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Why I Defaulted on My Student Loans

Discussion in 'Sports and News' started by YankeeFan, Jun 9, 2015.

  1. YankeeFan

    YankeeFan Well-Known Member

    Chose life, default on your loans:

    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. Or I could take what I had been led to believe was both the morally and legally reprehensible step of defaulting on my student loans, which was the only way I could survive without wasting my life in a job that had nothing to do with my particular usefulness to society.

    I chose life. That is to say, I defaulted on my student loans.

    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.

    http://www.nytimes.com/2015/06/07/o...contentCollection=Most Emailed&pgtype=article
  2. LongTimeListener

    LongTimeListener Well-Known Member

    It's a sound business choice, largely because the penalties aren't all that severe. No different from people making a sound business choice to walk away from a million-dollar mortgage or companies declaring one bankruptcy after another to restructure their debts.

    If it reins in the out-of-control industry of student loans, all the better.
  3. poindexter

    poindexter Well-Known Member

    Lehman Brothers and Washington Mutual are asking this dude, "What took you so long?"
  4. cranberry

    cranberry Well-Known Member

    I get that it's a business decision, but I'm not totally comfortable with what I detect as an increasingly prevalent attitude that people shouldn't be expected to live up to their agreements and obligations.
    Batman, JC and BurnsWhenIPee like this.
  5. Dick Whitman

    Dick Whitman Well-Known Member

    I get what you're saying. But there's a consequence. It's a choice. I look at it like a coach breaking a contract with a buyout.
  6. BTExpress

    BTExpress Well-Known Member

    The author mockingly states that the banks from which he took out the loans "have all gone under."

    Yeah, deadbeat, because people like you stole money and didn't give it back.
  7. LongTimeListener

    LongTimeListener Well-Known Member

    LOL yeah that's why the banks went under.

    That's a huge old DERP.
    FileNotFound likes this.
  8. amraeder

    amraeder Well-Known Member

    Vox isn't so sure it's a good business decision:
    A New York Times op-ed says you should default on student loans. That's a terrible idea. - Vox

    One of the reasons:
  9. cranberry

    cranberry Well-Known Member

    Yeah. Mostly I just wanted to punch the author in the throat for saying entitled shit like:

  10. The Big Ragu

    The Big Ragu Moderator Staff Member

    The guy who wrote it was on CNBC the other morning. He was as narcissistic (and said something that was flat-out wrong and got called on it and tried to bullshit his way out of it, as an aside) in person as he was in that piece. What an idiot.

    He took money that he agreed to pay back. He had the ability to pay back the money he borrowed. He made a choice not to. That makes him a deadbeat. He can rationalize his decisions any way he wants, and try to cloak himself as something other than a deadbeat and offer himself as a template for others.

    The real lesson is that he theoretically made it more expensive for future students who want to take out loans -- in a competitive lending marketplace, the risk of default because of every deadbeat like him gets reflected in higher interest rates and tighter lending standards, which theoretically drives up the cost for others.

    Related, but not related to his choice to default. ...

    What he did by choosing not to repay his loans, won't have the effect it should on interest rates as a reflection of default risk (what any lending market needs to operate efficiently). That is because of government interference in the student loan market and the mess it has created. We have built up a student loan bubble -- more than a trillion dollars of outstanding debt, much of which will never be repaid, and as a result has been added to our national debt. And that debt has purchased crap. We have lots of people holding the equivalency of mortgages but with no house in return. As long as those loans are guaranteed by public funds, it takes any risk associated with lending to some very marginal students (there are people taking "student loans" to meet personal expenses) out of the equation and that has made the loans plentiful and cheap. Worse, with the Federal Reserve rigging the interest rate market to make it cheap (while it lasts) to lend and have people put themselves into debt, it has allowed people to overleverage themselves now without any clue what is going to happen when the Fed loses control of rates and their payments skyrocket in the future. Even at a normalized rate that reflects historical norms, the defaults tomorrow would be like an avalanche.

    Either way, because of Federal guarantees, the flow of money has allowed universities to increase tuition at a rate that way outpaces most other things over the last 2 decades -- colleges don't have to compete on price thanks to public funds that don't discriminate in any way. They have a market of students paying with guaranteed Federal money and can charge virtually anything they want -- demand way exceeds what it would in an actual market that wasn't interfered with.
  11. doctorquant

    doctorquant Well-Known Member

    You signed your name at the bottom of the line. You owe it. You're free to renege on the deal -- and suffer the consequences -- but spare me your rationalization and your preening. And don't think I don't know that you know that someone else is paying your freight.
    franticscribe, Batman, X-Hack and 3 others like this.
  12. Dick Whitman

    Dick Whitman Well-Known Member

    Oh, bullshit.

    He made a decision based upon the market within which he operates, within which all of us with student loans operates. Don't want him and others to make that decision? Change the damned incentives then.

    Since when does a libertarian get self-righteous about someone making a decision out of self-interest?

    You're the one who, days ago, was lambasting anyone who deigned to criticize Woolworth D. Moneybags for donating $400 million to Harvard.
    Stoney and LongTimeListener like this.
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