March 15, 2012
In response to my recent article: "Modernize Wall Street Regulation Instead of Occupying the Industry" ("Street Sweeper" March 13, 2012), I received a lengthy, apparently heart-felt query from someone purporting to be a 29-year-old engineer with $90,000 in outstanding tuition loans and the dismal outlook on life that suggests the American dream is dead, that he should default on repayment of his loans, and that his future is in another country.
Assuming that the comment is genuine, it offers a chilling view - a sad depiction of the loss of hope among our younger generations and the overwhelming odds that they perceive are stacked against them. Of course, I am not so old as to forget that I too felt humbled by a reeling economy when in my late 20s and believed that I was burdened with the repayment of loans for a liberal arts college education that, at the time, seemed of dubious value.
Is it merely a now older man's faulty recollection that persuades me that each generation goes through its own trials and tribulations, or is there something quite different and worse about this current round of economic challenges? In my writings, I have expressed my perception that we have, indeed, lost an edge and the determination to turn things around, so, who's to say if the young commentator is off base. In a column that I wrote last year, here is how I put it:
Some fifty years ago, President John F. Kennedy spoke of accomplishment rather than debate. In a speech at Rice University, Houston in 1962, he issued this challenge:
We choose to go to the moon. We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win, and the others, too.
It is for these reasons that I regard the decision last year to shift our efforts in space from low to high gear as among the most important decisions that will be made during my incumbency in the office of the Presidency.
Sadly, America's Can Do spirit has become a museum piece, displayed in a case with long-ago collected moon rocks. The people who first landed on the Moon can't even reform Wall Street. Instead, we stand on the shore, a wet finger forever raised to find the wind - but we never set sail.
Whatever happened to high gear in America?
I have attempted to briefly address some of the commentator's questions. If some of you have a different perspective or advice, have at it. I re-print his comment and my reply below:
At the time that I had begun taking out privately dispersed student loans I was in my second year of schooling in which I had transferred from a liberal arts college to an accredited state community college to allow me to peruse a career in Engineering as well as participate in collegiate athletics. The reason at the time for taking out such loans was due to the lack federal loan availability. That second year according to the FAFSA that had honestly filled out by my parents, I was not eligible for any student aid, grants, or loans. Therefore in order to pursue the dreams and goals that I had set for myself to obtaining a degree in Engineering and playing baseball at the collegiate level, my parents and I had to take out variably accruing private student loans. I must say that I was not the most knowledgeable person about how financial institutions worked or even how an interest rate worked at that time. What I did know at the age of 19 is that I had excelled in high school in math and science and at baseball outside of the classroom. I had a GPA above 3.0 and was a member of the national honor society. It was clearly evident at that time that I had the ability to do all of these things. So therefore taking out the student loans did not seem like too much of a risk.
As time proceeded over the five years of schooling the cost of tuition and living as well as the interest rates on the loans continually rose. I was borrowing between twelve and fourteen thousand a year in combination with working on the side in order to cover tuition and living expenses. By the time that my schooling had ended, the gross total that I had borrowed including interest was ninety eight thousand dollars. At the time that I had started borrowing I did not quit realize that these loans would get this high. However, at the time I had also realized that I couldn't just stop taking the loans and quit school. Then I would be in a situation in which I did not have a degree and would have these loans to repay as well. I basically had created a situation for myself in which I had to continue borrowing and failure was simply not an option. This was very stressful! At one point I even had to forgo my senior season of baseball at the University of Akron in order to take the required classes at that time so that my graduation would not be pushed out one semester causing me to default on my loans. At the time I was in a position to be the starting catcher on the team. This was very heartbreaking to me. This was the first time in my life I had realized that no matter how hard I worked I could not control my future and was a victim of circumstance.
Once I had graduated and became employed the next step in the dream was to pay down the student loans as fast as possible in order to someday be able to afford children and a home. At this time the minimum loan repayment amount was seven hundred dollars a month. It was very discouraging at first to see nearly thirty percent of my paycheck go directly to loans and interest but I told myself that as time went on I would be able to put more and more towards them. However, as time went on it has become harder to save and maintain a normal standard of living while paying on such drastic loan amounts. One of the main reasons for this is that after paying the minimum required monthly amount I still have other expenses in the form of rent, a car payment, utilities, grocery, health expenses, and phone, not to mention gas expenses that are continuing to climb. This leaves me with a minimal amount of income to use as leisure or save for an emergency. I currently do not have the ability to pursue any entrepreneurial ventures in my career as well.
As time has passed I have not seen the pay raises from the company that I currently work for to counter balance effects of school loans on my budget. Due to the bad economy my company has had hiring and pay freezes as well as layoffs. At one point in time I was so concerned about getting laid off and the possibility of defaulting on my loans, that I took it upon myself to start a side business through a partnership in order to be able to pay my loans if something were to happen to my job. This was so stressful to my body, that at one point I developed insomnia and was only sleeping about three hours nightly. This caused me to have to sell my business and salvage what I could from it. The lesson that I had realized from this is that there is only so much you can do and only so many hours in a day.
Over the past few years I have contacted almost every major lending institution about refinancing my loans and none of them are willing to loan to me unless there is some form of collateral. Most recently I have tried to contact my student loan provider in order to renegotiate the payments and possibly the interest and I have been told by American Education Services that I do not have negotiation rights on my loans. That I simply must pay them or go into default, in which my taxes and wages will be garnished. After reviewing my initial promissory note from Chase Bank, it has come to my attention that on the promissory note it states that the loans provided by the bank would not be sold to another provider unless the loans had come into default. However, this is the first thing that the bank did once my loans had matured. I have already spoken with lawyers concerning the matter and I have been told that these types of loans simply can't be negotiated or declared bankruptcy against.
Some of the additional grievances that have been cause by my school loans are as follows. Since my current loans involve me repaying seven hundred dollars a month as a minimum for the next fifteen years with only 12 months of forbearance, I have come to the conclusion that I must make at least a wage of twenty dollars an hour simply to cover my basic living expenses in order to simply survive. This does not account for any times of emergency expenditures that may occur in that future time period. Therefore this prevents me from taking any type of sabbatical from my job or any type of freedom from changing careers as well as the possibility of being unemployed for twelve month within that fifteen years. These loans are preventing me from buying and owning my own home. They are causing me to have relationship problems in that most people do not want to be involved with someone who has so much person debt. These loans are hindering my ability to have any future with having children. These loans are causing me to live at a standard living below the normal reward and benefits of even having a career in Engineering. In other words I have come to the conclusion that for the stress and strain of doing Engineering work it is simply not worth the final pay after taxes and loan payments.
I have been a very hardworking clean and honest person my entire life. I did exactly what I had been told to do by my educators and authority figures. I have absolutely busted myself for the last ten years of my life to try and make a future for myself and a possible family. I have taken the step necessary to prepare myself to produce and provide for my country. However for some reason I find myself at the age of twenty nine, ninety thousand dollars plus interest in the hole! So I have to pose the question of what it was that I did wrong along the way?
Sometimes I feel as if I am a glorified slave. Sometimes I think to myself that the only true way to get ahead in this system is to simply find as many loopholes as possible that do not currently have laws against doing. I cant help but thinking that playing by the rules, and doing the hardworking and honest thing, simply gets you taken advantage of. How is it that I can successfully educate myself enough to work for an energy company and play a very important role in society and be ninety thousand dollars in the hole, while there are people out in society who have occupations that in which some are debatable to be immoral and others that do not generate any type of useable wealth for the country and these people are filthy rich?
If there are any suggestions or solutions for any type of relief please let me know. If I do not find any resolution to my problem in the future then I will assume that there simply is no future for me or my future family in this country for the American dream for me does not exist, and will consider the possibilities of defaulting on my loans permanently and moving outside of the boarders of this country.
Respectfully, I'm not quite sure what to make of your situation. I borrowed the funds to put myself through college and law school and spent ten years paying off each of those debts. To do so, I often worked nights and weekends, sometimes at a second job. When attending college, I was employed around my class hours - sometimes working mornings, sometimes nights, and always on the weekend to make ends meet. When I attended law school, I transferred to the night division in order to work full-time days in the law department at Smith Barney. I know of many colleagues with the same story.
In my lifetime I have seen many recessions, including the crushing Arab Oil Embargo that found me managing a Burger King at nights in order to survive. While I will not minimize the historic nature of the Great Recession that we are still dealing with, I'm not sympathetic to anyone who would believe that the best solution to a problem such as yours is to "default(ing) on my loans permanently and moving outside the boarders of this country." If you think that you will find a better life in another country, so be it. Perhaps there is more demand for engineers elsewhere, certainly in Brazil and other emerging nations there is a shortage of professionals. That being said, how does finding a job equate with the ethics of defaulting on your loans?
At your age of 29 I was working as a night manager of a liquor store, preparing to attend law school, and in need of loans to accomplish that goal. My father had died when I was 19 and I was an only child and single. Even at that age I understood that no one owed me a job, I wasn't entitled to a free education, and life isn't fair. Now, at the age of 60, I still hold those beliefs and look back upon a lifetime of what I would deem hard work and effort, and living within my means. When you ask "what it was that I did wrong along the way?" you seem not to understand that life often places us in situations not as a result of anything that we did right or wrong but simply because that's how things progressed. You might as well ask what you did wrong to cause today's earthquake in Japan - there's no relationship.
In closing, let me share with you this quote that has often hung over my desk and has motivated me for many years:
Nothing in the world can take the place of persistence.
Talent will not; nothing is more common than unsuccessful men with talent.
Genius will not; unrewarded genius is almost a proverb.
Education will not; the world is full of educated derelicts.
Persistence and determination alone are omnipotent.
I sincerely wish you the best of luck and you are welcome to privately and personaly contact me.