No, my blog is not dead, just on hiatus. I have some issues with my theme and just generally how the blog and podcast are being received and I needed some time to think about how the website and Youtube sites should look and feel. Also, it’s the beginning of my second year in Thailand which means I’m still trying to find where I fit in.
The first year was so taken up with all the things necessary to get settled. It took about three months to finally get my retirement visa approved and about six months to get Social Security benefits coming in. Then I began getting hit with demands to restart payments on my student loans. I’m retired, I know!
I haven’t talked about this before because until recently most people would have been very judgemental, and I know many still will be. The thing you have to understand about student loans is that you can never get out of them. Now, all the judgemental people are sitting there with their little moral red flags going up. But I have to tell you something. Loans of any kind have nothing to do with morality. They are a business transaction. In a business transaction, both parties are supposed to share the risk. The borrower shares the risk of loss of property or credit rating. The lender takes the risk that the loan might not be paid off. Risk has been part of the game since way back when Lloyds of London created underwriting and investors shared the risk on valuable cargo coming from faraway places by ship. If the ship went down, they lost it all. If the ship came in (and this is where we get the expression) they stood to make a huge profit.
In the case of student loans, all the risk is on the borrower. The risk is, the job market might be bad when you graduate, or the job you were hoping to get no longer exists because technology is changing faster than education. And in some cases, the institution of higher learning sells a bill of goods. They don’t guarantee jobs, but they paint a rosy picture, wave loan reimbursement deals in front of your nose, and anything else to get your money.
The poison dart is that the lender has no risk. Not only can the loans not be written off, which might not seem to be good business when you think about it. The reason lenders write off loans is that once it is impossible to collect, it is in their best interest to write them off and claim them as a loss. You might be thinking, “Well, they can’t repossess your education, so they might not want to take that risk.” But here’s the deal, they simply sell those loans to another lender every two or three years. Student loans are not regulated and there is no law against it. If a loan goes into default there are collection agencies waiting to take over. These agencies will offer reduced payments, which of course increases the long term payoff to the borrower. If you are the kind of person who watches the bottom line, eventually you may realize, as I did, that you will not live long enough to pay off those loans. In a normal business arrangement, bankruptcy would be the order of the day. But student loans cannot be included in bankruptcy, except in some very special cases, and you don’t want to know that those are.
So, what’s the next step? If the borrower can’t or won’t pay, they still get a fee for every loan they process, whether they collect anything or not. Are you beginning to see why student loans are a drain on the economy. Millions of college graduates are living in poverty, all because they bought into the belief that they had to have a college education in today’s job market. In addition, all these loan companies keep growing and getting richer at no risk. There is the moral dilemma, if you ask me.
All I can say about that is, if you are just starting college or going back to college, DO NOT take out any student loans. The amount of interest that mounts up every time you have to get a waiver is incredible. There is no way to get a reprieve; they will never write off the loan, nor will they negotiate on the principle or the interest. I have finally been given a zero payment requirement because of my low income is so low with little possibility of increasing it. Yet, along the way, at least three loan companies earned money from these loans, the collection agency got their cut, and now a new loan company gets money every month just for maintaining my zero payment status.
For every student who is in a similar situation, and there are millions who are, the government is picking up the tab. In the long run, it would have been less expensive to allow struggling graduates to default than to keep paying fees to loan brokers and collection agencies who make more money than they recover. Now, maybe you may see that, Bernie Sanders is not irresponsible when he says there should be forgiveness for student loans. When you think about the cost, it would have been cheaper to write off those loans and let all those loan sharks go bankrupt. There is a good argument for free education in this.
I won’t go there. This didn’t start out to be a blog about student loans, but it’s been an important part of my life for many, many years. It was about time I spoke out about it.
I will just end this post here and start another one about how this second year has been shaping up. And it has been shaping up! Look for a more upbeat post coming soon!