, is in no way her responsibility; as if the corresponding useless degree earned at a prestigious private university is something she was entitled to receive. I understand that no one sympathizes with a profit-oriented loan company, but what a lack of appreciation for the risk this company took to finance the education she chose for herself. Someone is out $70,000 and she thinks she is the victim because they are demanding to know how she intends to pay it back! They are right to demand an account of her plans for the future. All they did wrong was wait until now to ask for such an account, and granting her loans before she provided it. It would be far more sensible for financiers of education to force prospective college students to make the case, based on the near-term outlook of their chosen careers, that they will be able to begin repaying their student loans shortly after graduating from college. If the student can’t make a convincing argument to this effect, they shouldn’t be given loans. Why would you give up $70,000 on a wing and a prayer? How is that good for anybody?

People seem to sympathize a great deal with college graduates (my generation) who ‘find’ themselves confronted, ‘suddenly’, by a mountain of debt after college. If a twenty year old, sitting in his dorm room one day, off-handedly opens that student loan statement and is staggered by the debt he has already accumulated halfway through his college career, and doesn’t stop to think seriously about what he is doing with his life, then perhaps that twenty-year-old is playing down to the standards that are set for him by his elders. But who is he fooling? Does he really not know any better? Of course he does. He knows better: he has been taught all his life that he is entitled to a college-level education and that if he doesn’t make good on his debts someone else will be there to bail him out of them. We set our expectations too low. All this ‘sympathy’ is play-acting: even the ‘adults’ (I put this in quotes because eighteen-year-olds ought to act like adults as well – they’re old enough) fail to take the problem seriously. It is a monumental, and sickening, joke. “I am trying to be responsible…”

I was similarly disgusted with Romney when in the first debate he says he aims for an America in which every college graduate has a job. What kind of fantasy is this? We start from the ideal (and why it’s the ideal for so many people, I don’t know) that every young person ought to be college-educated, and then proceed to say it’s the responsibility of society to make that education work somehow in terms of employment. Should we not start instead from reality, from the real needs of society, and place the burden upon our young people to match themselves to those needs? Or if it is society’s responsibility to put a job in place for every graduate, can we at least acknowledge that young people themselves are a part of society, and so share in the responsibility to create the jobs they want?

My frustration, in summary, with this situation is not the same as that of other people. I do not consider ‘the system’ to blame, as if the system, this mysterious, abstract scapegoat for our collective moral and spiritual bankruptcy, somehow acts independently of the people. No, the people are to blame. The system is the people. We are the system. We the self-infatuated People of these United States are to blame. We cannot deny that on some level we wanted to find ourselves here.

I want to conclude by saying the father went on to rant that today’s young men are immature, which I, being a young man myself, am so sick and tired of hearing. That’s a separate subject, but I just want to point out that his daughter who is shocked, shocked, to discover she cannot pay her student loans (and who are we to expect it?), strikes me very much as the sort of young woman who was often praised by her teachers growing up as a mature and responsible girl. She carries herself with just that kind of subtle condescension.

“From the least to the greatest, all are greedy for gain; prophets and priests alike, all practice deceit. They dress the wound of my people as though it were not serious. ‘Peace, peace,’ they say, when there is no peace.” Are they ashamed of their loathsome conduct? No, they have no shame at all; they do not even know how to blush.” Jer 6:13-

—- Comments —-

Natalie writes:

A pox on both their houses! College students are encouraged to major in any old thing and follow their dreams without one hint of a back-up plan. Some people even seem to view back-up plans as indicating a lack of commitment. So I do think there’s a very narrow sense in which women like this man’s friend are surprised to see how this can all play out in the end. Certainly it’s not her fault when every single college professor and likely nearly every single adult she’s met has praised her dedication, hard work, and intelligence. Jobs might be hard to find for other people, but she’s special! (Or so she’s been told.)

All the student loan businesses fully support that delusion because they know they can come after her wages (should there be any) for as long as she lives. Apparently even bankruptcy doesn’t dissolve your student loans. The colleges just eat it up as well because there are almost zero market incentives for them to bring the quality of education up to a practical/useful level and work towards competitive tuition prices. If you want a “good education” you have to pay for it. If you can’t pay for it there’s a friendly loan officer who is more than willing to “help” you.

As far as I’m concerned, the large numbers of students defaulting on their loans, is just the market trying to correct what has been artificially inflated for so long. Colleges either need to again become institutes of “higher education” that focus on knowledge/intelligence and not job readiness (and say so clearly) or they should become white collar training institutes. Either way you know what you’re getting and have a rubric for pricing out what it’s worth (such as tuition costs against projected earnings). Yes, the students defaulting are irresponsible. I’m not trying to deny that for a second. They’ve also been lied to and conspired against by a joint coalition on the secular Academy, loan sharks, and our mass media. As far as I’m concerned they can all go down together.

Joe A. writes:

David writes, “Someone is out $70,000 and she thinks she is the victim because they are demanding to know how she intends to pay it back!”

No, David. No one is “out” one red cent.

Too many people, often older people that should know better, think banks simply collect and redistribute deposit monies like that scene in Capra’s “It’s a Wonderful Life.” Nothing could be further from the truth.

A student loan is a credit, a chit, scrip, Monopoly Money that spends like real money but does not and never has represented real money or anything tangible.

Bank loans are an accounting fiction, a legal obligation, and a revenue stream but do not exist as a real object.

Moreover, to assign all responsibility to an undergraduate is wrongheaded, as though the forces of manipulation and misdirection so often derided by conservatives cease to function for college financing.

In fact, since the wonderful banksters purchased ex post legislation to preclude student loan debt satisfaction via personal bankruptcy, a student loan is actually a species of chattel slavery, or peonage, both of which have been outlawed here for a very, very long time. Need we discuss the risk premium inherent in the interest rate calculation and the philosophical implications of same?

In short, conservatives, and Christians generally, should not blindly pile on fellow Americans with insurmountable student loan debt. It is uncharitable, ignorant of factual circumstances, and frankly serves as the primary enforcement mechanism of the banksters: confounding speculative business contracts with personal morality and bringing shame where coldly rational accounting is needed instead.

“It’s nothing personal – it’s business.”

Laura writes:

Good points.

Terry Morris writes:

About the issue David raises of the lending institution’s negligence in handing out such loans “on a wing and a prayer,” I should imagine, though I admit I’m not up to snuff on this, that it’s not really a wing and a prayer that they’re hinging their bets on, but rather on promises the government has made them to, in one way or another, make good on the loans if and when they go into default. Something like Fannie Mae and Freddie Mac.

Proph writes:

Commenter David wrote:

I understand that no one sympathizes with a profit-oriented loan company, but what a lack of appreciation for the risk this company took to finance the education she chose for herself. Someone is out $70,000 and she thinks she is the victim because they are demanding to know how she intends to pay it back! They are right to demand an account of her plans for the future. All they did wrong was wait until now to ask for such an account, and granting her loans before she provided it. It would be far more sensible for financiers of education to force prospective college students to make the case, based on the near-term outlook of their chosen careers, that they will be able to begin repaying their student loans shortly after graduating from college. If the student can’t make a convincing argument to this effect, they shouldn’t be given loans. Why would you give up $70,000 on a wing and a prayer? How is that good for anybody?

Wait, what risk? Banks face virtually no risk in issuing student loans. Students cannot escape them by anything short of extraordinary personal incapacitation or death. Default is functionally meaningless to them for the same reason (and that her parents aren’t warning her that this isn’t a viable strategy shows just what remorseless ignoramuses they are). Even large-scale coordinated defaults by masses of students would, if they actually imperiled even a single bank’s survival, be greeted with, surprise, government bailouts.

“All [the bank] did wrong” is not nothing. It is, in fact, everything. A bank that issues a loan to a person without asking for any basic information regarding their ability or intentions to pay it back is not acting responsibly. A bank that does this into the teeth of an imploding economy is imprudent to an incalculable degree. But why should it act responsibly, given all the incentives not to?

In a very real way, “the system” is, in fact, to blame, where “the system” is understood as the aggregate of all actors in the economy: the student getting the loan, the bank issuing the loan, the government backing the loan, the university receiving the loan, and the entire network of social expectations and demands propping up this ludicrous fiscal ouroboros. David’s friend’s indebtedness is ultimately her fault, sure, but her decision to go into debt didn’t occur in a vacuum. How is a terminally naive 19-year-old whose parents have told her from her ninth birthday that she can achieve great things IF ONLY SHE GOES TO SCHOOL, and who never once taught her even the basics of economics — whose public education left her largely unable to do basic math without the aid of a calculator and probably not even with it — going to know to opt out of this system? Who, at any point, will tell her that any of this stuff is a bad idea? Even if she knows what debt means from an economic perspective, she had no idea what indebtedness means — the word had no qualia for her. Reactionary sentiments are nice for those of us who’ve found our way to them, but there aren’t many of us, and there’s a reason for that. For the vast majority of people, our modes of thought and behavior are simply not live options: the ambient culture absolutely forbids it.

None of this is to say the girl bears no responsibility. She still has plenty of options, just, perhaps, none that are appealing to her (and God forbid she be inconvenienced for a few years!). What I’m saying is that her culpability is dwarfed by that of an entire, immense machine designed specifically to exploit ignorant children like her for profit. In an ideal universe, all the actors would be punished: the girl’s credit would be trashed and all but her most essential possessions would be repossessed; the bank would implode; the government would collapse; the universities would close, and the entire social order would be pushed back to growing rice to survive. In fact, we’re probably headed that way.

I can certainly agree, though, with David’s indignation at the rank, monstrous irony with which a grown man would complain about the irresponsibility of young men, while himself selling his daughter into debt slavery so she could pay his Social Security bills. I’m 26 myself, $60,000 in debt, with a strict budget and a plan to get myself debt-free in six or seven years, and I’m still lending money to my father, who, with twice my income and half my debt, often finds himself surprised and bankrupted by modest, anticipated expenses. His is the “dumbest generation of narcissists in the history of the world” (to borrow a turn of phrase from The Last Psychiatrist), and they’ve made a mess of everything.

 James P. writes:

David C. asks,

“It would be far more sensible for financiers of education to force prospective college students to make the case, based on the near-term outlook of their chosen careers, that they will be able to begin repaying their student loans shortly after graduating from college. If the student can’t make a convincing argument to this effect, they shouldn’t be given loans. Why would you give up $70,000 on a wing and a prayer? How is that good for anybody?”

The way to achieve this goal is to have the government STOP guaranteeing loans and, ideally, to make the universities co-sign the loans. Right now, the universities and the banks take no risks, so they have zero incentive to ensure that the students have any real chance to pay the loans back. Put the banks and the universities on the hook for the money, and they will certainly take a great interest in the prospect of future repayment.

Yes, this would reduce the amount of money flowing to banks and universities, and reduce the number of people in college. But those are benefits, not drawbacks! Less money for greedy Leftist parasites, and fewer people paying vast sums to study useless nonsense.

David C. writes:

To Joe’s final comment, “It’s nothing personal – it’s business.”

I reject this notion completely. Business is never not personal. It is always personal because a company is simply one of many interfaces through which we interact with other people, other creatures of God, in this world. I cannot say ‘company’ without indicating implicitly the presence of at least one person. Therefore, when I fail to pay my debts to a company, I do give offense: it is just an offense that is diffused across (possibly) many persons. It is an offense against the owners of the company, stockholders or otherwise, and it is an offense against the employees of the company who depend upon that company’s success for their continued employment.
It is also a personal matter because in taking out a student loan I personally make a promise to this set of individuals represented by one legal entity.
We cannot act as though these behaviors fail to affect real people in the world around us any more than we can deny that we have a responsibility to the people in the world around us.

Terry Morris writes:

By putting the concluding phrase of his post in quotes, I understood Joe to mean that he totally rejects the notion too. Am I wrong?

Joe A. writes:

David, the path you have defined for yourself – that of playing by your own set “rules” rather than the rules as they actually exist – is the path of Boxer in George Orwell’s Animal Farm or of the extraordinarily brave, extremely gallant, and exceptionally dead-to-a-man-and-horse Polish Cavalry facing the Red Army’s machine guns.

You are still young enough to be naïve about the reality of the U.S. of A. especially at this bizarre time in our history. So take it from someone who has been there – as in, inside the executive offices of some of the very institutions most responsible for this mess we’re in, screaming at the top of my lungs for someone, anyone to listen – you have put yourself on a fool’s errand. There is no honor in what you propose. It will shorten your life for the impossible stress that will burden you as you attempt to maintain your honor in a game rigged deliberately to milk “the muppets” of every cent by the exact moment of their demise.

YOU ARE NOT A MAN TO SALLIE MAE. YOU ARE A REVENUE STREAM. Learn that now while you still have the chance to do something about it. I recommend you spend 15 minutes every day at Zero Hedge and JSMineset until you understand what you are actually up against. It’s the next best thing to a career as a financial management (“CFO”) consultant for Price Waterhouse and its sister Big 4 firms and a bird’s eye view to the ugly guts of today’s post-national, Godless, global enterprises. In other words, that contract of yours is with the Devil. Treat it accordingly.

David C. writes:

In reply to Joe [to Joe above, not Joe’s most recent comment],

Joe writes, “A student loan is a credit, a chit, scrip, Monopoly Money that spends like real money but does not and never has represented real money or anything tangible.”

Joe, my undergraduate degree was in accounting, but I’m surprised to hear this. I think it is incorrect. Are you suggesting that student loan companies do not actually pay cash to universities to satisfy students’ tuition obligations? If not, then what is it, exactly, that student loan companies provide to universities in order to satisfy the tuition obligation? I’m interested to hear this.

Bank loans are not an accounting fiction. They exist because a cash outflow occurred in reality and represent an actual obligation that is not only legally but arguably morally binding. They are morally binding because each party made promises upon which they came to an agreement.

“Moreover, to assign all responsibility to an undergraduate is wrongheaded, as though the forces of manipulation and misdirection so often derided by conservatives cease to function for college financing.”

Again, I attended a college and I also took out student loans. Whatever manipulation and misdirection you may be referring to here has nothing to do with the basic point I’m making. When I attended college, I knew my college’s tuition rates. When I petitioned my college’s financial aid office for assistance, I was mailed a document that stated explicitly what loans would be provided to me to make my education possible. Guess what? The loans were usually provided as an exact match to what the college was billing, which information the college had already provided to me in a separate bill. If the loans exceeded what the college was billing, I had the option to pay the difference back to the loan company ASAP without incurring any adverse consequences. Finally, I received a master promissory note which my mother and I both read carefully and signed. All this happened with my awareness, in fact, at my explicit request, and I agreed to it – happily. It is not as though this all just happened to me, and I didn’t discover it until four years later. I was part of the process every step of the way. This isn’t as complicated as you’re trying to make it appear, unless you consider the idea that I must pay back money I have borrowed to be above the comprehension of eighteen year olds! And I’m sure that is not what you’re saying.

I do not assign all responsibility to the undergraduate. That’s a misreading of my comment. I believe that the parents, students, and student loan companies all share responsibility, but the students have the most. They have the most because they are old enough to understand what they are doing, because they are made aware of what burdens they are assuming to themselves, and because it is… their education and their debt, not someone else’s.

“In short, conservatives, and Christians generally, should not blindly pile on fellow Americans with insurmountable student loan debt. It is uncharitable, …”

I agree, and said so myself. Student loan companies should not be piling debts upon students without knowing that aforementioned students can actually pay them. As for the amounts of the loans, these are based on the real expenses colleges incur to educate. There is a quite a lot of overhead. A friend of mine who works as a finance director for a Catholic private college recently told me most private universities, and he mentioned by name the one my friend attended, actually get by each year, for the most part, on interest earned on donated monies held in trust.

 David C. writes: [NOTE: This comment came in before the most recent comment from Joe A. was posted.]

I’m perplexed reading some of the reactions to my comments. Some who have responded seem to actually repeat points I myself made earlier in the discussion, but nevertheless feel they are in disagreement with me in at least some respects. I may have worded my earlier comment poorly. It may also be that I am basically in agreement with all of you but we are placing the accent on different aspects of the same situation.

First, several people have made the point, correct I’m sure, that the federal government basically safeguards the whole system of student loans, so that if at any point the number of students who are defaulting were to threaten this system, the government would provide the bailouts necessary to keep it going. I’m sure this is true, but it is incidental to the discussion. I want to say first that in another sense it doesn’t matter at all that the government will protect my friend’s student loan company. I don’t care how many dominoes are lined up behind her – the student loan company, the federal government, China, an extraterrestrial species (that’s my attempt at humor, by the way). The point of failure is in my friend’s relationship with her student loan company. If she hadn’t failed here then what would it matter to us that the government is her guarantor? In some way then this must be the point that deserves our focus because it is the point at which things go wrong. Until then, we were fine. Now my friend is about to default. The crisis begins here and everything that happens afterward is a reaction to it. Thinking along these lines, I couldn’t care less what Uncle Sam is prepared to do in the event of my friend’s personal failure. I care about the fact that she failed.

Second, it is also being repeated that my friend’s behavior has a context. Some commenters believe I am being much too hard on her. I almost agree but I can’t let her off that easily. There are three reasons for this. First, and I say this with all the respect due to the other comments here, my friend is not an idiot. On the contrary, she is a remarkably intelligent woman. But she would have to have been an idiot not to have grasped what she was doing when she signed the promissory note. After all, what does it really mean? It just means I’m taking something now that is worth $75,000 and I have to pay that amount back later. I’m sure I could explain this concept to my youngest cousin who just turned seven. Again, I don’t mean to be insulting to Mrs. Wood’s readers, I’m just trying to underscore how utterly simple this agreement is. It is not in any way a hard concept to understand. Second, it takes very little maturity or personal formation to be impressed by the fact that I will owe $75,000 after graduation and that I will have no way to pay for it. I mean, the outright fear, if I lack any higher values, ought to be enough by itself to wake me up. So in short what is required of a student is an intellect and a conscience, and almost all of them have enough of both not to be let off the hook at all. My friend certainly does and if she ever personally addresses me with that obnoxious faux-victimhood, well……

But third and maybe most important, don’t you think there is a kind of paradox that is involved in excusing irresponsible behavior on the basis of the fact that the culture too often excuses irresponsible behavior, and so people can’t be expected to know better? Let’s simplify matters and stop excusing irresponsible behavior. Period.

Terry Morris writes:

Proph writes:

“…whose public education left her largely unable to do basic math without the aid of a calculator…”

How many following, and/or, participating in this discussion have, on countless occasions during the last, oh, fifteen to twenty years, confirmed your suspicions that the young, twenty-something individual (often a college student earning spending money part-time) standing behind the cash register and returning your change from a purchase, is a functional mathematical illiterate?

The next time one of these “goal-oriented” youngsters hands your change back to you, from, say, a $5.36 purchase for which you paid with a $20. Federal Reserve Note, in a veritible wad, look at it as though (s)he had just placed a lump of coal in your hand (bewildered look of “I’m not sure what that’s supposed to be, but I’m going to get to the bottom of it.”), motion for her to take the money back, while simultaneously, and respectfully, asking her to “Please count that back to me.” She likely will not know how to do it.

I’ve done this on many occasions over the last ten or so years, and contrary to what you might be thinking, it’s never resulted in any kind of negative response from the clerk in question. Indeed, often they’re interested in learning how to count back change, because many

of them (not all of them) instinctively understand its usefulness, particularly if you take the time to explain WHY it is a useful skill to know – “because that machine is never wrong except whenever YOU put the wrong information into it due to any number of reasons outside of your control.” Of course it still isn’t the machine that is wrong, but that’s beside the point, and I don’t want to lose them from the get-go, which is counter-productive.

I usually end up taking the money back and explaining “The purchase totaled $5.36, for which I gave you a twenty dollar bill. That means that you should owe me back (pausing momentarily, and slightly over-emphasizing that I’m doing the figures in my head) … fourteen dollars and sixty-four cents.” Then, of course, I count the change back to them properly, ending with a humorous remark like “Looks like you were lucky this time. How much more luck do you suppose you have left?” :-)

By the way, I never do this whenever there are other people around to witness it, which would tend to embarass, and/or, insult the clerk I am addressing. And that is not, nor has it ever been, my purpose.

Mrs. R. writes:

I cannot speak about the rising cost of public education, but I do have first-hand knowledge about the rising cost of private education. The commenter who pointed that the increase of government funds available is fueling rising costs is correct. I worked for five years at a privately owned cosmetology school. It is in a very economically depressed area of the country and the majority of the students are eligible for Pell grants. Pell grants are awarded based on the finances of the family of the student (their parents or their own, depending on the circumstances) and students may receive a partial award or the full amount. The kicker is this: if a student is eligible for the full amount, the school MUST award the full amount to the student; any money above the required tuition is refunded to the student to use any way he sees fit. The owners of such schools find it very galling to hand over thousands of dollars to students, many of whom they have had to practically beg to achieve satisfactory attendance so their bill would be paid by the Pell grant. Also, many students, upon receiving several thousands of dollars apparently think they are secure for life and will not take their state certification test.(The schools must maintain satisfactory completion, placement and licensure rates in order to keep their accreditation and their eligibility for Pell grants and other government aid.) If the students would use the extra money to cover costs associated with certification and then put the remainder of the money aside to start themselves out in their profession, it might not be so bad; however, there are no such requirements and many school owners simply don’t want to give that money away. This causes the owners to raise their tuition above what the education is actually worth; they don’t see any reason to give that money away, when they can keep it just by raising their tuition. If they were allowed to accept, on the students’ behalf, only the money needed to pay for tuition, the rises in tuition might not be so bad and the cost of training might be kept affordable for everyone. Then again, “free” money makes people do crazy things. Perhaps many students drowning in student debt don’t really understand the definition of the word “loan” and are equating them with “free” money, like Pell grants.

On another note, I noticed that students who had all their tuition and fees paid by Pell grants or other sources were more likely not to achieve satisfactory attendance than students who were paying all or part of their tuition or fees. I have heard students who had paid a $100 registration fee themselves say that they were determined to graduate because they didn’t want to lose their money; nevermind the $7,000+ the government was paying for them. It was their $100 that mattered to them!

Of course, there isn’t one single factor accounting for the ridiculous cost of post-secondary education today, which is why I wanted to share an insider’s personal experience with you. The greed factor is one of the reasons I left that work. I am so happy to be a homemaker again. Dealing with the greed of my children arguing over the last brownie is much less draining than dealing with big government and lazy students.

Buck writes:

There is much to say about this entry, which I just got to. I have this one initial thought about the much-heralded new and wise strategy of walking-away from debt. It’s insidious and immoral. Think in terms of the United States’ national debt and the collective debt of U.S. citizens. Think about it in the context of Joe A’s comment that “No one is ‘out’ one red cent.” It may be digital and not backed by gold, but currency still has currency, at least until everyone decides to walk away.

This is from the “money coach” at the web site; Black Enterprise, Wealth for Life. It was the top result of my google search “walk-away from mortgage debt”.

Walking away from a mortgage can be an attractive option for those who simply can’t keep up with their payments. If you can afford payments but choose not to, it’s known as a “strategic default”. Results of

Fannie Mae’s National Housing Survey reveal that 27 percent of underwater homeowners say it’s okay to walk away from a mortgage if they were facing financial distress.

Is it the right strategy for you? Here are a few reasons you should consider strategic default, along with several reasons you shouldn’t’…

The article goes on to list and explain the good and bad reasons. Good reasons: Free up extra cash, no more maintenance expenses, and prevent bankruptcy. Reasons you should not walk-away: your credit score will drop, you may still be “responsible for paying some taxes, and you may be out of luck if you want to get a new mortgage within three years.

I don’t believe that the “money coach” is trying hard to discourage his readers from walking-away with that list of pros and cons.

Wealthy home owners who pay financial advisers are getting the same advice; it makes economic sense to walk-away. To hell with morals or ethics. Show me the money.

College loans, car loans, mortgages, credit card debt, personal loans; if it makes economic sense to walk away from debt, then “just do it.” It’s not real money after all.

Why is that mentality in the least bit surprising? It would have been very surprising in America, but is simply routine and logical in the United States.

Renee writes:

Many students find themselves faced with staggering debt and limited prospects. Despite being “educated,” on graduation they find themselves, often for the first time, being forced to think practically about their futures. Now, many of these students who major in communication studies, gender studies and other programs of dubious quality and questionable utility are first-generation college students. What they don’t realize is that schools prey on their family’s ignorance about the value of a college education.

I remember being in college having a discussion with students from different socioeconomic backgrounds about parental expectations. Students who had professional parents, worried about whether their parents would approve of their classes and grades. Most of them had parents who forked over large sums for them to go to school and didn’t want to see their child squander their education. Some of these students would major in English, but those were the ones who knew they were going off to Law school, or would get a position at their father’s workplace when they finished. For those students it was not too important that they major in a field that would provide them with marketable skills.

Another student said no one in her family went to college, and they thought that merely going to college would open so many doors for her. She could major in whatever she wanted. Students such as her are the ones colleges prey on. The parents of such students don’t fully understand that their child may not be able to find a job or pay off their debt. They think just by having a college education, their child will have opportunities. They universities understand this. They know that not only are many of these parents gullible, their children often lack to skills to succeed in college. So what do they do? The create majors that have no value, but that anyone can pass. All the post-modern theory and political spin makes the students feel smart and useful. They are going to change the world, or so they think.

The schools can charge what they want. In fact, charging more gives the impression that the schools do provide something of good value. I recently heard of a school that did not get many applicants, so they increased the cost of tuition, and more students applied the following year. Keep in mind that these students will not make good alumni and the schools know that. They wont be able to get cash out of them after they graduate, but they sure can get money while they are students.

Mr. Bertonneau said that the pursuit for equality is the reason college costs so much. I would agree. College is supposed to be an equalizer. When everyone thinks they need to go, colleges can charge whatever they want. Also, high tuition makes the school appear to be of higher value than it is.

Jane R. writes:

I wish I had the time to participate in this discuss. Since I don’t, I’d like to contribute by quoting Henry Ford:

“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”

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