Category

The Pragmatist

A Dose of Debt Reality

By | Student Debt, The Pragmatist | No Comments

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

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