Everybody seems to be up in arms about the recent “forgiveness” of student loans, up to $20,000 per person. For some this might seem like a lot but if you went to school recently, and entered any kind of specialty, your loans could be much higher. Still, better than nothing.
A lot of people seem to think that people who chose not to go to college are now stuck with paying for the loans of those who did. That is simply not true.
I will paraphrase an explanation I read recently. If I loaned you $100 and said I would charge a dollar a day interest until the balance was repaid. After 300 days you have not paid me anything so you now owe me $400. Imagine I say, since I am a nice person, that I will forgive $100 of your debt so now you only owe me $300 and the interest continues. Do you understand that this would not actually cost me any money? I’m not spending any more money, I am erasing money that never actually existed.
That’s how student loan forgiveness works; it’s not actually costing anybody any money. Your taxes are not paying for this because nobody is actually spending any money. The amount of debt being forgiven is less than the amount of debt that was created by capitalized interest on the original loans.
I have also seen all the items that say something like, “Well, I had to pay back my student loans, so you should have to too or it’s not fair to me.” In other words, If I had to suffer, you do too. That’s like saying we can’t cure you of cancer because all those other people died from cancer and it wouldn’t be fair to them. And my favorite is “I had to pay back my student loans and I turned out OK, so you should too.” That tells me that you really didn’t turn out OK.
Here’s my student loan story.
When I went to college after high school, my parents said they would pay for four years of college but they had to be continuous. Fair enough. I headed to Colorado State University and spent three years coasting along and partying. I just wasn’t interested in school after three years so I quit. My mom and dad were plenty pissed but they reminded me about the four year deal.
Fast forward a few more years. Now I was living in Columbia, Missouri and working for the University of Missouri, basically as a graphic designer. When I asked my boss for a raise due to these new design duties I was told they couldn’t pay me more because I didn’t have a college degree. OOF!
Since I worked for the university, I was able to attend classes at a seriously discounted rate. I took advantage of it and took as many prerequisites and art classes as I could. Then the project I was working for came to an end. No more discounted classes but I could get financial aid. So I did.
I probably had about a year and a half to get my BFA in Fine Art so I kept going. I loved college and did much better and was more highly motivated than when I attended CSU. I guess I finally figured out what I wanted to do. I made the Dean’s List every semester and got some Curator’s scholarships for good grades. In 1980, when college was still fairly cheap for in-state residents, I graduated with my Bachelor of Fine Art degree. I even used one installment of my student loans to put a down payment on a house. Mortgage interest was 11% at the time, so I had to hustle to make my house payment. The loans could wait.
I started doing some free lance photography and a girlfriend and I started a housecleaning business, The White Tornadoes. That was pretty lucrative and we did fairly well but I still didn’t make enough to start paying back my student loans. They sent me notices and I finally started paying back what I could, which wasn’t much. I guess they just wanted to see some good intent.
In about the mid eighties, after working at a couple of photo labs and free lancing, I got a job at the University Police Department as a Night Watchman. I worked the night shift, which I never could get used to. The money was pretty good and the job was super easy, just take my ring of master keys and check on my assigned portion of the campus. I even had a patrol car to drive around in and I worked on my own, no partner. If I found anything unusual I could call it in but I don’t think anything like that ever happened, except one night we were all called to a building that had a fire.
Being able to have the keys to everything was great. My natural curiosity led me to explore all the darkest depths of the university and find all the hidden places. I discovered where the best couches were for napping. I had a radio so if they called me I could respond. I found lounges where the dark and quiet made for a good snooze. I also explored the theater department costume room, which had some fabulous finds. I got a really good look at the inner workings of the university.
One night I was assigned to an area of campus that included all the records for the student loans. Remember, this was way before the days of surveillance cameras and computers; everything was on paper. I decided to see if I could find my student loan file and I did. It detailed everything I had borrowed and paid back and how much I still owed. I spent quite a while trying to decide if I could make the file “disappear.” I don’t remember what the balance was at the time, but it was considerable for my income.
I ended up putting the file back on the shelf and leaving the office and locking the door. I figured I knew where it was so if I changed my mind, I could always go get it. I never did.
I didn’t get my loans paid off until about 1995, the year we moved to Kansas from Washington DC. I had been paying all along and finally decided to just pay them off when I could. What a relief that was!
My theory about loan forgiveness is that everyone who is eligible should take advantage of it. I also believe that higher education should be free in the United States like it is in other countries like Finland, Mexico, Brazil, Argentina, France, Spain, Germany, Russia (!), Italy, Iceland, Norway, Holland, Portugal and Denmark, to name a few. Since 1973 the average income has actually gone down while all other costs like housing, food and college have gone up. I know people who have been paying on their student loans for YEARS and still owe more than they borrowed because of compound interest. If they could have paid it off all at once they wouldn’t have had to borrow. And I think it is obscene that we spend so much on “defense” and various wars around the world. What if we used that money to fund higher education?
We all benefit from an educated society and a population unburdened by debt.