Student Loan Debt Dodgers

Student Loan RAPVice News had a fascinating, and kind of disturbing, article on Americans who moved to Europe to avoid paying back their student loan debt obligations. While I get it that it sucks to start off life with tens of thousands – in insane cases hundreds of thousands – of dollars worth of debt, the attitude of entitlement and absurd immaturity that comes off of these four case studies is oddly strange. The mental gymnastics going on to justify their behaviour is fascinating – it’s like watching some add one plus one and trying to justify it being five. Here’s my analysis, with full colour commentary and analysis.


 

Case Study #1

Student Loan Debt Dodgers a

Source: Vice News

First up was Brian, age 29, who has $40,000 of student loan debt. He moved to Germany after graduation because of anxiety over paying off his loans. The most insane thing he says?

I really, truly, honestly don’t want to pay it back. Sure, I realize the responsibility I took when I signed the papers and agreed to take out the loans, but I should have never had to do it in the first place. I feel some sort of civic duty not to pay them back, as if my small protest will make any kind of difference…

I think I know two friends that have completely paid off their loans and have received an awesome amount of confidence because of it. I am very proud of them, but I don’t think I’m one of those people. I would rather spend my money on things that I need like food and shelter than to give it back for a service that should have been provided for me.

In these 3 short sentences, the level of entitlement that oozes from this makes me want to punch myself in the face.

I mean, this is like saying:

I really, truly, honestly don’t want to work but still want to get paid money. Sure, I realize that a responsible adult understands that they aren’t owed anything in life and have to go out and make a living, but I shouldn’t have to go work in the first place. I feel some sort of civic duty not to work and get paid money, and this is my small protest to “the man” that might make some kind of difference…

I think I know two friends who work and make money and have received an awesome amount of confidence because of it. I am very proud of them, but I don’t think I’m one of those people. I would rather receive money by not doing work and then spend it on things that I don’t need like dining out and tech gadgets than to actually go out and find work because society should have handed everything to me on a silver platter.

The absurdity that I wrote above is basically what I heard when I read what Brian had to say. It blows my mind.

Case Study #2

Student Loan Debt Dodgers b

Source: Vice News

Next, we have Vanessa, age 29, who has $45,000 of student loan debt. She took out the loan with her mom as the co-signer on some of the loans. She also moved to Germany after graduation. Her insightful thoughts?

The only reason that I’ve ever worried about the debt from the private lenders is because it affects my parents. I don’t give a shit about the loans in my name. A year ago, I was working at a fancy restaurant in Berlin and made a lot of money in tips. For about ten months, I was paying some of the loans, but I don’t have that job anymore so I had to stop.

Debt collectors haven’t badgered me in Berlin. They haven’t found me in Germany. But when I go home, my phone rings non-stop. I always think it’s an old friend trying to hang out with me, but it’s really Sallie Mae. It rings like every hour…

I realized that we weren’t thinking about the debt when we were signing up for school. And sometimes I think living in New York City and going to a private university maybe wasn’t the best idea. I could have gone somewhere else and gotten a political science or history degree and only been in $50,000 dollars worth of debt. But I’m happy that I got that education. It’s the education I wanted.

If I don’t have the money, then I don’t have the money to pay for loans. I need to eat and live and not be a slave to this debt. But I’m scared. When I look back, I wonder what I could have done differently.

There’s so much going on in this one that I don’t even know where to begin. I mean… two adults, one younger and one older, both signed documents accepting money from a financial institution with conditions attached. I don’t understand where the misunderstanding is on the fact that you promised to pay back what you borrowed.

Case Study #3

Student Loan Debt Dodgers c

Source: Vice News

Mario, age 34, at $160,000 or more in student loan debt. This one is shocking because when you hear about student loan debt amounts this high, it’s typically for a doctor or lawyer. No, Mario went to film school.

I just feel bad for Mario. That is an insane amount of money to have taken out to go to film school.

The craziest part? His parents co-signed for the loan, and then once he decided to move to Europe and not pay it back, his parents transferred their home to his sister’s name so that the creditors could not potentially seize it.

Then his closing nugget of wisdom is for people to study abroad.

Case Study #4

Student Loan Debt Dodgers d

Source: Vice News

Zoe, age 31, with $35,000 in student loan debt. Surprise, she also moved to Europe to avoid paying off her student loan debt.

When I left, I had maybe $24,000 in loans. My intention was to get forbearance for like a year and then start paying the loans. And I knew I would be paying the loans until at least my late 30s…

After school, I went through my grace period and forbearance application and started paying the loans off. I was working and had a really good job. I think I was paying like $100 or $150 a month. I decided my senior year that I would move abroad after graduation. The last six months in the States I wanted to get all of my loans in order because I knew I wasn’t going to be paying them when I moved to Europe.

Once I moved abroad, though, I just stopped paying. Once you move abroad, you just kind of turn off that whole part of your life off. They can’t touch you; you’re elusive. But they started calling my parents, my grandparents, my past employers. And I was just living my life in Europe, kind of oblivious to it.

It wasn’t until about six months ago that I started paying my loans again. I realized that I’m 30 and I just can’t dip out on my loans forever. And maybe I’ll want to move back to America at some point. I don’t want to have this burden if I do.

The past two years I’ve been banking on this rumored Obama loan forgiveness bill that still hasn’t really been passed. I guess I’ll continue at this rate until they go away? I don’t mean until I pay them off. I mean until the government’s like, “You don’t have to pay those loans anymore, you millennial! We know you’re not good for it.”

Zoe had the most sane story of the bunch, which isn’t saying much.  Let’s see… she only had $24,000 in debt when she finished school. She apparently had a really good job, which allowed her to pay “like $100 or $150 a month”. This one is strange because either you didn’t have a really good job or your priorities with your money were somewhere else because paying a $100 to $150 a month is not going to be making a dent on your principal outstanding when you are paying off a combination of interest and principal.

Then she decided to leave her really good job to go to Europe. Then she decided that going to Europe was like the grown-up version of that saying in childhood where if you have a girlfriend but hook up with another girl in a different area code, it doesn’t count as cheating.

The kicker is that she comes around eventually to realize that it might be a good idea to pay off her debt obligation. But then this streak of intelligence is broken by fantasies of Obama forgiving her loan obligations.

Sigh.

Analysis

Those of you that have been around here know that I once had $54,000 worth of student loans. I got a job and paid it off. Yes, I had similar thoughts that ran through my head like these four: oh woe is me; how unfair that I have to pay back all these tens of thousands of dollars I agreed to as an adult to take on; university didn’t hand me a job on a silver platter so why should I have to pay back money I borrowed; etc, etc.

While in moments of weakness I allowed myself to indulge in these perfectly immature and deluded fantasies, I never for a second entertained the thought that I would skip town to avoid paying back my obligations. Avoiding my obligations was never in the picture.

I fully admit I had a strong support network – something that some people may not have – that accelerated the payment of the loans, chiefly my parents allowing me to move back into my childhood bedroom, rent free, so that I could focus on aggressively paying back as much as possible. If I didn’t have that support from my parents, the loans probably would have taken 4 to 5 years to pay off at the rate I was paying.

Nevertheless, my focus would still have been paying off my loan obligations, not skipping town to avoid my obligations. While this is only a case study of 4 people, and I imagine that most student loan borrowers diligently pay back the debt that they assumed, I worry about people in my generation who possess the attitudes displayed above.

Who would hire people with this type of attitude? In fact, who would want to marry or commit to long term relationships with someone displaying such brazen entitlement and immature thoughts? It’s a little disturbing. I can’t imagine you find success in life with the recipe these four are indulging in.

Conclusion

Being an adult means you accept the consequences of your actions. In this case, as an adult, you signed documents with an institution stating that they would extend you money that you didn’t have so that you could pursue what you wanted to do, with the catch being that once you were done doing what you wanted to do, you were obligated to pay back all that money you didn’t own back to the institution with an interest rate attached. It was all laid out there in the documents you signed. No one pulled a fast one on you. You signed the papers with all the small print detailing what the obligations were. By signing, you accepted responsibility of your actions.

From the four case studies Vice News presented, all I see are lazy, entitled young adults who possess a distorted view of reality.

Recommended Readings

  • Wait a minute, these people took the money and now they think they don’t need to pay back because they deserve the money? WTF is wrong with them?

    • It basically boils down to people who are at the age where they are fully adults acting like a tantrum-throwing children.

      While I feel especially bad for Mario and his +$160 student loan debt, when he looks in the mirror and looks for someone to blame, ultimately it is himself who is to blame – no one forced him to pursue film school at +$30k a year and no one forced him to take on the loans to pay for film school.

      The buck stops with all of us. Trying to blame society, banks, whoever else about our situation is not only lazy, it is dishonest. For most people, they are the CEOs of their lives and they ultimately make every single decision in life.

  • Good god. Why do you want to slap yourself while reading it? Personally, I want to slap these characters. Especially the guy with the beard – you’re trying to look manly by having it yet you’re presenting an argument of entitled 8-year old. Slap!

    • Because what I’m reading is so inane I need something more powerful than a pinch. It’s just so, so bizarre how they are justifying positions they internally know are faulty and wrong.

  • Totally agree with you. This is cowardice. Like you, I can totally empathize with how they feel. I came out of a private grad school with $146k in loans and the day I realized how much I had to pay every month for 10 years was crushing, but you have to be accountable to yourself. I also doubt they’ll be able to shirk this forever.

    • $146k is a hefty, hefty amount of money to owe. I salute you for tackling it. I thought 1/3 of that felt daunting…

  • Jeff

    Your examples do in fact support your conclusions. There are unethical, infantile loan dodgers out there. But that is only one part of the student loan story.

    There are ethical loan dodgers. Why? Because they took out a loan, got some education, and the college went under before they could finish. They are on the hook paying for something they didn’t actually receive – a degree. If the government didn’t guarantee the loans, I bet the loan company would never have made that loan. For car loans, you have a lemon law.

    How about when a school fakes their after graduation employment numbers? I’d say that would be ethical loan dodging, as the loan was based upon fraud.

    While it isn’t fraud I do think it is insane to allow parents to co-sign without adding a life insurance rider to a loan. It would cost pennies on the dollar and reduce heartbreak and bad publicity for the lender.

    The impact of shady bankruptcy laws, unbalanced government guarantees, lack of enforcement of lender laws, and unsophisticated consumers makes for a needlessly bad situation.

    If you want me to provide examples of any of the above, just let me know.

    • I would imagine that in a bell curve distribution, most people who qualify to be “ethical loan dodgers” are extreme outliers in the sense that their unique situation is highly unusual relative to all student loan borrowers.

      In regards to a college going under before they can finish… that seems pretty shady as no reputable school is going to be “going under”. I know there are a bunch of those small, private, for profit colleges that attract the students who can’t qualify for the actual, reputable schools. I mean… I’m torn because you should know that going to something like Everest College probably isn’t the greatest idea, especially when you are thinking of taking out tens of thousands of dollars to do.

      In regards to colleges that fake their employment numbers? I don’t know, my feeling is that one should take the responsibility for themselves to check out what realistic employment figures are. I wouldn’t trust anyone telling me highly optimistic numbers. I went to a “prestigious” UK university for my post-graduate and they told us all this sunshine and unicorn bullshit about employment prospects from our degrees. I knew – and I think almost everyone in the presentation – knew that was a crock of shit. I don’t think anyone should just simply accept statistics and figures just because someone from an authority position states it. Check, confirm, and compare with various sources.

      I think my personal philosophy springs from individual responsibility. The world is full of sharks who are just out there looking to eat you alive and rob you blind. You need to think for yourself. You need to be critical and skeptical. You need to apply logic and rationality in your decision making. Outside of outlier scenarios, where there may be a genuine case to be made for a grievance, I think most people who fail to pay back their student loans (like in the examples above) fall within the bell curve of just being lazy assholes who don’t want to pay back what they promised to pay back.

      • Jeff

        I’m all for the idea of individual responsibility, as long as it isn’t ONLY for the individual.

        I point out that your argument above does not mention the “prestigious” university’s “individual” responsibility. Rosy impressions are one thing, but some universities were actually cooking the books by temporarily hiring graduates, counting them as employed, and then letting them go.

        How do you apply individual responsibility when the government has it’s thumb so hard on the lender’s side of the scale? Where is the responsibility of the lender to “Check, confirm, and compare with various sources”?

        I note parallels to the situation of strategic mortgage defaults – The banks are saying it is a moral issue while banks themselves were walking away from loans.

        I do agree that the ethical (principled?) loan dodgers are probably a (very) small minority.

        • This reminds me of a conversation I had with my friend after we watched The Big Short – he had a problem with how easily the banks got off the hook with the mess they created through their greed and stupidity and how the small people who were either convinced to take on sub-prime mortgages or people who had their savings/pensions/etc wiped out or drastically reduced or (insert grievance) were hurt and didn’t necessarily get bailed out while the banks did.

          My response was to shrug my shoulders because it just falls into the “too hard” pile for me – I just don’t know.

          I think it’s a similar situation with the student loan debt dodgers: I just don’t know hold crooked colleges who cook their books and tell lies accountable vis a vis the amount of money they funnelled to themselves via attracting students who took on loans. While I understand that change can probably come through legislation, I sure am not going to be spending my time lobbying or attempting to become a politician to try and enact legislative changes and tighter regulations. So I’m left to shrug my shoulders I guess.

          I guess the lender does not have to check, confirm, and compare when it comes to lending out money because of the way the rules of the game are written? They are the ones in a position to lend out money to someone who wants it (student who wants student loans). They are no charity; they are in the business to make money. The two parties jointly agree by putting pen to paper on the terms and conditions that the lender almost always stipulates. The lender could care less if you become enlightened, educated, find your soulmate, waste that money on booze, gamble it away at the craps table, etc with that money – they merely want their money back within the contractually agreed upon timeline. It’s not the job of the lender to ensure your plans work out with the money borrowed – that rests solely with the individual. I think the lending aspect is mutually exclusive from whether or not a student gets “scammed” from a shady college.

          I think I’m just blabbering on now. Perhaps if you come back with some rebuttals points, it’ll make me think with some more clarity?

          • Jeff

            (Sorry about the delay, but I have continued to think about this.)

            For clarity, do you mean it is “too hard” to come up with a better situation, or “too hard” to expend (probably useless) effort implementing a better solution? I can understand either.

            Two specific comments:

            1) I think the “The two parties jointly agree by putting pen to paper on the terms and conditions that the lender almost always stipulates.” is key to examine. If the two parties came together and wrote a document together I would accept these outcomes better. Think about credit cards. The government forced the credit card companies to present their rates and fees in a very simple format, as well as force them to limit fees, and accept losing principal in bankruptcy. The credit card company cannot write any terms they want in any format they want.

            2) You state: “I think the lending aspect is mutually exclusive from whether or not a student gets “scammed” from a shady college.” Think about mortgage loans. If I try to spend $800K on a house in a bad neighborhood with a leaky roof, the lender will NOT give me any money. That helps borrowers from doing something truly stupid. There are less defaults because the lender has skin in the game. I do admit this may make it harder for a potentially great anthropologist from a poor background.

            I’m a capitalist, but I am a very pro-reasonable-regulation capitalist. The student loan system is in the “not anywhere close to reasonable regulation” pile for me. Mortgage loans and credit card loans are in the “zone of reasonable regulation” pile for me.

            PS: Did anyone else notice that the face of the dog was also blurred out?

  • 4n6

    This does make me want to throw up in my mouth. I had almost a $100,000 after I finished my Ph.D. I have been slogging for 9 years to pay them off and I am not even half way there (although I hope to change that this year). My mission in life is counsel my students on how to avoid this debt. My blog is a part of it, but I get much more traction with my story.

    • One of the major reasons that made me not pursue a PhD was that once I finished my Masters, I realized I had debt obligations of +$50k and that going into a PhD program would more than not add to that amount and extend my repayment of the debt down 4-5 years. The other reason being that it just didn’t seem likely that there were many tenure track history professorships relative to the number of qualified candidates seeking such positions. So I decided to find a job, pay off the loan, and plan out the next steps – still trying to figure out what those next steps are, although I have some vague ideas.

      I do think it’s great that you tell your students about the realities of taking on massive amount of debt to pursue education. Sometimes that is your only option to pursue what you want to do in life. But often times, I feel like the default message given to young people is to pursue their education at whatever means possible, without talking about things like opportunity cost, negative compounding, debt payments that can take a decade plus to erase, etc.

      • voidist

        totally in agreement with your last para…..pls see also my comments above…..

  • voidist

    i find , and i am sorry to say this…that these evaders are born losers…..Fancy changing a country for 100 k…!….europe is dying a slow deflationary death and the US is not that

    great but at least it s got a modicum of gdp growth. Anybody who therefore ditches US for europe is a loser…..unless of course he has got some serious cash stashed away in some tax haven…..

    if you value studying as you would a stock , then education is vastly over-valued as things stand now…..i am talking about cost to earnings ratio , which is historically at its worst.

    Unfortunately , and i want to provoke here, millenials are incrementalists ….and they would rather do the wrong thing for an infinite amount of time than take a calcuated risk

  • Tim

    I’m coming late to the party, but stumbled on your blog recently. And oh. my. god do I agree with you. I’ve heard about people moving to Germany to get advanced degrees for free, but this makes me somewhat indignant. I graduated with a PhD in 2012 with just over 100k, half from a private undergrad (not worth it) and half from graduate school (more worth it). I looked into some of the loan forgiveness programs, but since my starting salary was high enough I essentially would have only qualified for a couple thousand forgiven.
    So did I move to Germany? I would love to for so many reasons. No, I started maxing out my 401K and roughly doubled my loan payments. After 5 years I have solid credit, am well on my way to retire at age 50, travel a couple times a year, and have repaid 70K of debt that I willingly incurred. I do wish there was more education upfront about what it looks like to repay these loans, because despite excellent education in my field, I was not prepared for the financial reality I stepped into (and looking at many of my colleagues, this is true for them as well). I wish I had attended state school for undergrad, which would have been free. I wish I hadn’t bought a new car with my new job before loans kicked back in. I wish I had lived more frugally during grad school. But that’s the bitch about being an adult, you have to live with your decisions and reap the consequences. Now, my consequences are much more positive because I’m making more informed decisions. God help these people when they hit retirement age.