Buyer Beware: Student Loans and Who’s to Blame

On April 9, the New York Times ran a piece about a lawsuit filed by the Attorneys General of Washington and Illinois alleging Sallie Mae engaged in predatory lending. Navient is already under fire from the Consumer Financial Protection Bureau for irresponsible debt collection practices.

The piece leads with a story about a woman who took out $150,000 for a photography degree at what I assume is a prestigious photography school, which dooms the piece from the start. If you already think debt hardship is a matter of personal responsibility alone, then this woman is getting her just deserts. She shouldn’t have taken out enough to buy a cheap house to get a low-paying, low-employment degree. She was led to believe it was an industry “clamoring” for people, but she could have done more research, right? And the promissory note was available to read at any time. It would have been a simple calculation to find out how much her monthly payments would be based on interest. Any hardship is her own doing, and anyway, why is she complaining about being a waitress? At least she has a job. Why does she live in Seattle, one of the more expensive cities in the country? She could live somewhere cheaper to cut down costs.

The woman in this story got a few sentences to explain her life story and that’s hardly enough to judge the decisions she made when she was 18. Instead I’ll say I’m her. I started college in 2004, just two years before she did. I took out large private loans to get an English degree. I’m uncomfortable sharing the amount, but it would be a hell of a luxury car.

While some of the above argument is technically true, this ideology holds personal responsibility in such high regard as to interrogate an individual’s character for a source of misfortune, or even worse, a reason not to extend grace. It cannot account for systemic abuse, nor does such a punitive model provide a way back for a person who condemned themselves. It’s solutions tend to be purely ascetic, as if one must purify himself before returning to social respectability. The flagellants at Reddit’s personal financial responsibility board have been known to suggest, without a hint of irony, that Walmart allows people to park overnight in their parking lots, and foraging for food is free.

People should be held accountable for what they do, of course, but let the punishment match the crime, so to speak. My fault was being naive. The woman in the story was naive to think there would be a job waiting for her that could help her pay off $150,000. I was naive to believe an English degree from a mediocre school could be worth the money I paid for it in terms of employment. I believed a college degree was the key to success, and that was that. I didn’t question it for a moment. The world has consequences, as proponents of this ideology love to point out, and no one is exempt, no matter how much these entitled millennial loafers might want it another way. Facts aren’t feelings, as the meme goes. But in what way is 25 to 30 years of crushing payments an appropriate consequence for 1.) believing in the value of college and 2.) overvaluing a degree? I’ve been barred from the life I was promised for doing the very thing I thought I was supposed to do. I agree I have a responsibility here, but I disagree such a mistake should punish me for almost half of my life. I agree I should make payments, but I disagree it should exceed my rent payments until I’m 55. Playing with fireworks and blowing a finger off is a natural consequence, but it’s a foolish to think a burden like this is a natural consequence. It isn’t “just what happens”, as if the market is something we discovered in nature. It’s the product of anti-consumer laws and regulations designed to serve banks and corporate interests.

At what point can we blame the banks offering these loans without consequences? If an individual is responsible for their own choices, it stands to reason the other party in the transaction is responsible for theirs. If people are responsible to pay back debt, the bank should be careful not to lend to people who are likely to default, but the law has gone to great lengths to protect them. Student debt cannot be discharged in bankruptcy, putting it in such esteemed company as alimony and child support, and just like those kinds of debts, lenders can garnish wages with a court judgment. Internal memos at Sallie Mae proved they lent this money knowing the loans would fail, and under no other circumstances can an 18-year-old get such an outrageous loan.

I doubt the state will be able to successfully argue for loan forgiveness, but I’m glad to see such predatory wrongdoing has a chance at punishment. We want to see virtue individually, but ignore misbehavior perpetrated corporately.

I don’t want handouts. I don’t want wealth, and I’m not thrilled by the prospect of home ownership. I would like to know that my wages won’t be garnished if I end up in the hospital, and for what it’s worth, under Illinois law, I’d lose less if my wages were garnished than if I paid them on time. I doubt this law was designed to provide negative incentive. As it is, unexpected costs like car troubles set us back in ways that can take up to six months to catch up, ruining whatever progress we had made paying on the principal amount. It’s unjust, and I’m justified in demanding something better.