Victims of the Student Loan Industry or Irresponsible Borrowers?
The master promissory note from a typical Sallie Mae loan is ONLY TWO PAGES! I went through it and highlighted the sections that clearly spell out all of these "predatory" policies that "cheat" people out of their money. It's clear, in black and white, exactly what will happen if you don't make your payments. I'm sorry, but if you're too freakin' lazy to read two pages and you sign your name to the document without understanding it, how can anyone feel sorry for you (unless you had health problems because then you get a pass because you didn't do anything wrong)? You agreed to the terms and it explicitly explains how it will happen. You can click the image for the full-screen, highlighted version of the Sallie Mae Master Promissory Note. If you don't pay the balance, and interest is capitalized (added to the principal) so that you start to pay interest on interest, of course the balance can go from $25,000 to $300,000 over 20 years, just like an investment account can compound. It even says in plain English that they will apply any payments to the interest and penalties first before paying down your balance. If you didn't like those terms, WHY DID YOU TAKE THE MONEY?!
I was reading a site called Student Loan Justice as well as a piece at the Huffington Post where people are talking about their “overwhelming” student loan debt that is – wait for it – $15,000 or $30,000. Basically, less than the value of a car. Or a couple both of whom smoke a pack of cigarettes each day for five to ten years. Or 4 to 8 months of pre-tax income for the average American household.
Rational, full-grown legal adults who have the power to vote actually made a decision to borrow money, pay interest for the cost of “renting” that money, and then when it’s time to repay, want the government (read: everyone else, including you and me) to pony up the money because it’s cutting into their standard of living. One guy on the site, not that long out of college, complains that he has a $1,250 per month payment and can’t live in New York City. Then get the hell out of one of the most expensive cities in the world! I read a study a few weeks ago that showed New York was the single most difficult metropolitan area for a new college graduate to build wealth. If you choose to take on a situation where the odds are against you, don’t complain when you don’t win. Choosing your battles is the first and most important part of coming out ahead in life, just as it is in war or any other undertaking.
Maybe I’m not sympathetic because, as you know, both Aaron and I, as well as most of our friends, were first-generation college students that had to pay our own way through school (complete with a $140,000 price tag for each of us over four years). (more…)
