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I Defaulted On My Student Loans (And It Was The Best Decision Of My Life)

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Re: I Defaulted On My Student Loans (And It Was The Best Decision Of My Life)

#51

Post by siegecraft »

Xcelerate wrote: post #18

I agree completely with her grandmother: > Grandmother: “Why did you borrow money you could not repay?” > Her: “I thought I could repay it until the bailouts happened.” > Grandmother: “That is no excuse. You need to repay them.” For some reason, a lot of people my age lack any sense of personal responsibility. It's not the author's fault she couldn't repay her loans. It's everyone else's. Lately I hear more and more…

Doing something merely because of a sense of "personal responsibility" is irrational, especially if it makes more financial sense to do otherwise. Suggestions that the author go back in time to make different decisions are also ridiculous.

Re: I Defaulted On My Student Loans (And It Was The Best Decision Of My Life)

#52

Post by waps »

pdonis wrote: post #26
ars wrote: post #19

Sounds like she is defaulting, but paying. The idea of the default is to stop additional interest from being charged. Then pay down the full debt, wait 7 years and done. It's not a terrible strategy actually - although it has some serious drawbacks.

The idea of the default is to stop additional interest from being charged. But interest being charged was part of the original agreement she made. The fact that she was able to exploit a loophole in the system to avoid paying interest does not make it right.

Hey you can make the "fiscal obligation" argument here. You don't get to have your cake and eat it too. Choose :

1) defaulting as a strategy is not okay, but neither is giving out these loans without social responsability. In other words, she has zero obligation to respect the agreement she made, she only needs a socially acceptable option (let's call it the European strategy, the law as it applies to a sovereign government)

2) She has to follow the agreement, because it's an agreement, and so does the debtor. In other words, any loophole is perfectly ok, and if it benefits her, it's not just OK for her to use it, but it's morally good by virtue of being part of the agreement, and we should compliment her on being smart about her obligations.

This sort of discussion is the fundamental conflict between the people working in justice and congress. Laws often are written by morons in congress. They write stuff like "it is illegal to", or "you can't" or ... Without any guidance whatsoever about what happens in the alternate case

The problem with that is that that is not how the world works. A violation of the law is not resolved by God stopping the whole planet, smiting anyone who needs smiting, fixing any consequences and restarting the whole thing. So saying that something is illegal is almost completely beside the point, what you really should say is "if you do X, then Y happens". The world keeps turning after any and all crimes and we're left with attempting to puzzle together an incomplete mess and figuring out what would be a "fair" way to attempt to do what congress expects God to do.

In practice, you obviously can default on a loan, and the legal system does what the legal system does : "okaaaaayyyy, congress said A can't do X, who obviously just did do X, so now we do Y to her, because that worked well in this other case". In this case Y is nothing.

Thanks to the fact that congress can't be bothered to actually specify what happens if you do violate the law, there are huge holes in what they think the law is. As the author of the article illustrated, this makes violating the law a strategy. And please don't think only poor students use it as a strategy.

Re: I Defaulted On My Student Loans (And It Was The Best Decision Of My Life)

#53

Post by rakoo »

ars wrote: post #40
pdonis wrote: post #28

Earlier quoted context omitted.

But having interest accrue was part of the original agreement she made. The fact that she has exploited a loophole in the system to avoid paying that interest does not make it right. If nobody paid interest on loans, there would be no loans, and she would not have been able to get one to pay for her education.

I think she feels that the agreement was two ways: She would pay interested, but in return she would get a job. I'm not entirely convinced on the ethics, but there is something to the argument.

No one promised her a job (as in, no actual employer told her "I've got that job here, as soon as you show me your diploma you come and work for us"), but she did promise to pay the loans.

Ok, it's easy for me (or for any non-US) to look down on her because of the ridiculous loans that go with US education, but she still is in the wrong to me.

Re: I Defaulted On My Student Loans (And It Was The Best Decision Of My Life)

#54

Post by fnordfnordfnord »

rakoo wrote: post #53
ars wrote: post #40

Earlier quoted context omitted.

I think she feels that the agreement was two ways: She would pay interested, but in return she would get a job. I'm not entirely convinced on the ethics, but there is something to the argument.

No one promised her a job (as in, no actual employer told her "I've got that job here, as soon as you show me your diploma you come and work for us"), but she did promise to pay the loans. Ok, it's easy for me (or for any non-US) to look down on her because of the ridiculous loans that go with US education, but she still is in the wrong to me.

>No one promised her a job (as in, no actual employer told her "I've got that job here, as soon as you show me your diploma you come and work for us"),

Actually, high schools in the US often hold events where employers and college recruiters show up and give motivational talks where they do precisely that. No contracts are ever signed of course, but young minds somehow wind up with the impression that the way to achieve success in life is to get a college degree at practically any cost.

People in better circumstances can squeal all they want to about "responsibility" but, if you are a businessman whose profit is predicated upon convincing 18 yr-olds to mortgage their lives for a chance at the job-lottery don't expect a lot of sympathy from me when it all goes south. The failure of this student-loan scheme shouldn't surprise any one. It is dependent upon having a supply of well-paying jobs waiting for graduates. If the jobs aren't there, the students won't get (gainful) employment, and without gainful employment, what method do you propose that students repay their loans?

Re: I Defaulted On My Student Loans (And It Was The Best Decision Of My Life)

#55

Post by fnordfnordfnord »

kator wrote: post #23

Stupid question, if everyone does this do we expect that these loans will still be available? Maybe it was the "best Decision of (YOUR) Life" but every time this happens it hurts these programs even more. Congratulations on a perfectly self-centered Millennial decision that was the best decision of your life that most likely made these programs one step closer to being discontinued. I guess I'm old fashioned, I've ne…

Tragedy of the commons. A poorly designed scheme that may be at its breaking point. I do expect that as a country we will recognize the value of education (at least to the economy, if nothing else), and will find a way to educate young people. It may not always look like the current system, and IMO that's a good thing.

>Congratulations on a perfectly self-centered Millennial decision

Congratulations on your job! (and lack of empathy) Send yourself a nice greeting card "Congratulations kator, on your wise choice of [birthplace/parents/nationality/etc]." There are so many people who fail to realize the degree to which their personal success is dependent upon circumstances over which they had no control.

>I guess I'm old fashioned, I've never signed something I've not read and I always honor my commitments to the best of my ability and with honor and respect for everyone involved.

Is that because you're such a great guy, or because you've never experienced significant adversity?

Re: I Defaulted On My Student Loans (And It Was The Best Decision Of My Life)

#56

Post by xtracto »

stephen_g wrote: post #3

Stories like this make me very glad of the system we have in Australia. You can choose to have your Univertity fees just automatically paid by an interest free loan from the government (it's like a five minute online form to sign up for), and then you just pay back 4% of the loan on each tax return if your salary is over $51,000 (you can choose to make voluntary payments over the compulsory rate, or if you make less…

Or the system we have in Mexico: You can choose between several very good public University (costing around $200 USD per year) or some really expensive $8,000 per semester.

Both of them will teach you exactly the same, but enrolling in the expensive ones will give you "social status".

Re: I Defaulted On My Student Loans (And It Was The Best Decision Of My Life)

#57

Post by pdonis »

waps wrote: post #52
pdonis wrote: post #26

Earlier quoted context omitted.

The idea of the default is to stop additional interest from being charged. But interest being charged was part of the original agreement she made. The fact that she was able to exploit a loophole in the system to avoid paying interest does not make it right.

Hey you can make the "fiscal obligation" argument here. You don't get to have your cake and eat it too. Choose : 1) defaulting as a strategy is not okay, but neither is giving out these loans without social responsability. In other words, she has zero obligation to respect the agreement she made, she only needs a socially acceptable option (let's call it the European strategy, the law as it applies to a sovereign gov…

giving out these loans without social responsability

In other words, you think student loans should only be given out by entities who will guarantee a job to the student after graduation? Then there would be a lot fewer such loans. That might not necessarily be a bad thing; but I don't think you can say it's a requirement for giving out such loans.

saying that something is illegal is almost completely beside the point

I didn't say what she did was illegal. I just said it wasn't right.

In this case Y is nothing.

No, it isn't. She's suffering a number of consequences, as others in this thread have pointed out. But those consequences aren't being imposed by the legal system; they're being imposed by private entities.

this makes violating the law a strategy.

I would say it makes exploiting loopholes in the law a strategy. But again, I wasn't talking about legality; I was talking about whether what she did was right. You would appear to agree that those are not the same thing.

And please don't think only poor students use it as a strategy.

Where did I say that?

Re: I Defaulted On My Student Loans (And It Was The Best Decision Of My Life)

#58

Post by xtracto »

ZoF wrote: post #13
digisign wrote: post #12

Earlier quoted context omitted.

7 years when you're ~22, who cares? The point, which was a bit buried, was that by defaulting and having her wages garnished, resulted in much better progress in paying the debt off ... because there is no interest, and probably because of inflation as well. I'm not sure that's accurate, but it's what the piece implies.

Yeah, I grokked the point, and I strongly disagree with the conclusion. For anyone with a graduate degree that's competent in their field the chances of going 4+years jobless is pretty low. And I would assert that if you get a (well-paying)job earlier than 4 years out of college its worth it to not default on your loans. Why? By the end of the second year of a salaried job I would be highly surprised if that shitty c…

>It seems to be implied that life with bad credit isn't so bad(and it isn't), but we live in a material world. People want to buy shit, often-times shit that's more expensive then they can currently afford, it's why loans exist. I just think anyone acting on this advice without REALLY thinking about it, will regret it more often than not.

That is the mainstream culture you see in the USA. Other countries do not have that culture (in Mexico some people call it the "USAnd-throw"... and enjoy getting used stuff thrown away by Americans, in Germany [at least in the east] people do not value "stuff" as much as in the US).

Re: I Defaulted On My Student Loans (And It Was The Best Decision Of My Life)

#59

Post by xtracto »

ahomescu1 wrote: post #27
noisy_boy wrote: post #14

I'm Indian and sometimes pieces like this are a very strong reminder of how bad the student loan situation is in US. I went to a central university (i.e. funded by the central/federal government of India) and basically paid less than INR 1000 per year in tution fees and what not (I was a day scholar so no hostel expenses but they were low as well). For three years of full time university education, that is less than…

Public universities are funded by government, which in turn is funded by taxes. The choice here isn't between "university for a loan" versus "university for free"; the latter choice is actually "university in exchange for an extra 3-5% of taxes for the rest of your life" (I'm guessing that percentage, it might be higher or lower). You have to look at it as "do I want to pay a loan for the next 10 years" versus "do I…

>"do I want to pay 5% more of my salary for the rest of my life". There are up- and down-sides to both options.

The main difference is that, if I do not have a job for 3 years, I don't get drowned on interests.

Re: I Defaulted On My Student Loans (And It Was The Best Decision Of My Life)

#60

Post by gnaritas »

ZoF wrote: post #45
gnaritas wrote: post #15

Earlier quoted context omitted.

If 7 years is less than it'd take to pay back the loan without being broke the entire time, default is a viable option. > It seems to be implied that life with bad credit isn't so bad(and it isn't), but we live in a material world. Not everyone is material. > People want to buy shit, often-times shit that's more expensive then they can currently afford, it's why loans exist. Many don't, many like to live within their…

> You presume too much about other people. Really, do I? I hope I never take a loan in my life, doesn't mean I can't comprehend that the vast majority of Americans with an income greater than 50K a year rely on loans for their cars/housing. A bad credit score also affects future jobs/utilities/cellphone/etc... >If 7 years is less than it'd take to pay back the loan without being broke the entire time, default is a vi…

> Explain this logic please.

Pain of bad credit vs pain of paying back loan, choose lesser pain. Debt can and should be walked away from when that's the better option than paying it back.

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