Why I Defaulted on My Student Loans

[forevereagle]

I think this article should be renamed: Why I Cannot be Trusted with Decisions and Other People's Money.

[KRAM1]

Bank just needs to send the defaulting borrowers a 1099 as it can now be considered income.  Used that concept many times during my banking career with folks threatening default.  Did it a few times as well when we decided it wasn't worth pursuing the balance through the courts. Fun watching the reaction when the folks discovered that now they would be dealing with the IRS!  

Sure, the tax was not as big as the balance due, but did give some pause.  Also fun to tell some we would let them keep the house (mostly with folks who got into that "rental properties will make you a millionaire" scam) and just send the IRS a 1099 for the $100,000 plus balance or whatever it was.  Or, that they could keep the car, we would just send the 1099 in at year end for them!  Co-signers who thought we had to repo the car and sell it were often very surprised.  

 

Just FYI....never ever co-sign a loan for someone who is not your kid or parent...period!  Even if a kid or parent, be 100% prepared to be the one paying it.  

Once the the school is on the hook for a portion of defaulted federal and/or state student loans there will be far less debt, far fewer defaults and far less taxpayer liability.  The next financial crisis may well be seen in student loan debt.  Way past time to re-think this whole concept...especially for the "for profit" diploma mills...just how many massage therapists do we need...or medical office coders, etc.?

[KRAM1]

I think this article should be renamed: Why I Cannot be Trusted with Decisions and Other People's Money.

Like the U.S. House and Senate.

[meangreendork]

Way past time to re-think this whole concept...especially for the "for profit" diploma mills...just how many massage therapists do we need...or medical office coders, etc.?

​I have what's almost a personal grudge against diploma mills, especially in my field. It seems as if they'll let students pass so long as they pay tuition with little regard to actual grades or if that student is actually cut out for that field. There's no culling of students that just don't have what it takes, and that's bad for the student, which in turn is bad for the rest of us.

[Ryan Munthe]

That's because they don't have to repay those loans.  They just want you to get out ASAP to make the numbers look better.

 

After a while there may be too many of those, so then college age kids will have to find out what the new in demand skillset is.  I am not saying "everyone become an engineer", I am saying "take post HS education that helps you find a well paid job."

Degree in English netted me a great job. I did just fine following my passion.

[Cerebus]

Degree in English netted me a great job. I did just fine following my passion.

The plural of anecdote is not evidence.  You story is not representative.    Data published by the New York Fed in Are Recent College Graduates Finding Good Jobs finds that there were great variances in unemployment and underemployment rates among different fields.  One of the highest were Liberal Arts degrees with 8% unemployment and 52% underemployment.  The lowest was engineering, where the rates were 5% and 20%, respectively.  

[Ryan Munthe]

The plural of anecdote is not evidence.  You story is not representative.    Data published by the New York Fed in Are Recent College Graduates Finding Good Jobs finds that there were great variances in unemployment and underemployment rates among different fields.  One of the highest were Liberal Arts degrees with 8% unemployment and 52% underemployment.  The lowest was engineering, where the rates were 5% and 20%, respectively.  

That's because liberal arts majors often go for jobs that are personally fulfilling vs just paying the bills. Personally, I'd rather struggle financially doing a job I truly love vs making bank but hating my job. If you're an English Major, things like working in a bookstore are technically "underemployed" but what if you enjoy them?

College is not a degree mill. You go to college to learn what interests you, and shouldn't be solely based on majoring in what will get you a job. After you graduate, take your degree and make that degree work for you. College is about learning, and because society says "EVERYONE MUST GO TO COLLEGE" actually going to college to learn or follow your passions doesn't happen anymore.

A philosophy degree is not less valid than a STEM degree. There is such a thing called "personal fulfillment". 

Society's obsession with STEM and "to get a good job go to college" is why the university system is dying, ready to pop at any minute. University is NOT a degree mill or work training. It is a place to learn, find yourself, and a place to follow your interests.

Edited June 20, 2015 by Ryan Munthe

[KRAM1]

That's because liberal arts majors often go for jobs that are personally fulfilling vs just paying the bills. Personally, I'd rather struggle financially doing a job I truly love vs making bank but hating my job. If you're an English Major, things like working in a bookstore are technically "underemployed" but what if you enjoy them?

College is not a degree mill. You go to college to learn what interests you, and shouldn't be solely based on majoring in what will get you a job. After you graduate, take your degree and make that degree work for you. College is about learning, and because society says "EVERYONE MUST GO TO COLLEGE" actually going to college to learn or follow your passions doesn't happen anymore.

A philosophy degree is not less valid than a STEM degree. There is such a thing called "personal fulfillment". 

Society's obsession with STEM and "to get a good job go to college" is why the university system is dying, ready to pop at any minute. University is NOT a degree mill or work training. It is a place to learn, find yourself, and a place to follow your interests.

Pretty well said and lots I can find agreement with, however, get back to me in about 8-10 years on that concept of "rather struggling financially".  Life has a way of changing ones perspective over time and as responsibility and interests grow.  I see lots of education majors teaching for a couple of years and then leaving the profession because they "cannot make a living" doing what they love...same for several liberal arts, music, art, theater, design, etc. undergrad majors I know.  Many now have second bachelor's degrees or master's degrees in areas where they feel they can make a decent living and provide for their families' futures.  They all, however, retain their love for the arts, music, education, etc.  and, they all seem to be quite happy and satisfied in their now business, technical or professional fields of endeavor.  I know very few...very few liberal arts majors working in the field of their undergrad degrees.  Many are working in areas far removed from their degree major.  Which, brings up another point...once one graduates and gets their "foot in the door", it is pretty much up to them individually and not their degree in determining career success.  Enterprise Car Rental hires lots of liberal arts majors right out of college.  Few stay long term with Enterprise, but they get great business training, customer service trying and life skills trying and can move on from Enterprise to successful and satisfying careers...far afield from their majors.

while many liberal arts majors return to college for degrees in new fields I rarely see this from business and STEM type majors.  If these folks return it is often for advanced degrees in their undergraduate or a closely related field of study.

Hey, I have enough degrees in different fields to have a pretty decent point of reference in this area....while I never earned a cent in the field of geography, I retain my interest and love for that discipline to this day.  But, my career success is owed to my MBA in banking and finance...a career field I very very much enjoyed and still dabble in to this day.

[FirefightnRick]

 

Any guess who this national message this is from?

A college education should be as free and universal as high school is today,..for any American who wants it, (because we know college is for everyone of course),..and no one with drive and ambition should be left out.  And it should be paid for by you, the tax payer.  And if the student defaults on their part of it by making below a certain grade point average then the tax payer has to eat it anyways.  

Any guesses?  

Rick

Edited June 21, 2015 by FirefightnRick

[SCREAMING EAGLE-66]

--- I think I am agreeing with Rick (for once) if he is saying what I think he is...  I oppose universally free college....[ maybe cheaper (tuition tripled under Perry, salaries didn't ) so that working student can actually pay as they go as my wife did (100%) and myself (about 50%, parents 50%) ]  The community college where I teach  had no tuition for a while for new HS  county grads  and it did not work well at all.  [ after the first semester a certain GPA was required ] Since it was FREE we had so many students signing up for courses that they never finished... once they discovered it was not HS 2.0 and they were going to have to work hard to pass ... they just quit.... The drop or quit rate was very high..... Students need to have some money at stake if they are to be a serious student.

--- We had a lot of students enroll that had no business there.. Even now so many student in math classes fail because of what they did not learn in jr. high and HS.... Their background is awful. It is a lot like running a race a lap behind to start with ... little chance of doing well. Our solution to the free tuition was to change things ...... Still new high school grads CAN get a nearly free tuition (not books etc.) by previously doing 40? hours of community service before beginning and having a respectable HS GPA.

--- These "bums" that had a HS diploma and no other qualification and going for free (except books.. which a lot did not buy) were taking up space and disruptive to class progress. It may sound like a good idea .... but it isn't.

 

Edited June 23, 2015 by SCREAMING EAGLE-66

[SCREAMING EAGLE-66]

---Re above: Too many go to college and have a lot of fun and major in subjects that do not pay well or have any real future.  There is an insane number of jobs available in tech, engineering, and math/science fields, plus a few more.... it comes back to the old commercial "Pay me Now or Pay me Later" .... work hard during college years and get paid well later.. Those who don't ....pay for it later by having low paying jobs or unemployment.. some of which they could be doing with no college history.. maybe so bad they can't even pay off their loans .... if they have any ... I didn't or my kids either.... had high paying summer co-op jobs (engineering).. plus I chipped in.

Edited June 23, 2015 by SCREAMING EAGLE-66

[SCREAMING EAGLE-66]

--- No one should co-sign a student loan [ and maybe any other one ] because they can be held responsible for the debt....  The gutless wonder mentioned first that defaulted may have screwed his parents.... It is possible for some loans  to be paid out of THEIR social security payments later and possibly some other payments. I know of one that won in Lotto Texas and it was confiscated...

[Stix]

I haven't had time to chime in on this topic before this, and really don't have time now.  I work in IT for a major debt collection firm which has a significant amount of business in collecting on student loans, so I know quite a bit about the subject.  I can't give any specifics, as it would break the non-disclosure agreements and confidentiality rules I work under.  But this headline (never mind the article) pretty well sums up the problem, in my opinion:

Study blames college tuition arms race on schools addicted to federal aid

Truth in posting:  the article is from Fox News, so some of you will dismiss it offhand.

[ChristopherRyanWilkes]

As someone part of the same generation this actually makes me happy, just means more jobs for folks like me who don't think they are above "gutless corporate jobs" while everyone tries to be an artist or writer or what have you. I'd like to know what she considers "lower-middle-class" because that is what my family was growing up and it doesn't sound like we had similar upbringings at all. 

Edited July 10, 2015 by ChristopherRyanWilkes

[Cerebus]

ITWorld: Computer science students are in demand and they know it

Computer science majors have some of the best job prospects

The survey found that, of all students who had graduated the year before (in 2014), less than half, 45%, had full time jobs at the time of the survey. However, of those students who studied computer science, 61% had full time jobs, tops among all majors besides military science (62%) and better than the rate of 50% overall for STEM grads in general. Additionally, 31% of CS majors had full time job offers by graduation, which ranked third behind finance majors (38%) and those studying mechanics and repair (33%).

Computer science majors make the most money

Of all majors, students studying in CS had the highest average starting salary, $66,161, followed by engineering ($65,000), math and statistics ($60,300), economics ($58,600), and finance ($58,000). In addition, 32% of CS grads had a starting salary of over $75k and 13% started at over $100k.

Computer science majors know their value

The survey shows that CS majors are aware that their degrees are valuable; on average, they expected a starting salary of $68,120, slightly above the actual average starting salary of $66,161. In addition, 73% of them expecting a starting salary over $55K (compared to 70% who actually got that much) and 12% expected a starting salary of over $100k, slightly less than the 13% of them who actually got 6-figure jobs. As Looksharp’s CMO Nathan Parcells told me via email, “It shows that students understand how in demand the CS major is and that it can command a 6 figure salary immediately out of school.”

In fact, those CS student at the high end should continue to increase their expectations since, as Parcells explained to me, the practice of capping entry-level salaries is starting to erode as companies vie for new developers. “Some growing tech companies do negotiate and are willing to offer this large salary to top CS talent,” he said.

[GreenMachine]

That's because liberal arts majors often go for jobs that are personally fulfilling vs just paying the bills. Personally, I'd rather struggle financially doing a job I truly love vs making bank but hating my job. If you're an English Major, things like working in a bookstore are technically "underemployed" but what if you enjoy them?

College is not a degree mill. You go to college to learn what interests you, and shouldn't be solely based on majoring in what will get you a job. After you graduate, take your degree and make that degree work for you. College is about learning, and because society says "EVERYONE MUST GO TO COLLEGE" actually going to college to learn or follow your passions doesn't happen anymore.

A philosophy degree is not less valid than a STEM degree. There is such a thing called "personal fulfillment".

Society's obsession with STEM and "to get a good job go to college" is why the university system is dying, ready to pop at any minute. University is NOT a degree mill or work training. It is a place to learn, find yourself, and a place to follow your interests.

Serious question: If someone wants to and enjoys working in a bookstore, why bother going to college and racking up debt for a job they know they will never make much money with? Wouldn't it make more sense to just go straight into that job field? The same with making pottery, painting fruit etc.

Edited July 13, 2015 by GreenMachine

[ChristopherRyanWilkes]

Pretty well said and lots I can find agreement with, however, get back to me in about 8-10 years on that concept of "rather struggling financially".  Life has a way of changing ones perspective over time and as responsibility and interests grow.  I see lots of education majors teaching for a couple of years and then leaving the profession because they "cannot make a living" doing what they love...same for several liberal arts, music, art, theater, design, etc. undergrad majors I know.  Many now have second bachelor's degrees or master's degrees in areas where they feel they can make a decent living and provide for their families' futures.  They all, however, retain their love for the arts, music, education, etc.  and, they all seem to be quite happy and satisfied in their now business, technical or professional fields of endeavor.  I know very few...very few liberal arts majors working in the field of their undergrad degrees.  Many are working in areas far removed from their degree major.  Which, brings up another point...once one graduates and gets their "foot in the door", it is pretty much up to them individually and not their degree in determining career success.  Enterprise Car Rental hires lots of liberal arts majors right out of college.  Few stay long term with Enterprise, but they get great business training, customer service trying and life skills trying and can move on from Enterprise to successful and satisfying careers...far afield from their majors.

while many liberal arts majors return to college for degrees in new fields I rarely see this from business and STEM type majors.  If these folks return it is often for advanced degrees in their undergraduate or a closely related field of study.

Hey, I have enough degrees in different fields to have a pretty decent point of reference in this area....while I never earned a cent in the field of geography, I retain my interest and love for that discipline to this day.  But, my career success is owed to my MBA in banking and finance...a career field I very very much enjoyed and still dabble in to this day.

Well said. I like to keep my hobbies my hobbies and do something different as a career. Everything turns into work eventually if you do it long enough, I don't think anyone truly has a job they are 100% happy in. The bold part is a consideration that changed my thinking on my possible career path even with my liberal arts degree. If I could go back I would definitely get something more marketable, but whats done is done at this point. 

Interesting article on my generation's job and college situation published in the New York Times. 

[GreenMachine]

Because they wanted to enrich their minds and become a more worldly, well educated person? You know, the original point of a college education?

Fair enough but be worldly and educated enough to know you just took on a lot of debt for a $15/hr job. I guess I totally don't get that way of thinking but I suppose it takes all kinds. 

Edited July 14, 2015 by GreenMachine

[oldguystudent]

Fair enough but be worldly and educated enough to know you just took on a lot of debt for a $15/hr job. I guess I totally don't get that way of thinking but I suppose it takes all kinds. 

You both have valid points.  They were both more valid back when tuition was $1,500 a year.  Today, when the bachelor's degree is about the equivalent of a high school diploma was for our parents in terms of employment opportunity, and it cost somewhere in the $150,000 range, it's an economically frivolous pursuit to spend that money simply to become worldly.  Like it or not, and I tend to not, college has become an economic investment, its original purpose of providing universal education (hence the term "university") having long since passed.

[oldguystudent]

Agreed.  Part of the collective college experience for us 25 years ago were the Spartan living conditions.  Now every aspect of every university must be Hilton grade luxurious.  I don't get it.  Wait for the barrage of alumni about to chime in saying that THEY want to enjoy these things.

[TheTastyGreek]

http://www.vox.com/2015/7/14/8912981/student-debt

Got that in my email this morning. Go frugal, Mean Green! 

[Harry]

http://www.vox.com/2015/7/14/8912981/student-debt

Got that in my email this morning. Go frugal, Mean Green! 

Awesome article.  I can see in the future more and more students will use community colleges as a way to make their education more affordable. 

[oldguystudent]

Awesome article.  I can see in the future more and more students will use community colleges as a way to make their education more affordable. 

It is well established for Chloe that it's TAMS or community college.  She's quite driven toward the former, but should that not work out, she is very, very understanding of the latter because she knows how much debt I racked up in grad school, and she knows that it's tough to get a gig straight out of school that can make those payments.

[North Texas Shep]

Agreed.  Part of the collective college experience for us 25 years ago were the Spartan living conditions.  Now every aspect of every university must be Hilton grade luxurious.  I don't get it.  Wait for the barrage of alumni about to chime in saying that THEY want to enjoy these things.

I agree. In general everything is nicer. I recall moving from Bruce to Concrete City oo Ave H. Nothing pretty about it but that was college.

During my time in college I took a lot of loans, because I had 7 spine surgeries and parents who had no extra money to hand out. The government would not help me and it was the only way to pay bills.  I do not regret the loans I took out. Just wish I picked a better field of study, so I could afford to pay them back.

[Harry]

Here's a good story on cosigning issues with loans...

http://www.nytimes.com/2015/07/11/your-money/student-loan-co-signers-face-a-tangled-path-to-a-release.html?_r=0