There is a lot of conversation around the personal finance blogosphere about taking personal responsibility for our actions. We ‘take control’ of our finances and pay down our debt; control our spending; or grow our investment portfolios. We shun pension plans, social programs, and other initiatives and forge our own trail. We are aiming to be prepared for anything and that’s cool because anything can happen.
But I’d like to challenge that idea, I think responsibility needs to reside with more than just the individual. If It were just me and a few other idiot sticks, fine. But it’s a fleet of people. All in the same situation. When does it become a systemic issue?
I recently read a Consumerist article reporting how more than 22 states have laws on the books stating that a person’s professional (think nurse or teacher) or driver’s licence can be revoked if their student loans fall delinquent. I think that’s reprehensible.
I decided to write an open letter to the student loan system decision makers:
Dear Student Loan Legislators, Student Finance Money Lenders, and Bankruptcy Policy-Makers:
Ten years ago, I left my marriage with a kid, two suitcases and $500. I moved to a new city and found a job and tried to make an honest go of it. Unfortunately, my $30,000 a year job didn’t stretch terribly far in the third most expensive city in Canada. In between trying to support myself and paying all the bills, I didn’t really have anything left over.
To make matters worse, I also had monstrous student loans. I made “too much” for student loan interest relief and I didn’t qualify for any of the other assistance programs out there. It was pretty shitty. The numbers were just so big and I was bringing in so little, I had no idea what I was going to do with everything. I felt so trapped. I almost couldn’t breathe when I thought about it. It was fucking terrible, one of the worst experiences of my life.
When I was casting about for solutions, I talked to some bankruptcy people. They told me that I would have to wait for seven years before I could discharge my student loans through bankruptcy. I could have even handled that had it been from the time I graduated but sadly, it was from the last time I had taken a class (the year before). Somewhere along the way, you guys decided it was okay for some people to have fresh starts but not others.
I should probably mention that your current legislation controls discharge of debt for both private and public student loans. That way, banks are free to loan money without doing their due diligence but that’s still my problem, isn’t it? You guys wouldn’t want an eighteen year old girl to take advantage of the banks after all – that would be morally wrong. I should absolutely pay for that, no matter what the cost.
I especially enjoy the part where I have to prove undue financial hardship before you will even consider allowing me to declare bankruptcy on my loans. From what I understand, I better be breathing through a straw to expect to qualify. I believe it works similarly for my American friends. The ironic thing for me is that it’s easier for a convicted criminal to get a pardon than it is for me to get a financial clean slate.
I’m sure you’ll be pleased to know that things eventually started to sort themselves out but you can bet I’m still paying on those loans – 13 years after I graduated. Don’t get me wrong, I’m sure you have my best interests at heart and you’d be sad to hear how sick I got when I couldn’t do it anymore. Let’s be honest though, the important thing here is that I didn’t abuse the system. Isn’t it?
Why am I writing to you today? Well, I read in a Bloomberg Article that 22 states have laws in place giving money-lenders the power to revoke my driver’s licence or professional licence if my student loan is more than 270 days in default. While it’s important to collect on delinquent accounts, I am not clear on the wisdom behind barring me from working when the money from that work is exactly what you, the lenders, need.
I’m sure there are several people out there – and perhaps rightfully so – who feel that these are reasonable measures to take against “abusers of the system”. Those morally bankrupt students who want to steal a free education from honest, hardworking taxpayers like you. I can only imagine what you, the politicians of Canada’s Parliament and America’s Congress feel will happen if you lightened up on the draconian student loan bankruptcy rules.
Do you imagine hordes of us student loan borrowers, fresh from their convocation ceremonies, lining up at credit counselling agencies everywhere to declare bankruptcy? Will the economy collapse in on itself because a legion of irresponsible money borrowers are discharging their debts and partying in the streets?
OF COURSE WE WILL. Naturally. It’s not like being a credit pariah for seven years will make an impact on anyone’s life. Waiting around until I’m thirty to be able to buy concert tickets online sounds like a fantastic plan! Purchasing a plane ticket, renting a car, and buying a condo are for chumps – who doesn’t want to live in shack on the side of a mountain for seven years?
It’s getting to the point where the effing library doesn’t want to give me books without a credit check and people think student loan borrowers are excited to declare bankruptcy? Shit, of course we are. You guys need to cancel this Christmas RIGHT NOW. Let’s make it so we can’t even work unless you get your money. That’ll learn ‘us.
Let’s see how that master plan looks on paper:
Yeah, that doesn’t make a lot of sense – even with stick figures. I realize I’m reacting strongly to this but I can’t fathom the logic behind taking away people’s livelihood so they pay you money they are no longer able to make at their jobs. I know that you, the money-lenders, aren’t applying this to every situation but I think it’s scary that it’s okay to revoke professional and driver’s licences under these circumstances. Someone can run up a $50,000 credit card debt on bullshit stuff and that can be excused but student loans? NEVER.*
I don’t really know what the solution is for everyone but I know how horrible I felt when I was between a financial rock and an expensive hard place. It was crappy that I was too “rich” at $30,000 a year for the relief programs; I didn’t have any money to actually pay the bills; and I still couldn’t claim bankruptcy to take any of the pressure off. I can only imagine what having my driver’s licence taken away would have been like on top of everything else.
Okay, some of you are going to be saying it’s our (the student loan borrower) problem that this all happened. We made the choice so we should pay the consequences. Fair enough. It’s our problem.
BUT WAIT, here’s where it gets to be YOUR problem. If a sizable portion of a generation is saddled with paying off $50,000+ student loan debt over a decade or two, who is going to be stimulating the local economy by spending? Not us guys.
Are jobs going to be created when we are clipping coupons and living in their parents’ basements? I don’t think so.
Are more of us going to be accessing social programs and low income housing? Hell yeah. This answer isn’t a Scooby Doo mystery.
If you’re going to be so short-sighted as to believe that these realities will not impact you, you’re going to be in for a fucking surprise.
OMG! Your investments have been performing poorly for the past five years? That sucks! Wait, you expected to be able to retire early but the flagging interest rates have dented your investment portfolio? Too bad. That almost sounds like it’s going to be your problem…
How did that work out for you, smartass? Did that go the way you thought it would? I didn’t think so.
Blogger Out, Bitches.
* Economies are complex things and many factors contribute to a recession but hundreds of thousands of your citizens being financially oppressed by decisions they made while their age ended in “teen” (with no recourse) doesn’t sound like a recipe for a robust and healthy country. I’m not an economist though.
**There are options for your student loans, they just aren’t all that plentiful or promising. Do your research and figure out whether you qualify. I am speaking from what I have reads and my own personal experience with the process.