Defaulting on Your Student Loans

So many of us have fantasized about defaulting on our student loans. We imagine a collective refusal to pay our debt. We'd do this together, we say. We'd show them. We'd just stop paying entirely, and then the financial institutions who turned us into these indebted zombies would really pay. One reader of mine, a very astute economist, insists that we must revolt in this manner. He calls for a debt revolt on all things, not just student loans.

But then we - the student debtors - stop and think about the co-signers. For those of us with co-signers, we realize we're trapped. We'd have to get our mother, father, or grandparents, perhaps a friends - the co-signer(s) - to agree to this decision. (This is what many of you have said has held you back from committing suicide, something which devastates me every time I hear that admission). Suddenly, default doesn't seem like a possibility, and so we begin to despair.

Recently, I learned that a neighbor had lost his job in construction. I said to my husband, "how is he surviving? It's hard for me to understand. He has no income."

My husband laughed and said, "that's where something called savings comes into play. You know, there are people who've socked away enough money that when bad things happen to them, like losing a job, they can depend upon it."

I suddenly felt beside myself, a feeling I don't often get when it comes to being a debtor, and I said, "We're so screwed. How will we ever have any substantial amount of savings with these goddamned student loans? It's not just us! There are hundreds of thousands of debtors like us. What will happen to us when we're that age and you lose your job or I am diagnosed with cancer? We're over."

So, when you imagine defaulting. What's your initial feeling? Does it change? Do you always feel the same about the idea of doing it?

Also, here's a real shocker. Student loan default rates have risen sharply. Gee . . . wonder why . . .  What's Arne Duncan's brilliant response to the student lending crisis?!? He said in a press release, ""These hard economic times have made it even more difficult for student borrowers to repay their loans, and that's why implementing education reforms and protecting the maximum Pell grant is more important than ever. " Perhaps "education reforms" means helping current debtors? I'd love to be wrong, but I seriously doubt that is what this man means. And how will protecting Pell grants help those of us drowning in debt, jobless, and already out of school?!? I don't see the logic, Sec. Duncan. Once again, the department comes off as sorely out of touch and incapable of solving the crisis, even though they could be instrumental in help us.

Related Links


Bob Drummond, "U.S. College Loan Defaults Highest Since 1997," Bloomberg News (September 12, 2011)

"Now Is The Time To Invest in CURRENT Borrowers," AEM (September 1, 2011)

Riiight. In my dreams . . .

Artist: Dave Coverly