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Lee Siegel, a cultural critic and author, never paid back his student loans. In a Sunday New York Times op-ed, he said they were holding him back from pursuing his dreams. And he argued that recent graduates should make the same decision:
I could take what I had been led to believe was both the morally and legally reprehensible step of defaulting on my student loans, which was the only way I could survive without wasting my life in a job that had nothing to do with my particular usefulness to society.
I chose life. That is to say, I defaulted on my student loans.
As difficult as it has been, I’ve never looked back
For most people, Siegel's recommendations are dangerous. They gloss over the serious, lifelong consequences for defaulting on student debt. And they make one of the worst cases for student loan forgiveness imaginable.
Student loans can haunt you forever
Student loans, unlike most other forms of consumer debt, can't be discharged in bankruptcy. Once you take them out, you're stuck with them for life.
That's why the federal government can pursue you, literally, to the grave to get its money back: because it's almost impossible to get rid of the debt.
Siegel implies that life with defaulted loans is okay, as long as you find someone with good credit who's willing to marry you:
Get as many credit cards as you can before your credit is ruined. Find a stable housing situation. Pay your rent on time so that you have a good record in that area when you do have to move. Live with or marry someone with good credit (preferably someone who shares your desperate nihilism).
When the fateful day comes, and your credit looks like a war zone, don’t be afraid. The reported consequences of having no credit are scare talk, to some extent. The reliably predatory nature of American life guarantees that there will always be somebody to help you, from credit card companies charging stratospheric interest rates to subprime loans for houses and cars.
Defaulting on a student loan isn't a mild form of political protest with limited consequences. The federal government can make your life pretty miserable.
The federal government can take up to 15 percent of your wages to get its student loan money back, and it doesn't need a court order to do so. The number of people having their wages garnished increased 45 percent from 2003 to 2013, according to the Wall Street Journal. Nearly 175,000 people had a total of $303 million withheld from their paychecks to pay back defaulted student loans in the 2013 fiscal year.
The government can also withhold your tax refund and even your Social Security payment. And it uses that power, too: 33,000 people had their Social Security payments garnished last year to pay back their debt, according to the Government Accountability Office. These are people, well into retirement, still paying for the fact they never paid off their loans.
So it's possible that Siegel's long-overdue loan payments might yet catch up with him.
Stories like Siegel's are why it's hard to discharge loans in bankruptcy
Students with federal loans have more options now than they did when Siegel graduated. If you want to or have to take a low-paying job, for example, you can enroll in a plan that bases your monthly payment on your discretionary income, with the remaining loan balance forgiven after enough time has passed.
But loans from banks, which make up about 10 percent of the student loan market, don't have that flexibility. And once you have one, it's nearly impossible to get rid of it the way you would discharge other debt: by filing for bankruptcy.
Congress created these restrictions because it was afraid graduates would decide that a few years of bad credit was a better option than making thousands of dollars of loan repayments. As a congressional report in 1977 put it:
A few serious abuses of the bankruptcy laws by debtors with large amounts of educational loans, few other debts, and well-paying jobs, who have filed bankruptcy shortly after leaving school and before any loans became due, have generated the movement for an exception to discharge.
In other words, they were afraid of people like Siegel. Siegel seems to believe that not paying back his loans will usher in a utopia of debt-free education. It's much more likely that he'll be cited as a reason to keep using every means necessary to pursue people who won't, or can't, meet their financial obligations.
