Would mass suicide affect student loan practices?

By J. DeVoy

Earlier this week, 60 Minutes tackled the hard issue of strategic mortgage default.  In these situations, people capable of paying their mortgages despite being badly upside-down on their homes – owing far more than they’re worth – simply walk away from them.  While government loan modification programs are available to those who have lost jobs and suffered other economic hardship, creditors are refusing to offer interest or principal reductions to people who are capable of paying their mortgages.  So far, this latter group has been unable to cause any change in public or private policy on loan modifications, despite the group growing by the day.

In the 2005 Bankruptcy Code revisions, student loans were made non-dischargable in bankruptcy.  Now, as noted in a recent Frontline episode, the government administers all Federal student loans, which were previously available through private banks and lenders.  The episode further explains that Federal loans can be attached to wages and tax returns if not paid, and will follow the borrower everywhere… except into the grave.  Federal loans are discharged upon death.

For graduates returning home to live with their parents, jobless and adrift, one consequence may be depression and long-term psychological effects.  Given the above-average cognitive abilities and self-awareness of college graduates, it seems more likely than not that they would suffer these effects more than the average person.  In one particularly sad story last year, one attorney committed suicide upon learning of his layoff

Suicide is a serious matter that shatters families, ruining the lives of those left behind, and thus it is not invoked lightly.  With graduates from the classes of 2009 and 2010 now entering the worst job market anyone can remember, and competing with people a generation older for entry-level positions, the future clearly is bleak for them.  Coupled with a black swan environmental disaster that has profound implications for the long-term cost of oil and the growing sovereign debt default crisis, the makings of a double-dip recession are moving rapidly into place.

Even with the benefit of programs like Income-Based Repayment, the interest and principal of student loans will continue to grow for recent graduates.  Despite the program’s vaunted 10-year forgiveness feature for government and public interest employment, such jobs are extremely selective or nonexistent as state governments slash and burn various departments with layoffs, furloughs and forced attrition.  The social and egoistic cachet conferred by a college degree may also preclude graduates from seeking work in blue-collar or service fields; some may cite the desire to preserve themselves for a “career-track” position, while others’ pride may come in the way of taking a job that doesn’t make use of their credentials.  Even for those with the humility to seek whatever employment they can, employers may well reject these applicants for being flight risks destined to bolt for the first superior opportunity, or for lacking the requisite skills for the job.

If enough college graduates are pushed to the breaking point and decide life isn’t worth living, will anyone notice?  A governmental response assumes its knowledge, which is difficult if surviving family members refuse to talk about what happened and what they know.  For some families, this devastation may have already visited home for exactly the reason of crushing, inescapable student loan debt and crushed dreams.  But, like a tree falling in the woods, nobody can know a problem exists if it remains a hushed secret — however painful it is to keep.

Hopefully the state of education lending will never come to needing reform because of ended lives.  There are signs that this is already happening across the country, though, and the trend may only accelerate as economic malaise deepens, parental resources diminish, and opportunities for even the smartest among us become increasingly scarce.  Despite the emphasis to attend college from every angle, those who do and have done so are increasingly finding that the credentials they acquired at great expense aren’t as valuable as they were lead to believe.  This is the ultimate betrayal: People who are lionized for their accomplishment and knowledge are left to drop out of society in the most irreversible way possible.  More immediately, the discharge of these loans upon death affects the CDO-like securities stacked upon them; discharges above those actuarially anticipated when creating the instrument would lead to its unwinding, as well as the derivatives and options resting upon it.

As for what these reforms would be, making student loan debt dischargable in bankruptcy wouldn’t solve the whole problem.  It would, however, bring about several other realizations.  First, the cost of education in America has gotten out of control.  Second, the values of a generic college degree are oversold.  Additionally, not all institutions or degrees are created equally, and it is absurd that students from elite schools pay the same interest rate – to the extent undergraduates at elite schools have to take loans – as students from less rigorous institutions.  The same is true of major selection, as the value provided by a degree in biology or chemistry and the opportunities it provides is markedly different from one in communications, psychology or criminal justice.  These would be painful realizations, but ones that do not seem to be arising naturally.

However large or insignificant the problem of loan-induced helplessness is, it can’t be ascertained or addressed without ensuring it can be discussed.  Despite the shame and stigma people feel for not meeting their financial obligations, or the hurt a family may feel for the senseless loss of a loved one, hiding the experience under a bushel basket ensures that nobody can learn from it, potentially helping others and effecting real change.

31 Responses to Would mass suicide affect student loan practices?

  1. MikeZ says:

    I can agree with the increased depression/suicide due to student loans not being dischargable, I’m not so sure changing this would help to it would help with “First, the cost of education in America has gotten out of control. Second, the values of a generic college degree are oversold.”

    Seems to me making student loan debts dischargable would mask the issue. That same depression with being stuck with a massive debt and no good job prospects would seem to make those two points pretty painfully obvious. Whereas declaring bankruptcy and giving those problems to the bank could allow the person who made the decision to get the basketweaving degree to completely gloss over the cost. Certainly it would cause the banks to act differently but I’m not sure it would change public opinion.

    I certainly don’t disagree with much of what you say. Certainly the costs especially costs of a Liberal Arts degree are insane. Without doing any research though I would bet that a communications degree already costs less than a chemistry degree it is just funded differently. The Hard Sciences tend to take in grant money for doing research, this may subsidize the more expensive lab equipment/instruction that this kind of degree requires.

  2. wouldeye says:

    jesus, don’t give us any ideas.
    Cornell has already had issues with this this semester, and even my own college has had more suicides this year than any time in recent memory.

  3. [...] Would mass suicide affect student loan practices? « The Legal Satyricon [...]

  4. DMG says:

    Hell, the only thing that keeps me from depression over my law school loans is the fact that I have one of those public service jobs so at least there’s a light at the end of the tunnel.

    With budget cuts, etc. I would feel much better if they were dischargable though.

  5. evrenseven says:

    Dischargable student loans bring up a new problem: Lenders, mostly the federal government, will be faced with the question of whether to prejudge a prospective student’s likelihood of success and thereby loan repayment. As a result, only “worthy” students get loans. I believe the readers here can immediately see the problem: Students from certain socioeconomic backgrounds are going to be more “worthy” than others due to educational opportunities in certain parts of the country over others, and invariably that “worthiness gap” will correlate to a racial divide. So the lenders (mostly the government) will be left with choices:
    1) Allow everyone to discharge through bankruptcy (although perhaps make it somewhat strict) OR
    2) Grant student loans based on a likelihood of repayment.

    Option 1 could lead to major losses for the department of Ed. Option 2 would lead to a Supreme Court case. Sounds like a lose- lose.

    The real question is to figure out why my TTT legal education at Santa Clara U cost nearly $100K in tuition.

  6. 12XU says:

    “The real question is to figure out why my TTT legal education at Santa Clara U cost nearly $100K in tuition.”
    This is unambiguously absurd. And perhaps the industry reform that J. has in mind would change this.

    If creditworthiness was based on ability to pay, naturally students from lower ranked schools would be deemed unworthy to repay a certain amount of debt. This is a good thing. Most law students need to borrow to go to school. If students at ttt’s couldn’t get financing to cover the absurd tuition, schools would be forced to lower their tuition to keep from closing.

  7. Dr. C says:

    I am at the point where my life is either going to be destroyed by Sallie Mae or I am going to end it myself…it may be the only power I have left. It will be hard on my friends and family…but having them driven to despair and bankruptcy as Sallie Mae tries to collect what they co-signed for would ruin their lives and my relationship with them…better for me to die and let them collect my insurance benefit.

    • J DeVoy says:

      1) don’t do it

      2) don’t do it

      3) Look into whether this discharges a cosigner’s obligations, as it might not. The point of a cosigner is to hedge against the likelihood of your default, and that could include death.

    • DM says:

      it’s ONLY money. and I don’t say that lightly. I have been one of those “left” behind by suicide and I cannot tell you the lives that are ruined and changed forever. But MORE important is the lesson learned that LIFE itself is the gift and I know for a facct that if the person in my life had one more second of life back he would NEVER choose to end it. call hayhouseradio.com and/or reach out to someone who can help, to show you that NOTHING is more important than life itself, including your money issues. This comes from someone who faced the worst financial situation possible. get some help.

      • Drowning says:

        If it were only money we wouldn’t be having this problem. Family, friends, government agencies, would be pooling their resources to help people get rid of these debts. Life is only discovered a gift to someone only after the supposed loved ones give up on everyone. I once had a rich boyfriend who said to me that money was too important to me. Had it been all that important to me I would not have been killing myself pursuing higher degrees, I would have been out there robbing America like all the other crooks on Wall Street … like him. 130 grand is a drop in the bucket for him. He spends that easily in a few months on his cars and lavish gifts for the prostitutes he keeps in every corner of the globe. I was his first and only love he tells me. What rubbish. If money was not so important to him he could have easily indulged my ambition and prevented or payed this crippling debt. If I end up killing myself I know for a fact that 130 grand was more important to him than I ever was, as a lover, or even a friend. There are people in congress as I write doing every thing in their power to sap the life out of anyone they possibly can in the interest of their Holy dollar bill.

    • Justup247 says:

      Hey, don’t do that, come see what paybacks looks like… fight them, NOT yourself… The greedy Depart. of Ed and SALLIE MAE did THIS, you were just a victim of their greed, as they tried to make me… They started setting this up in late 1980 -1990, IMO it is a “conspiracy to defraud” all of those that got student loans…It is time that a full independent investigation be done into Sallie Mae, HEAF and Depart of Ed and their dealings in 1990 -93 that set this monster into motion…

  8. LAC says:

    To say I can sympathize would be an understatement.

    I grew up desperately poor and went to college, law school, and got my LLM for the sole purpose of making an income that could support myself and my indigent family. After spending $130k on just tuition for my legal education ($100k of which is federal loans), I have been looking for a job for a year and there are none. Not even temp jobs. Nothing. It takes every bit of strength I have not to beg and cry to employers for a job, given that for me the alternative to making a living is living on the street since my family is too poor to feed me and live. I’ve been explaining my situation in tears to Career Services since I got to law school. No one cares.

    I have 3 degrees and now my only income is food stamps. 10 years later, my family is still teetering on the brink of homelessness, and now so am I. The only thing preventing my suicide is the clause in my life insurance policy that prevents payment on that sort of death. I am worth significantly more dead than alive (and was richer when I was a kid on Welfare), and frankly that check would be a godsend to my family back home.

    • Tom Manning says:

      I am almost in the same boat you are. I grew up with two disabled parents living on social security disability and never really had much in terms of materialistic items. My parents taught me to survive and work through the problems that life will inevitably dish out and just keep pushing forward. I guess due to that I will somehow keep moving on after the loans kick in this year. Fortunately, I was able to find a job that is in my field a few years back but I can tell ya that at the end of the year when the loan payments start I hope my family sticks by me and I can find some decent repayment plans or I will be back here with a very different story of how my life is going.

      At the moment, me my wife and three children that live with me and two that don’t can barely get by and with payments on heavily bloated loans, we may be on food stamps and living in a two bedroom apartment in a bad neighborhood.

      I went to school to break the cycle yet somehow it feels like I just made things worse for myself and my family.

      This is a perfect example of a post that I wish Mr. Obama or someone that can do something would read and take to heart.

  9. [...] One day you will see my picture here.  Best way to affect student loan practices:  mass suicide.  When you are stressed out about your hard day trying no-fault cases or arguing no-fault [...]

  10. Accipiter says:

    I wish I could say I’m comforted to know I’m not the only one who’s contemplated suicide to escape student loan debt, but I cannot claim comfort in something so terrible. I wish no one was feeling the same thing. The only thing that’s keeping me from making the ‘plunge’ is my family. Whenever I think I want to end it, I think of how much it would hurt my father. I would rather suffer than have him suffer.

    At the very least, you should be able to discharge student loan debt through bankruptcy. I will gladly take a stain on my credit report rather than spend the rest of my life scrounging to pay that bill each month. 90% of my income goes towards that monthly payment, the other 10% towards car insurance and gas to get to my job. I live with my father because I cannot afford my own home.

    It needs to stop. I’m scared every day and cry myself to sleep. I just wanted a good education, and to get a job in the field I wanted. Am I to be punished because I wasn’t born into a rich family?

  11. Jimbo says:

    There’s HOPE! Check this out:

  12. Katie says:

    I’m 24 now but left college at 22 with $90,000 in student loan debt. I got a “good” job after school that makes $30,000 a year with benefits (I was one of the ‘lucky’ ones). I wish I had never gone to school. I’ve thought of suicide but decided I WILL NEVER give up so easily. But my life is ruined. I grew up in a poor family and all I wanted to do was better myself, improve my socioeconomic status and not work at McDonalds my whole life. McDonalds + no debt is much better than Corporate job + debt right now. We need to do something! This problem is EVERYWHERE. But I’ve noticed people are embarassed and ashamed to talk about it. And understandably! I can’t buy a friend a beer if I wanted. I’ve become a hermit because I can’t afford to do anything. I can’t even afford to dress professionally for work and borrow from my sister (thank God I have family willing to help!) I am so embarassed and ashamed. Oh, my 90 year old grandmother cosigned my loans so whenever I have trouble paying she gets harassed at her nursing home and there’s nothing I can do to stop it. I’ve received nasty letters and emails from my aunts and siblings because of it “How could you do this to her! She’s 90 yrs old! I DO NOT trust you anymore! You’re a terrible person!” I’ve tried explaining, but what’s there to explain? I took out student loans I’m obligated to pay back. I am so sad. I’ve had to cut off my family for my mental & emotional health.I’ve worked so very hard my whole life and have gone from *Free to *Endentured Servitude. :*( But I WILL NOT give up. F##$ the banks! F$#@ the government! I’ve applied for a night shift at McDonalds so I can work there and hopefully not see anyone I know (I’m embarassed). My goal is to throw $1,000 extra at my loans a month. I CAN DO THIS!! I WON’T GIVE UP! I wish I could tell my friends about this but I’m in it alone. They wouldn’t understand.

    • At least your consignor is old and will die before you pay off your loans (I know this is morbid, but it’s reality). The plus side to that is that once that happens you are free to default on your loans, and just wait out the storm on your own. You can drop off the radar completely, move to a different country, etc and the only person that they can harass is you. The consequences may be immense, and the measures extreme, but in reality, if you are the one responsible, and they can’t go after your poor family members who were only trying to help, you can take control of your own life and choose to just stop paying. Just make sure you know what that will do to your credit, social security etc, and be prepared for a very long battle. You will probably have to not have a phone or an address, or a “real” job, but you will be better off because you can actually save money, as long as you get paid cash or figure something out with your employer so they can’t garner your wages, and have someone else who can store your money for you in an extra account. And here is the plus side. If you default for over 270 days, the guarantor pays the loan (aka, the government, usually) so Sallie Mae or whoever owns your life at the moment gets their money and goes off happy. Then, you are dealing directly with the government and their collectors and they will go after you HARD. However, if you can lay low long enough and the whole thing balloons so far out of control that it is completely absurd, then, maybe, just maybe, they will be willing to negotiate. Then you hardline and tell them you can only pay xx amount, and if they don’t accept, just put your head down for longer (or, like I said, just leave the country permanently) until they are finally just desperate to get something, anything. Just make sure you go into it with your eyes open because there are no statute of limitations when it comes to student loan collection and they will stop at almost nothing, and go on for a very, very long time. Hopefully, in that time some sort of bankruptcy legislation will get through (VERY unlikely while Boner is the Speaker of the House, since he is BFFs with student loan lobbyists) and some basic consumer protections will be returned to student loan victims.
      In the meantime, keep fighting the good fight. You are not alone. Many of us were fooled into signing our lives away for the promise of a better life. It was a noble endeavor, and ultimately, we can’t say we didn’t learn anything…

      • Amanda says:

        I can so relate to you guys. I have several minor disabilities. Coupled together though and I stay sick alot. It took me 6 yrs to get my 4 yr degree. Voc Rehab was suppose to pay but they lied. I owe $42,000.00 now pule another $40,000.00 b/c of no medical insuranc while enrolled in college. I too applied for a McDonalds night shift job and now run into the problem of being “over qualified”.

        Then again the job market is hard enough on healthy folks its impossible for the hearing impaired.

        Good Luck, God Bless and your not alone…

  13. RBURGER says:

    3rd time in 6 months. Your doing it wrong.

  14. Randy says:

    There is hope!! I just found a site that will reduce your loan in most cases and end all payments in 25 years. There is a loan calculator that is very easy to use. If you are in default you will need to do some extra work to qualify, but not impossible. I am 50, and owe $74,000. Two kids at home-no jobs, wife laid off, doing temp work for 8-10 dollars an hour. I was thinking that when I retire at 68, I will get around $1000 a month to live. However the loan payment of $700 would be taken out of my S.S. check!
    With this new program they can only take 10% of my income for school loan payments.
    Go to http://www.ibrinfo.org/ before you do anything.

    • Randy says:

      Just some additional information: I found that the current rate is 15% of AGI. Still not bad, it will work for Nelnet loans. I’m not sure about the wording of “based on your current ten year payback”. I ran my loans out to 25 years, low payment at the start then it goes up. I have paid over $12,000 in interest over the last 10 years and only reduced my principal by $1200. Just like a home loan, amortized to front load, then pay down in the latter years. If you can get the payments to a reasonable amount and add $50 extra payment to the principal you can reduce your interest and the time required to pay off the loan. One thing I would add,it was the Democrats that did lower student loan repayment under President Obama. All the Republicans voted in lock-step to defeat the bill, and some Dems too. The first school loan bill was much better than the current bill, but it was watered down and passed only by a slim margin to try and get some Republican support. I’m not saying they are better, just that every tax break or bankruptcy right I have had, was taken away by the Republicans. Bush number 1 said “read my lips, no new taxes”, (his campaign sound bite) and then he took away my deductions for interest on credit cards! Yes, that’s right, in the past I deducted ALL INTEREST paid to credit card companies including interest on my car loan from my taxed gross income!!! Then “W” let BOA and other banks “WRITE the new bankruptcy law” in 2005. They drummed up public discontent with reports that rich Doctors and rich Lawyers never paid back their student loans. Sounds like more WMD to me!! Do we see a pattern here? If you are one that’s in the top 5% earners in the USA then this all sounds great. We should change our name to C.U.S.A, Corporation of the United State of America. If you’re an average or even above average person, the chances of you becoming in the top 5% is about as slim as you being reincarnated as Michael Jackson and doing a new Thriller tour! We need to watch who we elect! Not an easy task working 60 hours a week to make a 30 hour paycheck.
      Sorry to be so political, but truth is truth.

  15. Connie Concepcion says:

    Well, there is also mass migration. Canada’s not that far and, unless you work for a US-based company, they can’t touch you. It’s certainly better than suicide. SO save your pennies, get your passports, pick a country, get your visa papers in order, and get the hell out. I did it, and I don’t regret it.

  16. I would stop paying my loans in a heartbeat if they weren’t PLUS loans. I never took on loans with the intention to not pay, however, upon finding out how corrupt, backwards and ultimately evil the whole system is, I feel so cheated, and so STUPID for buying into the whole thing hook, line and sinker. Everything, literally everything, I ever hoped for in my life is now impossible. With over 150k in debt, consolidated at 8% interest which can NEVER be refinanced, my hope for a normal life even, forget about better – the great promise of higher education, is gone. Unfortunately, I was told by Citi bank (who was in bed with the financial aid dept at NYU, where I attended) that even if I DIE my mother has to continue to pay the loans. So for me, even death is not an escape. I now at least have AD&D insurance, another monthly cost, but find myself almost hoping to lose an arm and get the payoff, although unless I actually die or go into a permanent vegetative state, the amount still wouldn’t be enough to cover all my loans… So now even suicide isn’t an answer because then is it not an accident, which means no money for my mother, who would doubtlessly be totally destroyed by the loss of her daughter, and the continuation of the payments invested in a brain that no longer exists. HOW WRONG IS THIS SYSTEM? I battle with payments of over $1,200 every month, watching my money disappear into a funnel which, even after over $20,000 in payments, the principle has only gone down by $1,000. How does one avoid depression in the face of such a monstrous injustice? I cry every time I think about it. Like right now. My life was signed away when I was 18 and didn’t have a f’n clue about any of this, and I will never get it back. I will spend my working life scraping by, unable to invest, unable to purchase property, unable, even, to think about having a family. It is hopeless. Utterly hopeless. And not even suicide offers escape. There is something deeply, terribly wrong with this country.

    • debtvictim says:

      Hi, I am writing a book on this crisis and I was wondering, Doomed by Debt, if you would mind me quoting what you said above in the book.

      If you don’t mind, I could discuss it further with you.

      Thanks!!

    • Treading Water (6" below the surface) says:

      I’m in a similar situation. $400/mo being taken by SLC from my paycheck. $600/mo to Sallie Mae (interest only). Over $120k total in loans. Even though I’ve had a full-time job since I graduated, I can barely scrape by. I’ve used almost all of my vacation and sick days to work other jobs in order to scrape by. I trained for a technical job that requires current equipment, and the loan payments keep me from getting the new equipment required for the jobs. It’s a vicious circle. I can’t leave this dead end job unless I have a position (that I trained for) with a greater income… I can’t get the positions without the equipment… I can’t get the equipment without the $… I can’t have the $ if I keep giving it to Sallie Mae and SLC.

      If I don’t pay Sallie Mae, they call and write my sister and brother (cosigners) and generally make their lives hell. I went to school to follow my dreams, not to make my siblings financial life a nightmare.

      I have had thoughts of suicide. At times it seems like the only thing stopping my is the pain that it would cause my family.

      I just had an associate commit suicide over the Christmas Break.

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    Would mass suicide affect student loan practices? « The Legal Satyricon…

  18. jeff says:

    Sallie Mae calls my cell phone everyday harrassing me with people that don’t even speak English, but I bet they make more then people with degrees because they are subsidized. I owe Sallie Mae 6 times more than what I borrowed. I’ve been paying them for 15+ years. Suicide seems the only way out. I’d even hope for Civil War at this point to discharge all my debts!

  19. Jf says:

    I’m leaning more towards suicide every passing day myself. I came across this article while trying to find out if my family will be held responsible for my debt after my death. I graduated in 2009 and it took me 6 months to find a job and it paid $1.15 more per hour than the job I held prior to going to school…I earn only 10.65/hr and work with people who make more than I do WITHOUT a degree. I’m a single mother of two children and receive no child support. I took my ex to court three times for payment. He moved out of state and the state I’m in won’t look for him. I lived in family housing while I went to school and borrowed so that I could just barely get by. Now the state has threatened to garnish my wages but my ex won’t get garnished because he is nowhere to be found…my son wants to leave home when he turns 17 and resents me for not being able to provide. I have a twelve year old daughter that I’m desperate to take care of but I feel as if I’m drowning. I’m extremely depressed and I’ve been trying to find financially stable family to raise her so I can end my life and end this impossible struggle….

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