Student Loan debt is a huge financial crisis in this country. Every week you read a story of some poor Millennial on the hook for thousands of dollars for a useless degree. If you're a conservative you probably read these stories and either congratulate yourself for NOT being in this situation. Maybe you think "Well, it serves her right. She should have known better." And that may be true, but even if you don't have student loans yourself, this DOES affect you. This affects ALL OF US.
I offer up my own story as a dire warning to others. Let me start by saying, I don't expect anyone to feel sorry for me. I did this to myself. I'll get myself out of this. And I'm going to be OK. But perhaps if you see how carrying this debt has affected every decision I've made since I was 20, maybe you'll see why it's such a threat and we can do something to solve this crisis before it destroys us.
So, how did I get into this mess in the first place? It's a long story (which I may tell one day) but let's just say it was a combination of poor personal choices and bad luck. The bad luck part was my father dying when I only had one year left before graduating. So, I borrowed a whole lot of money because "I only need ONE MORE YEAR and I'll have my degree" confident that I would graduate, get a great paying job and live happily ever after. It was more bad luck to graduate in the middle of a recession.
And this is where the poor personal decisions came in.
One of my friends spent a year trying to find the right first job. Then she moved home, saved her money and went to graduate school. But with $20,000 hanging over my head, I didn't have that luxury. I also didn't have the luxury of getting my own place. So, right off the bat I was forced to take the first job I was offered and live with my mother just because of these loans. All that economy stimulating money to rent an apartment and set up a household went towards paying off my debt instead. I ended up working 3 jobs in an effort just to pay off all my debt. So, my life pretty much sucked. But I was paying all my bills on time and at least getting out of debt instead of getting further in the hole each month.
Until I got married. And my husband got transferred. And I couldn't find another job. And I did what so many other stupid young people do when faced with catastrophe: I decided to ignore the problem.
I always tell people that student loan debt it like herpes: It may not kill you, but it NEVER GOES AWAY. The student loan people don't practice the aggressive collecting techniques that my other creditors do. They don't have to. They know you're not going anywhere. They can garnish your tax returns. They can garnish your SOCIAL SECURITY CHECKS! You can't bankrupt them. Unless you go to work for the government, there is no loan forgiveness. And I was told I didn't qualify for any program to lower my interest rate. So, one way or another, I would be paying on these loans until I died.
When I finally dug my head out of the sand and face my debt, the student loan people were more than happy to help me out: by putting me in deferment. At least that meant I wasn't in default. And since I was only earning minimum wage, they didn't expect me to make any payments. But that 8% interest just kept adding up. Every year, I would send them my tax returns and buy myself another year of deferment. Then I started making payments again, but not nearly enough to pay even the interest that was accruing. I think it finally topped off at $48,000 before I started paying enough every month to make it go down. At 8% interest, that meant I was paying around $300 a month on interest alone just to keep from going further into debt.
So, how did spending my whole adult life under this crushing debt affect my life? Basically, it took away a lot of my choices and opportunities.
It took away my ability to move. Since I had to live with my mother instead of getting my own place after college, I couldn't move to a new town (or even a different part of Atlanta) to seek a better job. That also meant keeping a car since there was no public transportation out in the burbs.
It took away my opportunity to go to graduate school. Maybe that wasn't a bad thing. But I was already being crushed by my undergraduate debt. Borrowing more to go back for another degree simply wasn't an option. Maybe I'm better off. Maybe I missed the chance at a better career.
I never bought my own house. I've spent my entire adult life either living in my mother's house or renting an apartment.
I never had children. I had this crazy idea that because I couldn't even afford to take care of myself, I shouldn't be bringing anyone else into the world.
I never traveled. My entire bucket list is pretty much places I want to see before I die. I've never been to Europe. I've never been on a cruise. Heck, I haven't even been to Disney World since I was a kid and my parents took me.
I never saved for retirement. So, I'd better hurry up and pay these loans off because as I mentioned before, they CAN garnish your Social Security (if that even exists by the time I'm ready for retirement.)
If you just read this as my personal hard luck story, you really don't see much of a problem here. I shouldn't have borrowed money to finish college. I should have paid it off years ago. It's my problem, not yours. And that was true 30 years ago. It WAS pretty much just MY PROBLEM. None of my friends had student loans. None of my friends lived at home until they were 40. A lot of them went to med school or law school or got masters degrees. They had children. Judging from my Facebook news feed they're taking some pretty nice vacations.
But look at the people in their 20's today. Many of them are starting out with a lot more debt than I did. How will this affect THEM? How will it affect YOU?
Will we face a shortage of doctors as more people decide against medical school? We probably have too many lawyers, but that could change in the next few decades.
We're already seeing the effect on the housing market. Millennials aren't buying houses. The housing industry employs a lot of people. That's one reason the last recession was so devastating. If home values crash again, how many mortgages will be under water? What happens if homes don't gain value?
Our birth rates are plummeting now. Who's going to be paying in to Social Security for us if we don't have more young people? Will we be forced to take a huge influx of immigrants from third world countries like they have in Europe? What happens to retirement if Social Security collapses and nobody has any savings? And what will happen to the few children we have in the next generation if they spend their lives in apartments while both parents work (and then there's no money for THEIR college educations?)
My story might have a happy ending. My mother passed away a few years ago and I inherited her house (which thankfully, was paid off.) I took out a home equity line of credit and paid off the student loans. I still owe a lot of money, but it's a whole lot easier to pay off at 4% interest than it was at 8% interest. I'm hoping to put the house on the market in a few weeks, pay off the HELOC and buy another house with what's left over. I've managed to put some money into a Roth IRA and I still have a few years before retirement. Maybe if I'm not paying old debt, I can start saving more. My current employer has a profit sharing plan. I should be OK if I don't do anything else stupid.
How many others can say that? How many Millennials will inherit enough money to wipe out their debts one day? Right now, student loan debt is over a trillion dollars. That's more than credit cards and car loans. What if they just decide to quit making payments? We taxpayers will be on the hook for all that money!
What if my generation finished paying off their loans to find out they have to start paying them for the next generation? And what if we CAN'T?
What if we WON'T?