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Student Debt

A Dose of Debt Reality

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Today, I attended a support group for individuals with crushing debt suggested to me by one of my readers.  Even I did not realize the situation was this bad. Yes, I may be irked by the government profiteering on our backs and the steady decline of the value of a bachelor’s degree simply due to the hubris of those who should be obtaining a vocational degree; however, I find my life to be rich in love, friendship, and purpose, despite any monetary shortfalls.

Today, I learned about those of my peers whose debt burden has led to health problems, divorce, and even suicide.  Listening to their stories, I sat there stunned.

In 1982, my parents got married.  My mother, the math major, crunched the numbers and told my father that they could not get married because the cost of starting a life together exceeded their income.  My father, ever the romantic, told her that love would prevail. He did so with such passion that she did indeed walk down the aisle to hold his hand and continue henceforth on the adventure of life together.  

As the Wall Street Journal corroborates; however, this is not the story we will be telling our children (if we ever can afford to have any).  {cite article}. Honestly, that fills me with a profound sadness. Until one has children of one’s own, life should be a journey of oneself. Not necessarily easy, but rewarding in experience and self discovery.  It is these life lessons that inspire the next generation to achieve greatness beyond their forbearers’ dreams. If we take away the hope, the positive experiences, the fulfillment, what exactly are we passing to the next generation?

Tomorrow, therefore, it is imperative that we fix the problems of today.  We must stop sending our future trades people to obtain degrees they do not need.  We must stop corporations from underinvesting in their most valuable asset, their employees.  And, dear god, we must sponsor programs like Third Estate’s Forgiveness Fellowship to throw a line to our future generation of parents, so that they do not drown in debt, the American Dream, unachieved.

 

Sincerely yours,

The Pragmatist

Mama Just Don’t Know . . .

By | Student Debt, The Angry Millennial | No Comments

So today Mother and Father were kind enough to help me move into my new apartment.  Don’t get me wrong, I’m grateful; however over dinner Mother again asked when would I be settling down, buying a house, and popping out some grandkids for them.  Once again, I explained that having my own home, children, and all of the other traditional milestones of life, were all expensive and beyond my reach, despite the fact that I have a respectable job that pays a “living wage”.  Between my rent, car payment, student debt, and groceries; only a small fraction of my income is left to, for example, save up for a down payment on a house. Of course, Father chimed in at this point saying that he and Mother had all of those expenses too, and they made it work.

It was their sheer lack of comprehension that really irked me, and led me to do some research, so that I could provide them with a cogent response.

So no, Mom and Dad, my situation is not the same as yours.  You may have the same types of debt in name alone at my age, and yes I may make more than you made, but wage growth has not kept up with the growth of the other expenses.  The fact is that the hills I must climb to reach those milestones are steeper than you can imagine. When I do reach those peaks, especially the one that involves progeny, don’t worry, you can make up for lost time by spending more time with your grandchildren than Nan and Pop spent with me.  I can’t afford daycare anyways.


Yours in solidarity,
The Angry Millennial

Survival Under the Shadow of Debt

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Well, we’re all fucked . . .

It’s no secret that America is in the midst of a student debt crisis. But, most people do not understand that we are facing two distinct crises with two distinct groups.  The first group is those people who incur debt, but do not finish their education or alternatively earn a worthless degree. Whose bright idea was it to let you get a communications degree from a community college?  Go work in retail. You’ll learn at least as much and actually get paid for it. Also, if you got shit grades in high school, why on earth would you not go right into the workforce, or at most seek vocational training?  Instead, you continued to get shit grades, flunked out of college, and now are saddled with thousands of dollars of loans that you can’t afford. Good job genius.

These are the people who represent most of the individuals defaulting on student debt. Because they are never able to obtain the higher paying jobs required to pay off their debt, the lost individuals in this group, unable to discharge the debt in bankruptcy, have been squashed by a rock they could never bear.  And, the bankruptcy piece is key. If Lord Protector Trump is right about one thing, it is that our bankruptcy code exists to correct economic fuck ups, so that people can get on with their lives. Because the government is by far the largest owner of student debt (see my diatribe {hyperlink} on that issue), bankruptcy is not an option, and you basically have to die to get out of your student loan.

The bottom line being that we are forcing the lower-middle class into destitution and widening the wealth gap into a chasm.  We are stripping away what few comforts they would have been able to enjoy in their lives, if they had not taken on the student debt.  We are stripping away their hope for a better life. These people will continue to perform the same jobs that they have always performed, rent in the same neighborhood they would have rented in, and, apart from a small hit to consumer goods that can be corrected by selling more product abroad, the American economy will continue to go on.  The more alarming issue is what faces our second group.

Our second group of Americans in crisis are those who take on student debt, do make those soul-crushing monthly payments, but are never able to amass the same financial cushion as their predecessors.  They will rent longer, have kids later, and underfund their retirement. These are our traditional homebuyers. This is both our middle and upper-middle class. Why is this important? These are the individuals to whom the Baby Boomers planned to sell their homes, the asset in which they hold most of their wealth.  Right now, America’s real estate market is enjoying a surge of pent-up demand from the Great Recession. But, when this game of musical chairs is up, what do you think is going to happen to the value of all of those McMansion cookie-cutter suburban homes? Crash, crash, crash.

In short, our current economic clusterfuck is screwing us all.  For those of you who see the writing on the wall, come live with us in our sustainable inner-city neighborhoods.  Yes, the ones that were abandoned a generation ago, and we can ride out this next crash together. We may even share our avocado toast.

Yours in solidarity,
The Angry Millennial

Utilizing Debt Instruments in Lieu of Scholarships

By | Student Debt, The Pragmatist | No Comments

I recently had the pleasure of being invited to the unveiling ceremony at my university for a variety of new scholarships.  Many of these scholarships had pseudo strings attached such as “intended for individual who works in ___ field” or “to support an individual who resides in ____ community.”  Perhaps it is the cynic in me, but I realized that these conditions were completely irrelevant in terms of contract enforceability. Because hiring a lawyer is ridiculously expensive, it is more expensive to enforce the conditions of the scholarship than the scholarship itself.  While some organizations may take on that cost simply to make an example of the breaching party, most trustees will eat the loss as a cost of doing business and not wish to take away the support of the next awardee simply to pursue the individual who failed to live up to their promises.

After shaking off that notion as ridiculous, I remembered my friend from college who upon admission was inducted into this special group at the university based upon his admission essay, which was entirely fabricated.  The simple fact of the matter is that the manner in which most scholarships are set up does not protect the donors from individuals who write targeted grant letters for the sole purpose of obtaining the support. The shift in intent may not even be malicious.  The individual may have truly believed that they would live up to the requirements of the scholarship, but upon entering the real world, for one reason or another, had a change of heart.

Personally, I find this unequal balance of power to be unnerving, especially as the individuals contributing arguably more to the transaction have the least amount of decision making power.  Individuals providing their capital for scholarships have worked hard for their money, and they are entitled to receive exactly what was bargained for in distributing their assets. This is why I find Third Estate Ventures’ approach to the scholarship model so appealing.

Rather than extracting empty promises, Third Estate utilizes a debt instrument as their contract document and, whenever possible, chooses to deal in student debt.  Third Estate’s use of student debt is important because it is extremely difficult to discharge. All of which is music to my ears.

 

Sincerely yours,

The Pragmatist

Owned by The Man

By | Student Debt, The Angry Millennial | No Comments

How are all you people so damn calm?  Ignorance is not bliss. Ignorance just allows educated people to take all of your shit.  Ever wonder how you as a young college kid with an entry-level job and no education were able to get tens of thousands of dollars in student loans? Oh? It’s because people believe in you? Wake up dumbass!

 

The government owns almost all of our student debt.  They say they are lending to us to help ensure that everyone can get a college education, but I call bullshit.  It doesn’t take a genius to know that not everyone should get a college education, and anyone who has ever had the toilet break in their one-bathroom apartment knows that the arrival of the plumber feels like the second coming of Christ.

 

The real reason that the government is willing to take on so much risky debt is that student loans are a cash cow for the government.  It’s our teets that they are sucking dry. And, our government, unlike private investors, has special powers to milk us dry. True, private investors benefit from the fact that our student debts are virtually inescapable, but the government has the IRS as its enforcer.  And, while the IRS may not break your fingers like your booky’s friend Mickey, they can garnish your wages without a court order, seize your tax refunds, deny new student loans and grants, take a portion of your Social Security benefits, and charge very large collection fees.  To add insult to injury, the government keeps raising interest rates on their student loans. Oh, and I almost forgot to mention that there is no time limit within which the government must attempt to collect your loans.

 

The bottom line is that it is upon our backs that the government is balancing its budget.  To my friends who say that the government should just forgive all of our student debt and eat the loss, are you a blithering idiot?  Not only is the government relying on the interest profits, but how would we fill a $1.5 Trillion hole in our balance sheet? The magic genie?!  Do you remember what happened when America’s credit rating was downgraded? It was bedlam. This would be at least as bad, if not worse.

 

That’s when I came across Third Estate’s Forgiveness Fellowship.  From what I gather, they figured that not everyone would want to bend over and take it quietly from the government, so someone should be around to help break our chains of student debt bondgage.  Battle Debt! Build Communities! Join the Cause!

Yours in solidarity,
The Angry Millennial