The Lingering Burden of Student Loans: A Decade Later, Still Paying Off?
Have you ever found yourself still grappling with student loan debts a decade after your graduation? My experience, now recounted years later, offers a stark reminder of the challenges that can persist in this arena.
Personal Experience: Student Loans and Bankruptcy
Consider the story of my now ex-wife. In 1986, she earned her MBA from Kellogg School. Just two years later in 1988, she fell ill, leading to a forced bankruptcy. Sadly, because she also became homeless, all her loan-related documents, including the list of loans, were lost. According to the law, she was still responsible for these loans.
Struggles to Pay Off Loans
We got married in 1995 and, driven by the obligation to repay these loans, we resorted to living mainly on beans for two years. This extreme measure was to ensure that the loans were completely cleared. We succeeded in paying off every single loan on the list.
Unexpected Debts Decades Later
In 2013, after 27 years, we received an unexpected and surprisingly large bill for a 5000 loan that wasn't on the list we had obtained. Upon investigation, it turned out one of the agencies we had approached had provided incorrect information. This experience highlighted the complexities and the systemic issues involved in managing student loans over extended periods.
The Larger Picture: Scams and Debt Servitude
But the story doesn't end there. The combination of loan agencies and legal loopholes can make these situations worse than dealing with loan sharks. A business entity has been known to secure a loan of $500,000, only to run a highly corrupt operation, draining the money, and ultimately declaring bankruptcy without any "personal" debt. After 7-10 years, no records of the bankruptcy remain. There's little accountability, and the cycle continues.
Bankruptcy Due to Corruption, Not Misfortune
When it comes to student debt, the issue is even more severe. The debt can persist for decades and negatively impact an individual's ability to start a business. For instance, obtaining a loan from a government agency and living a frugal life solely to pay down this debt highlights the systemic issues that can trap individuals in a cycle of debt.
Lessons Learned: The Capital Game
During our own attempts to start a business to help my now ex-wife, every cent we invested became debt. This experience taught me a crucial lesson: Always rely on external financing, get yourself a salary, and default on the debt. Ultimately, this strategy can free up some money to pay legal fees.
The Scam of College Loans
Yet, even those willing to follow the rules are subject to exploitation. The college loan game often functions like a modern-day scam. While some may claim to provide smart lending, the reality is often that these entities hold individuals in servitude for decades, offering no real solution beyond collecting interest and penalties.
Honest Work vs. Systemic Corruption
In the United States, the concept of "honest work" and "bankruptcy due to circumstances beyond control" is a joke. Most wealthy individuals I know have engaged in scams, not innovation. They either started with a substantial amount of money or leveraged connections to access funds. Those without access to external wealth face a significant limitation in building a substantial fortune.
Incentives and Lack of Legitimate Solutions
The vast majority of loans issued for college are part of a system that is geared towards keeping individuals in debt rather than providing a legitimate way for them to pay back their loans. These entities have no incentive to develop innovative solutions that ensure debtors can pay back loans effectively. Instead, they use the legal framework to their advantage to maintain a sustained cycle of debt.
In conclusion, the issue of student loans is a deeply rooted problem, influenced by unscrupulous practices and complex legal barriers. It's time for policymakers and financial institutions to reassess and reform the current system to ensure fairness and alleviation of this burden on millions of Americans.