Student Loans . . . Hard To Shake? Or just hard to take?

Student Loans.  Those two words have the bane of many, including myself.  I hate those words so much that I opted for automatic withdrawal from my checking account, so I don’t have to be reminded with a hard copy bill every month or be forced to write a check.  Fortunately, I am in a position to make my payments on time.  Nonetheless, I hate making the payments, because at my current rate of about $850 a month, it will take at least thirty plus years before I tackle the approximate 100K in law school debt I acquired.  Awesome.

Not everyone is so lucky.  For many, student loans are not only the bane of their existence, but also the ‘evil’ that has garnered their paychecks and the ‘evil’ that has remained despite declaring bankruptcy.  It’s an interesting thing in the bankruptcy law, but the bottom line is that student loans are excluded, unlike other types of debts.  There’s a website called Student Loan Justice that discusses the ‘problem’ of student loan debt and shares numerous stories of student loan payments gone horribly wrong. According to the author of the website, Alan Collinge, the “problem” with student loans boils down to this:

Due to Congressional action over the past decade, student loans are the ONLY type of loan in our nation’s history to be specifically exempted from standard bankruptcy protections, have statutes of limitations removed, be exempt from truth in lending requirements, and also exempt state agencies from the Fair Debt Collection Practices Act. . .As a result, student loans have become the most profitable, uncompetitive, oppressive, and predatory type of debt of any in the nation.

While Mr. Collinge’s website sheds light on some of the strong arm tactics displayed by collection agencies working on behalf of student loan companies, it stops short on several issues on tackling and addressing the real ‘problem.’  For one, it is very easy to attack the student loan companies.  They are the ones we have to fork over our hard earned money to — whether we like it or not.  At the same time, they were the ones, whether we like it or not, that allowed us to pay the exorbitant tuitions and to focus on school without having to work seventeen jobs.  I think you may see the point here already.

Attacking just the student loan companies, and blaming them for all that is bad in the world, surely misses the point.  What we should be focussing on is a) why the cost of education for a student has skyrocketed and b) why the job market has not kept up with the higher cost of education.  Here’s just a simple anecdotal example.  In the early 1990’s, law school tuition was about $8,000.  A few years later, in the mid 1990’s, law school tuition shot up to about $35,000 a year.  Meanwhile, incomes for first year attorneys — barring those that went to the handful of jobs at large law firms in NYC — remained relatively flat for that same time period.

Yes, this is America, and we should take responsibility for the choices we make.  In my case, yes, I could have gone to a state law school and my debt would be 1/10 of what it is now.  I did not, because I wanted to go to the better school.  I take responsibility for that.  I could have gone to a private firm after law school and received a potential earnining capacity higher than what I have now, but I decided not to, because I wanted to serve the public.  Again, I take responsibility for that choice.  I did spend very frugally in law school.  I thought my law school loans wouldn’t be such a portion of my monthly debt.  But they are, and it’s a portion I’m not so comfortable with.  Perhaps I should I have done real research for that, but I didn’t.  I take responsibility for that idealism and ‘ignorance is bliss’ attitude.  Now I’m paying the price, literally.  It doesn’t seem fair, but again, it was the Faustian choice I made to go to law school and the Faustian choice I made to take a job in public service.  If I had to do it over again, I would — except I would have thought a lot harder about choosing a cheaper law school.

But why does it have to be this way?  Why does education have to be so damned expensive?  It’s great that these student loan companies give people like me an opportunity to go to law school when I would certainly not have been able to pay the $35,000 in tuition each year plus the about $8,000 in room and board out of my shallow pockets.  But it’s disappointing that even if you made this sacrifice to go to school and acquire a solid and honest job . . . you still aren’t in the position to pay off the debt in any normal amount of time (I think the normal life of a loan for people that go to law school loans is a ‘lifetime’).  The conspiracy theorists may say that this is exactly what the student loan companies want, as more time equals more interest equals more money, more money, more money.  Perhaps.  Then again, student loan companies are companies, and they make profit from their borrowers as opposed to finding money on trees or handouts from the government.  I’m sure if student loan companies were frugal with their loan guidelines, i.e., giving loans to people only with a solid credit history and assets that will guarantee repayment within five to seven years, then surely these conspiracy theorists would complain equally hard as to why these student loan companies aren’t giving loans out.  Somethings got to give.

Regardless, there’s currently a serious disconnnect between expectations, the economy, education, and the government’s role.  We have education institutions charging up the wazoo for tuition.  We have student loan companies handing out loans to anyone and everyone so that they can go to school.  We have a job market that doesn’t empower people to pay off these student loans in any reasonable amount of time.  We have a government and education system that teaches, at a very early age, that everyone can go to college, regardless of money.  Even on paper, something here doesn’t make sense.

Is this really the ‘American Way’?  Perhaps I’ll just move my family to France.  At least I’ll know my taxes are going to something tangible. . .like health care and education.