Paycheck Chronicles

Don't Default On Student Loans


A piece in last Sunday's New York Times has fired up the internet.  Lee Siegel's  Why I Defaulted On My Student Loans is a narcissistic, illogical rant about the cost of higher education and the federally-organized student loan system in America.  I read it on Sunday, and was speechless, to the point where I couldn't fully respond until now.  However, I do need to make sure that my dear readers understand that you can't just default on student loans.  There are many reasons why, and I'll go over them, but repeat after me:  Don't default on student loans.

Siegel's basic premise is that the cost of education and educational loans is so high that it is morally or legally wrong, and therefore he is just going to stop paying.  This, of course, is rubbish.  A student loan is a contracted debt, and once a person freely enters into that contract, without any fraud or coercion, then the person, of course, is morally and legally obligated to repay the debt.

More importantly, Siegel makes it seem like there aren't any consequences to the choice to stop repaying student loans.  This is just not true.  I'm not sure if Siegel is deliberately trying to deceive the readers, or just trying to deceive himself.  Either way, it's not good.

In addition to the hundreds of comments at the original piece, other websites were full of discussion about this topic.  There were many stories of people who perhaps had something that resembles a good reason to default, stories of shockingly aggressive debt collection practices, and the general "college is too expensive" refrain.  Pretty much no one, however, agreed that people just stop paying their debts because they don't want to pay them any more.

At Slate, Jordan Weissmann put together a fabulous rebuttal, The New York Times Should Apologize For The Awful Op-Ed It Just Ran On Student Loans.  In it, Weissmann makes logical points, such as pointing out some of the actual consequences for default.  These include garnishment of wages, but Weissman's explanation stop short of the full story.

Thankfully, Rebecca G. Neale at the Personal Finance Lawyer has filled the void with a short, simple, clear language article on the legal side of student loan default.  In Can I Default On My Student Loans?, Neale explains that

  • student loans live forever,
  • the government can garnish your money at any time, from any possible source,
  • you lose flexible repayment options,
  • your debt will grow, and
  • your credit will suffer.
Because she's not writing to a military or federal audience, Neale didn't discuss the most important issue for many military families:  unpaid student loan debt may impact your security clearance.

If you've ever considered defaulting on your student loans, or if you read Siegel's awful article advocating that you default, please, please think again.  Student loan default is a last-step measure that should only be taken if you have exhausted all other options.  Those other options include:

  • restructuring your student loan debt,
  • requesting a more affordable repayment plan,
  • getting financial counseling, usually available at your family readiness center or through the Navy-Marine Corps Relief Society,
  • finding additional sources of income to repay your debt, and
  • decreasing your other monthly expenses to repay the debt.
Despite the blase attitude of the author of last weekend's reckless article, you can't really default on student loan debt.  It will continue to follow you and make your life complicated forever.  Literally.  Don't do it.


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