Response to: “Why I Defaulted on My Student Loans.”

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“Why I Defaulted on My Student Loans,” was written by Lee Siegel and published in the New York Times on June 6, 2015*.  This article is written in response to some of the statements in that article. 

When I saw the title, I initially thought, “Are you serious, you purposely didn’t pay off your debt?”  So, I read the article to get a grasp of what caused this person to default on their student loans.  I was amazed to find out that the author felt like that paying back the debt was not a moral obligation.  In the article when referring to people paying back student loans, the author stated, “To my mind, they have learned to live with a social arrangement that is legal, but not moral.”  My question would be, “How is defaulting on your student loans moral?” 

I decided to look up the definition of moral, before I made my comments.  The definition of moral states, “of, relating to, or concerned with the principles or rules of right conduct or distinction between right and wrong; ethical.**” Each person has their own interpretation of moral obligations, but I believe that I signed and agreed to pay that student loan, therefore I am morally obligated to pay back the money I borrowed.  I can’t just default on the loan, because I felt like I was wronged or misled.  You knew that when you signed the student loan agreement, that you had to pay back the loan.  Therefore, I don’t believe that this person acted morally and I don’t believe that they have a good reason for acting this way.

In the article, the author mentions that they were confronted with a choice.  They needed to either work at a job that was not fulfilling and pay off their student loans, or work as a writer and default on the student loans.  The author felt like he chose life.  He chose to work in a career that he wanted to work in and he chose to live the life that he wanted.  I agree that this is a noble goal and everyone should want to live the life that they want, but we must still fulfill the obligations that we signed for and agreed to pay.  I believe that this author could have taken drastic measures and paid off the student loans as fast as possible and then they could be living the life they want at this moment, instead they felt like the life they wanted should be handed to them.  Nothing in life is just handed to you, we must work hard for the things that we want.  I want be financially independent and not have to depend on a job.  I essentially have the same goal as the person who wrote this article, but I chose to pay back my debts, work my butt off and save like a mad man to get there.

There is an interesting parallel to my life and life of Lee Siegel.  Lee’s parents were not rich and his parents struggled to help pay for college.  His father went bankrupt and his parents got divorced.  Similarly, my parents got divorced, didn’t help me pay for college and my father lost the ownership rights of a business that he built.  The two people, with similar backgrounds took two very different steps in dealing with their student loans.  Lee mentions character in his article and mentions that a lot of people with character have family money and family connections.  This is not true at all and I don’t think that Lee has any character at all.  A person who looks at other peoples mistakes and uses them as a way to justify defaulting on student loans is not a person of high character.  Lee tries to justify the fact that only the rich can pay off their student loans and since the rich are immoral, then he can be immoral.  I don’t look at what other people do, I only control what I can control.  I can only control myself and I believe that morally I must pay back all of my debts.

This author also makes multiple statements in the article that I must comment about.  The author makes this statement, “Or maybe, after going back into school, I should have gone into finance or some other lucrative career.  Self-disgust and lifelong unhappiness, destroying a precious young life – all this is a precious price to pay for meeting your loan obligations.”  I don’t think that you can assume that everyone working in finance or other lucrative careers are unhappy.  It may not have been what this person wanted to do, but they assume that everyone is the same.  Some really love working in their jobs and some really love the power of moving up in their job.

The writer of this article and I share a common theme, that we don’t want to be miserable and stuck in a dead end job.  As I have come to learn, you don’t have to spend your whole life working at a job that you don’t like.  You can lower you monthly expenses and save as much as possible to become financially independent. There is another blogger who talks about only working nine years, because he and his wife saved enough money to live off of their savings.  This blog is named Mr. Money Mustache*** and he has taught me about the importance of working hard and saving money to free yourself from working full time.  He no longer has a boss and can do whatever he wants.  The assumption that we all must sit in our jobs and continue to work until 65 is absurd.  I definitely don’t want to be stuck in my career and I want to live the life that I want to live.  We have all been misled that we have to work until we are 65 and live off of a pension or social security.  We don’t have to do that, just save lots of money so you can dictate your retirement.

The second statement that needs to be discussed is the following statement, “But I have found after some decades on this earth, the road to character is often paved with family money and family connections, not to mention 14 percent effective tax rates on seven-figure incomes.”  The assumption that the rich don’t pay taxes is absurd.  There are articles that have outlined the amount of money that the rich pay in taxes is much higher than the middle classes and the poor.****  This statement is a lie that many political people state to push their agenda.  My wife and I have a six figure income and we fall into the 28% tax bracket and we pay all of our taxes every year.  I believe that it is my moral duty to pay my taxes every year and I know many people who follow and don’t try to screw over the government.  Yes, there are people who are not trustworthy and do not pay their taxes, but we as a society assume that these people are the majority.  They are not, the majority of people pay their share of taxes because they feel it is their moral duty.

This article has allowed me to show my personal beliefs on multiple topics dealing with morality.  I am a strong believer in paying my debts, and paying my taxes.  These are paramount to the person that I am.  I believe that my wife, my family and my time are more important than my job.  But my job is important to my goal of reaching the financial summit.  I would suggest paying all debts as fast as possible and then begin to save and save and save some more.

Note from the author:

At the writing of this article, I still have student loans.  In my previous article, I mentioned that my wife and I had paid off our car loans and that our income was freed up for savings in seven months after marriage.  I made that statement because I was attending grad school and my loans were on deferment during that time.  So, I have been saving money, while my loans sit there.  I chose to do this, because I am an educator that works in a low income district.  The government has a loan forgiveness program that will pay up to $17,500 of my student loans if I work at a school for five years.  I just finished my five years of teaching and have sent the application in for loan forgiveness.  Currently, my loan servicer is reviewing the application and I should soon be debt free.  I have paid my student loans down to the point that I would only have $200 left after the loan forgiveness.  I will pay that back the day that I learn my loans have been forgiven.

I think it is important to be completely honest about how my student loans will be paid back.  I can hear the attacks now, “You can’t get on the author of this article for not paying the student loans, when you didn’t pay your student loans.”  You can feel that way if you want, but I am still fulfilling my obligation to the debt that I signed.  When there is a legal way to help get your debts paid off, I think that any moral person should utilize this strategy.  The two situations are completely different, because defaulting on your loans and getting your loans forgiven are two very different things.  I even have a plan if the government rejects the application.  If my application is rejected, my wife and I have the money sitting in a savings account to pay the debt in full.  I have the money sitting there, because I wanted to make sure the debt gets paid this year.  It is important and morally right to pay back every one of your debts.

*Link to the article titled “Why I defaulted on my student loans.”

**Definintion of moral from

***Mr. Money Mustache is a blog that I read regularly and has shaped a lot of my views on finance.  Here is a link to the home screen of Mr. Money Mustache.  I encourage you to explore this website.

****Linking to an article comparing income and percent paid on taxes.