I agree almost entirely with Megan McArdle’s critique of Lee Siegel, in his article on why he chooses to default on his student loans (NY Times Link). And I don’t particularly wish to defend Mr. Seigel, who, as McArdle says, presents what is perhaps the least sympathetic account of why he has defaulted. Mr. Siegel comes across to McArdle–and to me–as an entitled, even snobbish, person who doesn’t wish to live up to his freely-incurred obligations mostly because it’s inconvenient for him to do so. I’d also add, though McArdle doesn’t say this, that if, as Mr. Siegel urges, all who hold student loans boycotted paying them, then one possible consequence would be a huge curtailment of the loan program, such that others would not have the same opportunities that loans have afforded him.

But there’s a little bit of something in the article that does give me some sympathy, if not for Mr. Siegel’s situation, then at least for what some people face when dealing with student loans. It’s an image his opening anecdote evokes for me:

ONE late summer afternoon when I was 17, I went with my mother to the local bank, a long-defunct institution whose name I cannot remember, to apply for my first student loan. My mother co-signed. When we finished, the banker, a balding man in his late 50s, congratulated us, as if I had just won some kind of award rather than signed away my young life. [link omitted by GC]

By the end of my sophomore year at a small private liberal arts college, my mother and I had taken out a second loan, my father had declared bankruptcy and my parents had divorced. My mother could no longer afford the tuition that the student loans weren’t covering. I transferred to a state college in New Jersey, closer to home.

Here’s the image that snippet evokes for me. It’s the image of an 17- or 18-year old and his parents, who seem to not have had much or any experience with college or with how to play the loan game. Perhaps they all assumed that college was a guarantee of success in life, or perhaps they had met people with college degrees who had money and authority and whom they perhaps had to answer to at their jobs

They, I imagine, had talked to a recruiter for the small liberal arts college at which he found himself. Or perhaps they read the glossy pamphlets that such institutions send out, perhaps with bucolic scenes of campus life, photographs of attractive young students and older but good-looking professors with charismatic faces, and quotations from famous alumni about the value of a small liberal arts college education. Perhaps the recruiter or pamphlet offered some impressive statistics that showed a large number of students obtaining a BA (instead of dropping out) and going on to high-paying jobs or to professional or graduate degrees.

There’s something not quite right with that image ( and I admit I’m reading much into this that Mr. Siegel doesn’t offer). There seems to be something exploitative about it, and I might at a later date write how I believe it is exploitative. But it’s not clear to me what the solution is.

To make matters more difficult, we don’t need to assume bad faith on the part of anybody when the loan was taken out and when Mr. Siegel first matriculated. He and his mother probably really intended to pay back the tuition. The loan officer and the bank he worked for probably really believed that going to college was a good thing and that the loan would help Mr. Siegel. The program of government guarantees for loans was designed to help people like Mr. Siegel to expand their opportunities. The impressive statistics the small liberal arts college offered probably were accurate. And for all I know, maybe that particular college was responsible–expensive, but mindful of costs and really making an effort to give its students real value for their tuition dollars.


Category: School

About the Author

Gabriel Conroy (conroy, fka Pierre Corneille and corneille1640) is an ex-graduate student. Now he writes blogs! He has a solo blog--Ye Olde Republicke. The views expressed by Gabriel (or Pierre, or corneille1640) are his alone and do not necessarily reflect those of his spouse, employer, or his co-bloggers at Hitcoffee.

72 Responses to Sympathy for the defaulter

  1. Grrrr….I hit publish too soon to write a proper conclusion. But I’ll let it stand.

  2. trumwill says:

    You can give it an “Updated!” with the conclusion. It’s the weekend. There’s always more breathing room on weekends.

    • Well, I’m also lazy, too. Never discount laziness.

    • Another problem is that at work, I’m helping to write content for a wordpress website (not a blog) and because the site isn’t live, I “publish” it repeatedly as I write because that’s the only way to really save my content as I work. I don’t know if that’s true of all wordpress websites (as opposed to blogs, where one can save a draft), but because the platforms look similar, I probably on some not wholly conscious level think I’m working on the website and not the blog.

  3. trumwill says:

    I don’t especially have a problem with the administration retiring the debts of the Corinthian College students, largely for the reasons you outline.

    Seigel, of course, seems factory-designed to elicit as little sympathy as possible.

    They’re both extreme examples (though the former is more common than the latter). But my degree of sympathy kind of follows along that spectrum.

  4. Seigel, of course, seems factory-designed to elicit as little sympathy as possible.

    That’s one of McArdle’s points, too, if I recall. I’ll give Siegel props for being honest and not pleading poverty or other attenuating circumstances when those circumstances don’t apply. That’s still not enough, in my view, to be particularly sympathetic to him.

  5. Oscar Gordon says:

    I’ve zero sympathy for Siegel, although I have some, perhaps, for his parents (if they truly were neophytes with regard to school).

    Slick university advertising material is a non-issue, although deceptive or exaggerated claims are different.

    Honestly, aside from places like Corinthian, that are outright lying, I think people like Saul, or rather his ideal with regard to the purpose of college, are an issue. There is a romanticism towards liberal arts study that just ignores reality. It might be nice to spend 4 years studying all that which intrigues, but the reality is that such study, without careful consideration & career prep, does not necessarily result in employability.

    Think of it this way, it would be awesome if everyone could drive a BMW, but the dealership & the bank aren’t going to let you leave with unless they are pretty sure you can pay for it. Obviously we can’t do that with an education, since you can’t repo a degree, and with loan guarantees, the school has no obligation to investigate your ability to repay, so its on the student to do that due diligence (something most new adults are ill equipped to do).

    Perhaps we need academic insurance, where policies are underwritten to pay for student loans should the student be unemployed after college. Underwriters would set premiums based upon academic success, relevant legal issues, degree sought, school attended, etc. & could offer advice & services to students to ensure academic & career success (& avoid payouts)

    • I have a lot more sympathy for 17-year-old Siegel than for whatever-year-old-he’s-now Siegel. And I guess I have sympathy for anyone who’s made bad choices and now has to live with those choices. (And despite Mr. Siegel’s refusal to pay, he’ll still have consequences to live with, unless there’s some sort of bailout.)

      I do agree with you about the dangers of the liberal arts romanticism that Saul and others sometimes engage in (and that I used to be just as guilty of). At the very least, someone going into Liberal Arts should go in knowing the degree doesn’t sell itself.

      I wasn’t sure if you were being tongue-in-cheek, but idea of academic insurance sounds like an interesting one. Would there be a workable way for the government to promote such schemes, or at least encourage insurers to start doing it?

      • Oscar Gordon says:

        The insurance idea just occurred to as I was writing the comment & thinking about how to best handle the problem of the first kid to go to school running up against administrators & advisors blowing rose scented smoke up their asses.

    • Also, I think I feel differently from you about this:

      Slick university advertising material is a non-issue, although deceptive or exaggerated claims are different.

      I may write a post someday to elaborate, but I tend to see that even non-deceptive and non-exaggerated claims can still be a problem that enters into my “should I have sympathy for ’em?” calculus. That doesn’t mean I think honest claims, honestly given, are to be punished or outlawed, just that I think even when things on the surface are aboveboard, there’s some level at which they’re not good.

      Of course, my “sympathy” is pretty cheap. My feeling “sympathy” doesn’t do much for anybody.

    • Michael Drew says:

      I think we should be careful before concluding exactly what Saul thinks on these subjects. Often he’s resisting resistance to X more than prescribing what he thinks particular students or some number of students should do. For example, he recoils from people he perceives as party people who have no interest or even awareness of the classical value of university, but that doesn’t mean he thinks all of them should “go into” liberal arts. (It doesn’t mean he doesn’t, but I don’t think he does.) I think he’d like everyone at college to buy into the value of liberal arts and the classical ideal of full-person development that higher education holds out, but that doesn’t mean he doesn’t want for there to be business schools or for people to get practical degrees. Buy-in to liberal arts at major colleges is entirely compatible with attaining even the most career-focused degrees, but students have to actively buy in (elect!; “Electives”!) in order for it to happen. As far as specific concern with the abandonment of liberal arts, I think that is largely what Saul is concerned with – that, and popular discouragement for students who would be otherwise inclined to to :go into” liberal arts. It’s one thing to have an agenda that people who don’t want to do so should for some reason focus on (i.e. get a degree in) the liberal arts. (I don’t think Saul has that agenda or ideal at all.) It’s another to react against overt discouragement from doing so in the case of those so inclined, or to be concerned that large swaths of college students have no awareness or interest in engaging with the classical subjects taught at university even as a matter of one-off exposure.

      • Oscar Gordon says:

        Its less the pursuit of liberal arts & more the ideal of education for its own sake, or as personal betterment with no serious focus on career. The gentleman scholar is a nice ideal, but on its own its a luxury good these days. If you have to take out loans for college & you do not have a career that pays well already established, then you should either focus on degree that leads directly to a career, or you need to be doing career development from day one of freshman year.

        • Michael Drew says:

          I don’t think Saul holds out an ideal of education for its own sake, or for personal betterment only, or certainly with affirmatively no career focus. I think that he assumes people in general go to college with the plan of trying to develop a career that will provide a good life, and that he thinks that is what they should do (buying into the value of the liberal arts/sciences as supplements along the way, at least in the case of people who enroll in institutions where that was once the ideal.) I don’t think Saul has anything other than a model in which a degree leads to a job.

          I do think he;s a bit more forgiving of kids who don’t get focused in the way you;re calling for as quickly as you;re calling for them to do, and I think he laments that career track jobs for people who complete bachelors’ in liberal arts (maybe journalism and the other “content creation” as the paradigmatic are drying up. But that doesn’t mean that he doesn’t embrace the model you describe, where degree leads to job, i.e. that he embraces an education-for-it;s-own-sake model (that’s more my attitude!, but then I won the state scholarship that paid at one time 100% of UW tuition for valedictorians, though it had been capped at like 70% when I got it.). The issue is more that he’s slow to accept and adjust to changes to what skills and skill levels are remunerative these days, and has indulged in a good bit of pining for a time when there were more jobs for educated but not highly-specifically-skilled information workers. But that;s far from a completely different model for the purpose and value of education from the one you espouse. I think what you describe in broad strokes is the model he embraces. He just hasn’t updated his understanding of what this decade’s economic realities mean for how that model has to be executed in order to still work. That’s a different thing.

        • Oscar Gordon says:

          First off, I picked Saul as an known example, but he is not alone, or even the more damaging of persons who hold this ideal. I don’t mean to pick on Saul directly.

          While I don’t disagree with you entirely, I’m pretty sure Saul has said that his preference is education for it’s own sake, which I admit to being a noble goal & ideally, a preference I share in the abstract.

          His continued lamenting for such, or, if you prefer, his lamenting for middle class careers that came about just from having a degree, without needing that specific or technical degree, is a whole lot of “Back in my day” from a guy who is not actually old enough to have been alive back in that day. However, there ARE a lot of people still alive, still giving out bad advice from that same ideal, because they imagine they did live during such a time. Except they didn’t.

          Those jobs, the ones Saul imagines existed, were rare as hens teeth even back in the day. Such jobs, those that were middle class & could be had for a degree, even in an unrelated field of study, were jobs whose skill set was easily learned, or were jobs given to people who had the skill set already, or were given to people who were otherwise known or vouched for.

          When I managed the student computing facilities at Grainger Hall, I needed a degree in order to qualify for the position, but any degree would do (although STEM degrees were preferred). So technically, the position fits the ideal of a job that can be had for a degree, any degree. What is left unsaid is that if I hadn’t had 5 years of IT admin experience under my belt, as well as management experience from being a Non-Com in the Navy, as well as the glowing recommendation of two previous IT positions I had held on campus, I never would have gotten the job.

          And this is what I mean when I talk about laying career groundwork from the word Go. No one, & I feel pretty comfortable saying this, pretty much NO ONE gets a job (that is not an internship or co-op) on the strength of the degree alone. Some degrees are worth more than others, but even the mighty STEM degrees are not enough to get you an entry-level middle class job all by themselves. The student who graduates high school, and gets an engineering degree, but held no relevant jobs, or worked on no relevant projects, or did no relevant independent work that can be shown, or has done no networking, is going to struggle to find work, especially in our ever-technical economy. Hell, even back in the fabled day, you’d need to demonstrate at least some kind of moxie to get the attention of a hiring manager.

          If the only thing on your resume is a degree & some minimum wage work, that degree is going to be next to useless. All that extra stuff, the teams, the projects, the networking, the moxie, that’s the stuff the actually gets you hired.

        • Michael Drew says:

          Personally I find the kind of intense career focus you’re describing from jump to be vanishingly rare for people of that age (maybe outside the military and the most intense career-focused degree tracks). I think most people have the kind of general hope that a decently skills-focused agree will aid them in finding a job that will get them to a decent living.

          Point being, I’m not at all sure why to single out Saul for that attitude. You say you don’t really mean to, so how about just… not? It seems like Saul has attracted ire more for being a defender of students studying at least some liberal arts in college, and for defending highbrow culture. The idea that he’s at all remarkable for generally hoping college leads to jobs but not being exactly sure how that works seems just baldly unfair to him given over all attitudes on the point.

          And as for holding out education for its own sake… well, we all probably do to an extent, whether it’s personal reading, continuing ed, or electives at college, right? Saul wanted to be a theater director, and that’s what he went to school for (I think). So I don’t think there’s reason to hold him out as a particular exponent of not directing your education to a vocation. But he does hold out the value of getting liberal arts exposure if you’re going to go to college. That makes him… a lot like just about everyone else who goes to college, doesn’t it? Varying only in relatively small degree of exactly how much he values it?

        • Michael Drew says:

          … And I’ll reiterate that it’s not the worst thing in the world to use Saul as a stand-in for a set of attitudes or views you want to highlight.

          But I guess I’m inclined to ask how does it helps communication at all, really. It’s hard to pin down exactly what Saul thinks. Instead, you could just describe the views you actually are talking about.

        • Oscar Gordon says:

          I like to use concrete examples when available. If there is an idea or ideal & I have an example that I feel represents that idea or ideal, I’ll employ it. It forms a stronger argument than just saying “those people who think X”, especially since one could then counter that “those people” is a figment of my imagination. Which I why I picked Saul. not for any real ire or animosity toward Saul, just because he’s a known quantity that expresses the ideal in question.

          And I am wondering where you get the idea that I am against or somehow devaluing the study of liberal arts? I’m not. I am a firm believer that there is considerable value in such study, and I think a lot of STEM programs do their students a disservice to de-emphasize such. I myself took a few extra L&S classes at Madison specifically because I saw the value to it outside of the technical aspects of my degree.

          My point, the one I’ve been making all along, is that if a student is going to spend 4 years in a course of study that is meant to expand their economic & intellectual opportunities &, during that 4 years, gives nary a thought toward career development, or whose thinking manifests as some these of “I’ll figure it out later, or leave it to fate”, I am going to have a very hard time feeling any sympathy for their financial plight, indebtedness or otherwise.

          And no, I don’t expect a newly minted adult to have vocational focus. I did, but I know I’m a rare bird. My wife spent almost a decade figuring out what she wanted to do, and she’s still exploring in a fashion. But she still had a plan for a career once she was done with school and ready to re-enter the workforce, and once she had a plan, she started to take actions to make it happen. Hell, she even changed directions a few times as the previous plan became unworkable.

          So go to school, study what you will, but have a plan for when school is over & the bill comes due. And since young people are notoriously bad at planning ahead, I fully support exploring ideas like Academic Insurance, or forcing schools to have skin in the game with regard to the ability of students (successful or not) to pay back loans. When they aren’t otherwise lying about job placement, schools treat career advising pretty cavalierly, and if they are going to take student loan money & raise tuition rates under the promise that they are making more productive citizens, then they should back that claim up with serious effort, not minimal staffing and thin services.

        • Michael Drew says:

          But just alluding to Saul doesn’t help the concreteness of what you’re talking about at all. It just makes it about a guy. If you want to find a quote, great, but I don;t think there’s a quote from Saul that really gets to what you’re saying here. It’s more just an impression of his overall set of values that I think causes you to mention Saul. And that muddies the actual views you want to critique more than makes them concrete.

          And I haven’t at all said that I think you devalue liberal arts study. What I’ve said is that I think Saul has attracted a lot of attention Over There for defending it, among other things, and for whatever reason that causes his name to be brought up when people want to ake points like the ones you’re making here. When in fact neither the points you’re making require you to disagree with him on that point, nor do we know that Saul disagrees with what you are saying here for other reasons. Maybe you raise his name for other reasons, but it’s not fear to me what they are. We’ve already death with the ‘education for its own sake’ view – Saul may have it, but then we all do (or most of us) at some level, and I certainly deny that Saul thinks that education should be exclusively or even primarily for its own sake, meaning not to aid in career development. Si it;s really just degrees of difference there.

          Generally, there is nothing clarifying or concrete about raising what Saul thinks on these matters to identify views you want to talk about, because to my mind he is always giving his thoughts on these matters in response mode. He’s defending liberal arts from what he thinks is a STEM tide devaluing it; he’s saying there needs to be a place for education for its own sake preserved within the imperative for increasingly career-specific learning. When he makes these points in that context he inevitably comes off as a strong advocate for liberal arts or for non-career-focused education, but we would need to get him out of defense mode to find out what he really thinks are the proper roles for these things in education overall.

        • Oscar Gordon says:

          I think you are overly focused on Saul, especially since I only mentioned him in passing; but fine, whatever, forget I mentioned Saul if excluding him is so important to you. I tire of this rhetorical ploy.

          My points still stand.

        • Michael Drew says:

          I can forget you mentioned Saul, but then I’ll know even less whose or what “ideal with regard to the purpose of college,” it you are talking about, which “are an issue. There is a romanticism towards liberal arts study that just ignores reality. It might be nice to spend 4 years studying all that which intrigues, but the reality is that such study, without careful consideration & career prep, does not necessarily result in employability.”

          Having an ideal about these things in one thing; colleges simply sucking at career prep is something else. And actually, Saul has made that latter point himself, if I recall. Getting kids to understand all things you ar talking about that are necessary for career preparation is hard work. That schools aren’t getting the job done isn’t the same thing as a persistent ideal beyond the fringes of a liberal arts education that isn’t even intended to aid in finding a career (nor that Saul De Graw holds such an ideal).

          I do take your point that it helps to be concrete about what people think and what is going on. But I suspect if we do that, we find that the problem is that universities are having a hard time implementing programs to successfully prepare students for careers despite trying, not a commitment to liberal arts education for its own sake (though I suspect a number of older tenured professors in the humanities are obstacles to the effort for that reason).

        • Oscar Gordon says:

          Yes! Someone has to teach upcoming generations how to succeed in finding a career. I think parents struggle with it, either because things change faster than they can adjust to, or they mistakenly assume that colleges will take care of that.

          In the latter, I don’t blame the parents, because colleges make the claim that they prepare kids for careers. Except they don’t.

          The military does. Hoo Boy do they ever. When you are getting ready to separate from service, you are required to attend about 2 weeks of extensive career counseling, where your service record is gone over in detail and your options (given your various training & experience) are laid out. You also get training writing resumes & cover letters, and you attend mock interviews, which are then critiqued. You also get help with dressing for success. I never knew I was a summer, and what that meant, until I was being discharged. I learned about suits, and belts, and shoes, and proper fit, etc. When the military says they prepare you for a career, they mean it.

          Don’t recall anything like that being offered in general while I was in school (I know the Business School did, for certain grad programs).

          So yeah, schools are failing at such things, while getting rich. They need to feel the pain of that failure. It doesn’t even require them to tell History majors that they wasted 4 years, because it will incentivize the school to sell the value of a History degree to employers.

        • Mike Hunt Ray Rice says:

          I don’t mean to pick on Saul directly.

          But it’s so fun.

          Someone has to teach upcoming generations how to succeed in finding a career.

          Why? After all, it is a zero-sum game. For everyone who gets a leg up in order to get a job, there is someone who doesn’t get that very job.

      • Michael,

        I think you have a good point. His view is probably more nuanced than what I tend to acknowledge in the heat of the “college isn’t for everyone” discussions Over There. I disagree with him a lot, about formal education and others, but if he sometimes advances positions that on the surface are easily criticized/caricatured, I should admit I sometimes get backed into corners and say things I regret or have difficulty standing by, too.

        At any rate, and speaking only for myself, it behooves me to be chary before criticizing his stance further right now, because he’s not here to defend himself and because the run-ins between him and me are as much a result of my own decisions to escalate the discussions as any stance he stakes out. That doesn’t mean I’ll never address any of his arguments or ideas here, just that I want to tread slowly and be mindful that I don’t want to misrepresent him.

        In other words, point taken.

        • Michael Drew says:

          To my knowledge you didn’t even bring Saul up; I was addressing Oscar doing so.

          I actually don’ think it;s the worst thing in the world if you guys want to come over here and use Saul as a stand-in for a set of view you have a problem with. I’m just pointing out that on this topic, I think those who critique Saul here and There haven’t managed to identify what he actually thinks quite accurately.

      • bluem says:

        Saul comes up in these conversations because he is the perfect example of what college-skeptics are talking about.

        People who go to college are already given virtually every advantage socially and economically, but Saul’s position is that it’s still not enough. They shouldn’t just be more respected, but more revered. And they shouldn’t have to contend with debt, because that is unbefitting of a righteously privileged class.

        Now, he does seek to extent this privilege to others. He’s indifferent, though, to the privilege actually becoming a requirement. He takes that for granted, because that is the natural order of the world. His should be privileged, and if others want to be privileged they should do what he did. It’s the natural order. Those that don’t want to clearly don’t want to out of spite for him and people like him, and in his view they’re the ones operating from a privilege of position, because they don’t recognize the obvious superiority of those with his inclinations.

        While engineers should submit themselves to his interests, it is an imposition that he should submit to theirs, including math which is one of the original liberal arts. And it’s unfair that engineering should be more highly prized in the economic marketplace because, in the natural order of things, it is he and his that should be privileged. If the market does not do this, it is indicative of a market failure.

        This becomes evident in his rotating arguments in favor of college. He argues that college should not be vocational, but also argues that the job advantages provided by college are indicative of the need for everybody to go. But the job advantages should come less from having learned applicable skills, but from people having gone being more versed just as he happens to be.

        That’s why he gets under people’s skin. He wraps all sorts of privilege in the banner of liberalism. he takes his exalted position in social society and expresses that it is not enough because it’s not universal enough. That his aspirations are the righteous ones, and those who don’t share them are some degree of wrong.

        I genuinely admire his ability to keep taking the hits and getting up for more. I think it is, in his own way, a desire to escape the provincialism he embodies. But we should be pretty clear on why exactly he’s taking the hits that he is.

        He may or may not agree with this summary of his worldview, but whether he verbally says it or not, it’s at the foundation of almost everything he says.

    • Oscar Gordon says:

      Allow me to add one anecdotal to this already long thread:

      I made the mistake I am admonishing others for. I gambled on the strength of my degree alone to land me an engineering career, and it failed. I had to return to IT for another 5 years while I went to grad school before I was able to get the job I wanted.

      But, and this is critical to the discussion regarding career building, I DID have job offers right out of college for good, entry-level/middle class salary engineering jobs. But they were in very undesirable locations, for my wife & I. If it was just me, with no spouse, and no other obligations, I would have jumped on at least one of them, moved to the location, worked my tail off to overcome the shortcomings of my resume/CV, and then sought out a position that better aligned with the lifestyle I wanted for myself.

      In all of the discussion surrounding this issue, the reluctance of people to relocate to less than ideal locations for opportunities is boggling. I get that the desire to live where you want, I loved living in Madison & I toyed with the idea of staying in IT just to stay in Madison, but IT work was making me miserable, and despite a world class engineering school at the UW, Madison was light on engineering jobs. I almost took a job at GE Global Research in Schenectady, NY, not because I think upstate NY is a place I want to live (it so very much isn’t), but because having GE Global Research on my resume would open a whole lot of doors down the line. As it was, Boeing was also such a door opener, and the Puget Sound was on my list of places I would want to live. But that was as much luck as anything else.

      The point is that opportunities don’t just show up out of the blue very often, sometimes you have to search far & wide for them, sometimes you have to travel long ways, and sometimes you have to take them strategically. I strategically took an IT opportunity that would allow me to better position myself for the career I wanted while living in a place that didn’t suck. I could have also taken an engineering opportunity in Orlando (a place that sounds like Hell to me) that would have involved 75% travel. It too would have better positioned me, had I been single.

      Finally – McMegan has a link to a piece she wrote about New Mandarins, which was a good read.

  6. Dr X says:

    I also found Seigel alienating.

    But your descriptions of youthful naivete and the ease of taking on loans that a young person thinks he or she can work out later, plays into the kinds of decision making errors that human beings are prone to making. On that account, I have sympathy and see some need for relief in some and perhaps many cases.

    Frankly, I’m not really sure what we should do about student loans. I think they have driven up the cost of education. I’m shocked by the skyrocketing costs since my days in school and it wasn’t all that cheap when I attended.

    To make the loans available to all, the loans are guaranteed, but that creates serious moral hazard. So what should we expect? Lots of defaulting or a lot of people struggling, living seriously compromised financial lives for many years, if not perpetually.

    While the banks are encouraged to loan by guarantees (free money), the schools have reasons to sell their programs and minimize attention to risks of loans when appealing to a young person who doesn’t yet understand the gravity of decisions they’re making. To note that some kids understand and handle these decisions, doesn’t address the fact that many people just don’t get it. And often their parents don’t get it.

    I think this is more or less what you’re saying, GC.

    One other way to look at this.

    Loans are available to help a growing subset of people who can’t afford college at a time when making a decent living increasingly requires a college degree.

    So we make college available to those who can’t afford it, but on the back end we create a population of people who have a degree in hand, but can’t afford college. It’s become a nightmare for them.

    We haven’t really eliminated the problem of increasing need for college degrees and lack of affordability. We’ve just transferred lack of affordability to the back end and maybe somewhat redistributed the lack of affordability.

    No answers here, but moralizing that this subject can sometimes elicit is also, for me, alienating.

    • trumwill says:

      All of this plus the students who don’t end up graduating, saddled with the cost of the debt but without the benefit of the degree.

    • I certainly agree that a solution is hard to come by. I also agree that moralizing the issue can be alienating, whether it’s from the Mr. Siegel’s quasi-populist jabs at an “immoral” system or from someone tsk-tsk’ing about people being deadbeats.

    • Michael Drew says:

      Can we not act like the solution is completely opaque please? It might not be what we want to do, but it isn’t invisible or a null set. Rich countries all over the world (and we’re basically the richest country) solve the problem by paying for kids to go to school, more or less. Publicly – – whether by just not charging for attendance, or by subsidizing cost of attendance. If that’s not what we want to tax & spend on, fine, great, that’s who we are, but let’s not act like there’s just nothing we can even conceptualize that could even deal with the problem of having a lending system rather than a public higher education spending program.

      • Dr X says:

        I don’t think it’s as simple as you’re making it Michael. For example.

        http://qz.com/85017/college-in-sweden-is-free-but-students-still-have-a-ton-of-debt-how-can-that-be/

        • Michael Drew says:

          It’s not perfect or a panacea, but there are also other life factors that affeft debt levels:

          And yet, students in Germany and the UK have far lower debts than in Sweden. And 85% of Swedish students graduate with debt, versus only 50% in the US. Worst of all, new Swedish graduates have the highest debt-to-income ratios of any group of students in the developed world (according to estimates of what they’re expected to earn once they get out of school)—somewhere in the neighborhood of 80%. The US, where we’re constantly being told that student debt is hitting crisis proportions, the average is more like 60%. Why?
          Freedom isn’t free

          College in Sweden is free. But rent isn’t. And food isn’t. Neither is the beer that fuels the relatively infrequent, yet legendary, binges in which some Swedes partake. Costs of living in Sweden are high, especially in cities such as Stockholm, which regularly ranks among the world’s most expensive places to live. But again, this stuff isn’t free for students in other European countries either. So why do Swedish students end up with more debt? It’s pretty simple, actually. In Sweden, young people are expected to pay for things themselves instead of sponging off their parents.”

          This isn’t an argument that nullifies the way in which free higher education would greatly mitigate the contribution of higher education to debt.

  7. fillyjonk says:

    The thing is, I have heard a few students talk of planning to default on their loans. (One was a non-trad student who figured they’d be dead before the government could track them down). I find that more than a little distasteful. (And I teach at a school that prides itself on being relatively affordable).

    I don’t know. I had a lot of advantages in re: college. My parents had gone and they knew their way around all of the paperwork. And I earned merit scholarships. AND I had money left me by grandparents, so I was one of the few who didn’t have to take out loans…..so maybe I have no right to speak on this.

    But still. I think taking out a loan with the feeling “in your heart” that you’re not going to pay it back and gambling that either the government will go all generous, or won’t be able to find you….well, that’s effectively criminal, isn’t it? Planning to breach a contract?

    I would feel differently if students got partial forgiveness in return for low-paid public service; for example, I know of doctors who go to “underserved” areas to work.

    • Like you, I’ve had a lot of advantages (though slightly different ones) and didn’t have to take out loans for my BA or MA. And I suspect the amount I took out for my PHD–while enough to make me nervous–probably didn’t equal what Mr. Siegel had to take out for his two years at the private liberal arts college. Also, while the loans are in some way a burden, they’re a burden my spouse and I can meet relatively (to other debtors) easily.

      In other words, maybe I’m not qualified to comment too much on those who default, either.

      I do agree that taking out the loans, intending to default, is wrong.

    • trumwill says:

      The clever students are likely in for a rude awakening. Even apart from the moral considerations, it’s just bad advice.

      Over at Outside The Beltway, some people were actually defending the guy and saying that the game is rigged because there’s no discharging student loan debt. But you know why there’s no discharging of student loan debt? That guy is why.

      • Michael Drew says:

        I don’t think that guy is why. Why would people who take out student loans be more inclined than others to default? An education loan should be more likely to create the value to allow its repayment more reliably than, say, a car loan, no? Surely auto lenders know that some people take out car loans with the intent not to repay them Yet car loan are dischargeable. I think student loans are not dischargeable because the government basically makes them happen by backing them up, and by financing higher education that way has created such a large bubble (and inflated costs so much) that it simply can’t allow the simple act of bankruptcy to turn all those assets bad just like that. I don’t think it’s because on an individual basis people are for some reason more likely to run out on an equal amount of student debt compared to other debt.

        I certainly agree that people who take out student loans on the theory that it’s cool they’ll just default are buying a world of trouble.

        • trumwill says:

          I mean he makes it politically impossible, not fiscally. I’m in favor of a sort of dischargeability (after x-years), but the Siegel scenario is what I run up against whenever I have talked about it with people. And that was mostly before Siegel’s piece was even published.

        • Mike Hunt Ray Rice says:

          Surely auto lenders know that some people take out car loans with the intent not to repay them Yet car loan are dischargeable.

          That’s because if you default on your car loan, they can repossess your car. They can’t repossess your diploma.

        • trumwill says:

          Right. The lack of any collateral whatsoever makes student loans different from houses and cars. It’s one of the reasons why I would treat it differently even if we allowed discharge.

          What makes them different from credit card debt – which also generally lacks much in the way of collateral – is that student loans are easier to strategically default on. You accumulate a lot of debt in a very short period of time, during which you are not expected to make payments.

          Which is why I think if we make student loans dischargeable, we need to add specific provisions such as a minimum time before they can be discharged.

        • Michael Drew says:

          These are structural reasons why it’s not the fault of people who are simply honest about the emotional path they took after incurring the debt.

        • trumwill says:

          There are two sets of problems, the logistical and the political.

          The logistical problems are strategic defaults and the fear thereof. It’s unlike most comparable things in that regard. Personally, I think we can figure something out, which is I prefer dischargeability after a time. In part because I think most people are disinclined to strategically default.

          The political problem is Siegel. It’s hard to convince people that “No, strategic defaulting is not something we can’t work around” when people like Siegel make the arguments they do. He’s making the other side’s case for them, making his argument in as unsympathetic a manner as I can imagine.

        • Michael Drew says:

          I think this is totally wrong.

          If you make it dischargeable, a certain percentage will seek the game the system, and another percentage will choose bankruptcy in the event. That reality staring policymakers in the face is what makes going to dischargeability politically impossible.

          The emotional honesty of someone like Siegal who simply describes his bpath to becoming one of those people, first of all, should be welcomed because it is an honest illustration of the way those incentives play out, and second, no it’s just not the reason why the policies politically have to be what they are around this. Maybe people will look at his individual attitude and not like it, but I think they think that students go into to it with good intentions, and this article won’t change that. The problem is the structural realities they confront, which would make Siegels out of thousands of students, 90% of whom, like Siegel, didn’t set out to be a Siegel. Policymakers know that; that is the obstacle.

          I don’t even find him that unsympathetic, but I certainly find his honesty sympathetic.

        • trumwill says:

          I don’t even find him that unsympathetic, but I certainly find his honesty sympathetic.

          I don’t think the NYT could have found someone less sympathetic if they had tried, and it seemed to go over accordingly. Too good for state school, too good to work plebian jobs, could have paid it back but thinks he’s entitled not to. As I said in an earlier comment, it’s like he was factory-designed to make the opponents’ argument.

          But if you can’t see it that way, our views here are irreconcilably different.

        • Michael Drew says:

          He got into a private college, then had to transfer to a state school because of finances, about which he says nothing about being too good for.

          His unwillingness to work at what was not intended to be his career is something I certainly don’t find laudable, but it’s something I relate to, and in that sense am sympathetic to to a degree. I think that the attitude that work outside of one’s profession after a certain is a real existential difficulty is one that sort of had some currency in times before and into Siegel’s generation, and so there’s something of a generational divide on display here on that score (not that it’s past surrency made it sympathetic at that time, either. BUt also generally it was not accompanied by so much student debt.)

          Anyway, on balance on balance I do find his decision unsympathetic, but not thatunsympathetic. The reasons he gives for it (thogh not the decision to blithely default) makes him merely reflective of the pressures faced by lots of grads today. That’s why I don’t take this act of honesty as a causal reason for why the policy is what it is. Everyone knows these are the pressures that are coming to bear: a bit of honesty about how they can play out to my mind is surely not political determinative.

        • trumwill says:

          He transferred back to Columbia, and then stayed there through two graduate programs. I thought he’d mentioned that in his piece. I suppose you could say his omission of it might have been meant to be tactful. Or, like some of the other things he didn’t mention (Columbia!) or glided over (the extent of his post-graduate education), it didn’t help his case.

          A single NYT opinion piece isn’t going to be the determining article in the discussion. But Siegel is almost exactly what opponents are worried about. If everybody in a worse situation than he is in defaults, the system collapses. Possibly, one of the main things preventing that from happening is that we make defaulting unusually difficult. While I don’t think it would happen that way, it’s despite instead of because of people like Siegel. And the argument will need to be made that those we’d be helping are not like him, but people like the Corinthians.

  8. Peter says:

    Student loans should be abolished. Far fewer people would be able to go to college, which would be a GOOD thing – college degrees would actually be worth something once again. Most young people probably would be better off entering the work force after high school.

    • trumwill says:

      Not a big fan of means being the primary determinant of who goes to college. I’m not as concerned that less people will go to college (though I’d want to know how many less) as I am who wouldn’t be going. If it got rid of most of those who don’t graduate anyway, I’d consider that a plus. I fear it might get rid of kids mostly according to class. (Unless I am underestimating what banks would do.)

      At the very least, I would want to be a lot more aggressive about merit-based scholarships, and I would probably want to subsidize the least expensive forms of higher ed as much as possible (to allow people who didn’t live up to their potential in high school to “get serious” at a community college to prove themselves for some of the merit aid.

      • Dr X says:

        I like these ideas. Merit based scholarship, and I’d say with some sort of weighting of class rank to consider context given that kids come from widely varying community and educational environments.

        I have a wealthy friend who sends her kids to a top private school. They also get private one-one-one tutoring every day and they work extensively with a private college prep adviser every step of the way in the last two years of high school. Her eldest is about to graduate from a great college, well positioned for several solid graduate school options.

        Interesting thing is that my friend says the whole thing is unfair. Her kids have an enormous leg up and she knows it. They’re around smart kids, a rich social world full of options, and a variety of worldliness that primes one for integration into the culture of higher social and economic standing. These kids are comfortable talking with partners at major law firms, surgeons, college professors and investment bankers. So in looking at merit, I think some consideration of social and economic origin should contextualize rankings for the purpose of awarding these scholarships.

        Also, I like a cheaper option for the late bloomer and underachiever to have another chance to get their footing. Adolescence is hell for more than a few kids. I think community colleges provide the ground work for further developing that second chance for the underachiever who wasted potential on adolescent misery.

        • trumwill says:

          Well, if I am made king, I would have three tracks:

          1) The Ready Track. This is for merit-based scholarships, and for the most part performance would not take individual circumstances all that much into account. The kids with advantages are going to be strongly advantaged into getting in this track. Fair or not, they’re likely to be the most ready for college at any rate.

          2) The Promising Track. This is for kids who outperform their peers. Their academic record indicates that they might not be ready for State U, but taking their circumstances into account they’re more likely to be college material if given the opportunity. They go to Community College, but with a rather generous package with a stipend that allows them to focus on their studies. If they do really well, they can jump tracks at the end of a year. If they do pretty well, they jump after two. (Many may elect to stay here for two years due to the generous package, even if they’re eligible to jump and receive a scholarship.)

          3. The Catch-All Track. This is for those whose academic profile (and personal circumstances) for whatever reason do not indicate that they are likely to succeed in college. Some votech would be here. “I screwed up but am ready to do it right” would be here. “I want to get transferred into accounting at my current job and so I want to take an accounting class” is here. If you’re pursuing a low-cost option, there may not be a stipend for you but the classes themselves would be pretty cheap. If you want to get a college degree, you might be taking night classes for a bit before you’re building up an academic profile to qualify you for a merit-based scholarship. At some point, persistence here is likely to count for something, if you’ve got it.

          This is all hopelessly vague, and the devil is in the details. But this is the general framework of what I would like to see. I’m not comfortable with rigid European and Asian tracking system (American exceptionalism!) but I’m also not comfortable with the current model. This would reward the talented and the persistent, and perhaps for others encourage them to take a different path.

      • Peter says:

        Using income as the bait of restricting college access is a poor way of doing it, but it’s the only way. The government cannot directly force half or more colleges to close, but it can achieve that goal by eliminating student loans.

        • trumwill says:

          I guess some of this goes back to whether we think too many people are going to college, and if so how many too many. I think too many probably are – the wash-out rates being a big indicator – but I don’t think we’re talking about half or more of colleges by any stretch, unless we’re talking about the for-profit business park schools, and/or I am underestimating the sheer number of private liberal arts schools.

    • Mike Hunt Ray Rice says:

      I think government-backed student loans should be abolished. If banks or colleges want to give them out without any guarantee they would be repaid, that should be on them to decide.

  9. superdestroyer says:

    I am less sympathetic to students who overextended. Did they not pay attention to the high school classes ahead of them? Did they never see students who returned to their hometowns with the proverbial tail between their legs due to academic failure or immaturity? Did they never see a child of a family friend, fellow church member, or neighbor who ended up with a worthless degree?

    In my hometown, the local wedding announcements use the euphemism of “attended” to describe someone who started out in college but never finished. Reading the local newspaper, something that liberal arts students should have been doing in high school, would have notice such things.

    • It might depend on the social class of the person involved. In some cases, it wouldn’t surprise me if a large number of people really didn’t see those a few years ahead of them who overextended or otherwise didn’t succeed at college. I’m also just inclined to give 18-year-olds a pass that I wouldn’t give to, say, 25-year-olds. By “pass,” I don’t mean “carte blanche,” just am a little less willing to judge, not that anyone said I had the right to judge anybody.

  10. Michael Drew says:

    If the loan system were to collapse it’s entirely possible it would be replaced with a subsidy/grant expansion program – either to students or to institutions. The same political pressures to deal with offshoring and other economic forces by promoting education that have built up the student loan bubble would persist; it;s entirely possible that the political system would respond. It’s not like it’s that far out-there a proposal, either: it’s how most of the rich world funds higher education.

    So mass defaults on student loans leading to the collapse of the lending system don’t necessarily mean denying lots of people education they’d otherwise get past the short term.

    • trumwill says:

      Possible, but most of the scenarios I see are not the ones where Siegel envisions, which is that the government pays for him to get his degrees from Columbia on the government’s dime. We could become like a lot of other countries and more selective about who goes to college, which of course I would consider a bonus! It might renew some of the merit-based talk from the nineties (like Georgia and Massachusetts have). I don’t foresee college as a nigh-universal ideal continuing as it presently does. There are some good options.

      It’s also not hard to imagine some less rosy scenarios. College could become like health care, where it’s tethered to an employer. Colleges could increasingly segregate by class as lower-class students eligible to go to better schools increasingly go to lesser and cheaper schools.

      If student loans are the crutch, kicking out the crutch can lead someone to walk or crawl. A non-deliberate change caused by the failure of the current system can go in any number of directions.

      • Michael Drew says:

        I don’t love the choices that would have to be made, but I don’t think the current debt burdens are sustainable, and what’s unsustainable won’t be sustained. Obviously I’d prefer an orderly transition, but I guess I’d prefer a disorderly transition to something I like to an orderly transition to something terrible.

        In terms of low-income, qualified students going to Columbia, ultimately the Ivies and the highly selective will have to look in the mirror and ask themselves whom they are for. The government can’t subsidize attendance at current prices, and students just aren’t going to be able to continue to shoulder the kind of debts they are taking on, especially students from families with little wealth. ONce they’re forced onot to offload the cost of their interest in having an economically diverse student body, I think these institutions will find ways to bring these students in while managing the costs themselves. I suspect the numbers of such students won’t be that much different from what they are today.

        I do think this will mean an outflow of students from flagship state universities to the system schools, (if all were now subsidized), and then system/directional to community college, etc., as states would have to set up better merit-based systems to determine who gets those spots. That seems like what should happen anyway, to me.

        • trumwill says:

          I think the current debt is quite sustainable, if not optimal. It’s the rate of cost escalation that will likely incur some change at some point.

          I think the odds are likely better with a transition that is intended than one that is managing a disaster. I think my rosy scenarios are probably too rosy, and I haven’t thought of the things that could go wrong.

        • Michael Drew says:

          I guess I meant the current path of debt given cost escalation.

          But: really? You think current student debt levels are quite sustainable? Even at the high end?

        • trumwill says:

          Well, I think some people found themselves in situations that they’re not going to get out of. But the people who racked up the largest debts mostly graduated, which will help, and they’re not representative. I’m most worried about those who didn’t graduate and so don’t have the extra money to pay it back. I fear there are more of those.

          But I don’t think we’re past the point of no return, even if I fear we’re headed generally in that direction.

  11. aaron david says:

    Great essay Gab, and I do have a thought. One of the issues is that the colleges themselves are not on the hook for any of the load amounts. And as they have no stake if there is a default, they are free to keep raising money this way and to offer majors that we are overabundant in the recipients of. I went to a great school for business, architecture, agriculture and engineering. A very difficult school for most people to get into and one with many degrees “impacted”. That school should look at the majors that have the greatest drop out rate and start figuring out what the issues were. Are they too tough of those admitted? etc. Until schools are forced to do this we will keep having the same issues.

    And all of this is before we get to state/fed political issues.

  12. SFG says:

    What about the European system of the state paying for it? I guess you’d have to raise taxes a huge amount though.

    I actually don’t have a better solution. My dream would be to make college unnecessary for entry-level secretarial, etc. positions and shut down most colleges, but that’s going to unavoidably screw the people who graduate high school just after the changeover and have to compete with all the ‘college’ graduates.

    • I would also prefer to somehow make college unnecessary for a lot of entry-level positions, but not sure how to go about doing it. If an employer wishes to make degrees a requirement, or sees degree-holders as more likely to be better employees, I don’t know if there’s much I can do to tell her not to indulge that wish. (That’s the problem I think you’re pointing to in the very last part of your comment.)

      But yes, that’s something I’d prefer, too.

    • Oscar Gordon says:

      European systems also have a lot of rigidity with regard to who can attend what schools.

    • aaron david says:

      There is a link up above about how Swedish students often end up with large amounts of student debt, even with Swedens free higher education.

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