Time to Rethink a Myth

Maybe parents might want to consider the effects of pushing their children to get a college education:

Cyndee Marcoux already was stretched thin, thanks to the $80,000 in student loans she racked up after getting divorced and going back to school a decade ago. Her breaking point came in 2010, when her daughter defaulted on student-loan payments of her own.

That’s because Ms. Marcoux, a 53-year-old library administrator in Seekonk, Mass., co-signed for about $55,000 of her daughter’s loans. When the daughter was unable to keep making payments, Ms. Marcoux was on the hook—a burden that forced her to reshuffle her entire life. To scrape up the extra $550 a month she owed, she sold her house, then took a second job registering emergency-room patients on the weekend overnight shift. “You work your whole life and never pay a bill late,” says Ms. Marcoux. “You don’t ever think your kid isn’t going to pay.”

As certain internet writers have noted, this outcome wasn’t exactly unpredictable.  When supply of college-educated labor outpaces demand, due in large part to federal subsidy and state propaganda, it should come as no surprise that the average income of college-educated individuals decline.  And since demand for college has outstripped supply (though it should be noted that supply is radically increasing right now, almost like a bubble), two things began to happen at once:  wages for college-educated workers declined while the cost of college education went up. The outcome?  Lots of college grads are stuck with a lot of debt and no way to pay for it.
Making matters worse, the federal government—in conjunction with the major banks who lend out college loans, service the debt, and even act a collections agencies in the event of default—has conspired to basically make the recipients of student loans into debt slaves by preventing students loans from being discharged in bankruptcy.  Furthermore, the federal government strongly encourages parents to co-sign for their children’s college loans by requiring their financial information when filling FAFSA.*
All this has started to bite a good number of parents in the rear.  Deservedly so, I might add.  Hopefully this will help other parents to wake up and start to actually consider whether a) their child should really go on to college and b) whether they will legally bind themselves to pay for their child’s worthless majors.
* Note:  while this is only technically required to determine students’ grant status, it is assumed that parents are going to pay for their children’s education (hence the parents’ expected contribution) portion of the FAFSA calculation.  Parents implicitly agree, since they are often expected and encouraged to sign for their children’s loans.  Thus, the rarely-challenged assumption is that parents are good for their children’s education costs.

1 comment to Time to Rethink a Myth

  • Unfortunately, you gloss right over the crux of this problem: The unwarranted, unprecedented removal of standard bankruptcy and other consumer protections from this debt instrument. It has corrupted the entire lending system from top to bottom.

    This removal has made defaults more lucrative to the entire lending system…including the federal government. Think about the implications of a lending system where the lender wishes the borrower to default on their loan.

    Instead of using this issue as an opportunity to lecture borrowers and parents, you should be calling attention to the perversion of the lending system, and for its immediate correction.

    Otherwise, you only come off as yet another elitist with his head in the clouds who did nothing to solve the problem.

Leave a Reply




You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>