Stealing a College Education

Lee Siegel takes to the NYT to explain "Why I Defaulted on My Student Loans."

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Lee Siegel takes to the NYT to explain “Why I Defaulted on My Student Loans.”

By the end of my sophomore year at a small private liberal arts college, my mother and I had taken out a second loan, my father had declared bankruptcy and my parents had divorced. My mother could no longer afford the tuition that the student loans weren’t covering. I transferred to a state college in New Jersey, closer to home.

Years later, I found myself confronted with a choice that too many people have had to and will have to face. I could give up what had become my vocation (in my case, being a writer) and take a job that I didn’t want in order to repay the huge debt I had accumulated in college and graduate school. Or 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.

Having managed to get a PhD without my parents paying for it or going through debt, let alone in such volume that it would have dictated my career options, I’m rather confused as to how Siegel managed to get into this bind to begin with. To be sure, the cost of attendance has skyrocketed since I attended school in the mid-1980s and early 1990s. Seigel attended school even before I did, having started 40 years ago and finished 30 years ago. (“Lee Siegel” is a surprisingly common name. Given the biographical details supplied in the piece, the author is neither the 57-year-old Columbia educated writer and cultural critic* nor the 69-year-old Berkeley educated professor and novelist, since neither graduated from a state college in New Jersey.)  Nor is it obvious why he needed to go to graduate school to become a writer.

Regardless, he accumulated said debt for years after his father went into bankruptcy and, presumably, after having decided he wanted to be a writer. Didn’t he feel badly about stealing the money? Not at all.

As difficult as it has been, I’ve never looked back. The millions of young people today, who collectively owe over $1 trillion in loans, may want to consider my example.

It struck me as absurd that one could amass crippling debt as a result, not of drug addiction or reckless borrowing and spending, but of going to college. Having opened a new life to me beyond my modest origins, the education system was now going to call in its chits and prevent me from pursuing that new life, simply because I had the misfortune of coming from modest origins.

Well, actually, he managed to combine “reckless borrowing and spending” with “going to college.” My origins weren’t so modest that I’d describe them that way twice in one sentence, but we certainly didn’t have a lot of money. Perhaps foolishly, I therefore made decisions about where to go to college and graduate school—and how I would live while attending—accordingly.

Am I a deadbeat? In the eyes of the law I am. Indifferent to the claim that repaying student loans is the road to character? Yes. Blind to the reality of countless numbers of people struggling to repay their debts, no matter their circumstances, many worse than mine? My heart goes out to them. To my mind, they have learned to live with a social arrangement that is legal, but not moral.

What’s immoral about paying back the people who agree to loan you money in good faith? Or paying for an experience that “opened a new life to me beyond my modest origins”? Apparently, the fact that it isn’t free to begin with.

Maybe the problem was that I had reached beyond my lower-middle-class origins and taken out loans to attend a small private college to begin with. Maybe I should have stayed at a store called The Wild Pair, where I once had a nice stable job selling shoes after dropping out of the state college because I thought I deserved better, and naïvely tried to turn myself into a professional reader and writer on my own, without a college degree. I’d probably be district manager by now.

Or maybe, after going back to school, I should have gone into finance, or some other lucrative career. Self-disgust and lifelong unhappiness, destroying a precious young life — all this is a small price to pay for meeting your student loan obligations.

Yes, those were the only options. Going to a school where you’d qualify for a full scholarship or continuing to work part time while going to school were off the table. It was either a wildly expensive school or a life in retail. Or, perhaps such imagination is too much to expect for someone considering a career as a writer.

Some people will maintain that a bankrupt father, an impecunious background and impractical dreams are just the luck of the draw. Someone with character would have paid off those loans and let the chips fall where they may. But I have found, after some decades on this earth, that the road to character is often paved with family money and family connections, not to mention 14 percent effective tax rates on seven-figure incomes.

Uh huh. There’s no middle ground. It’s either be born rich or default on one’s loans.

Forty years after I took out my first student loan, and 30 years after getting my last, the Department of Education is still pursuing the unpaid balance. My mother, who co-signed some of the loans, is dead. The banks that made them have all gone under. I doubt that anyone can even find the promissory notes. The accrued interest, combined with the collection agencies’ opulent fees, is now several times the principal.

Even the Internal Revenue Service understands the irrationality of pursuing someone with an unmanageable economic burden. It has a program called Offer in Compromise that allows struggling people who have fallen behind in their taxes to settle their tax debt.

Given that all I know about Siegel is the information supplied in the piece and the byline “Lee Siegel is the author of five books who is writing a memoir about money,” I can only guess at the state of his finances along the way. Writing books is a hard way to make a living, although some are wildly successful at it. But one would think that, even having decided to take that risky path rather than one that would bring immediate cash flow three decades ago, he’d have at some point come to a point where he could start paying down his debt. Apparently, he’d rather have just kept the money.

How did he get away with that?

The Department of Education makes it hard for you, and ugly. But it is possible to survive the life of default. You might want to follow these steps: 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. Our economic system ensures that so long as you are willing to sink deeper and deeper into debt, you will keep being enthusiastically invited to play the economic game.

Seigel thinks everyone should follow suit:

I am sharply aware of the strongest objection to my lapse into default. If everyone acted as I did, chaos would result. The entire structure of American higher education would change.

The collection agencies retained by the Department of Education would be exposed as the greedy vultures that they are. The government would get out of the loan-making and the loan-enforcement business. Congress might even explore a special, universal education tax that would make higher education affordable.

There would be a national shaming of colleges and universities for charging soaring tuition rates that are reaching lunatic levels. The rapacity of American colleges and universities is turning social mobility, the keystone of American freedom, into a commodified farce.

If people groaning under the weight of student loans simply said, “Enough,” then all the pieties about debt that have become absorbed into all the pieties about higher education might be brought into alignment with reality. Instead of guaranteeing loans, the government would have to guarantee a college education. There are a lot of people who could learn to live with that, too.

I’m sympathetic to the idea that the United States should subsidize university attendance in the way that most of our OECD counterparts do. But Siegel’s vitriol is both misdirected and bizarre.

First, as already noted, he attended school from roughly 1975 to 1985, before the massive spike in the cost of attendance. I attended from 1984 to 1995, with a break for military service, and was able to pay as I went. (The military service helped, in that I got a whopping $345 a month combining Army Reserve drills, the GI Bill, and an ROTC contract stipend as an undergrad and $350 a month from the GI Bill during grad school, thanks to a combat tour.) He’s hiding under the cover of the very real crisis that recent grads face even though it has nothing to do with his own circumstance.

Second, while I suppose one can critique Harvard, with its $35 billion endowment, for charging sky-high tuition, the overwhelming number of colleges and universities are state-affiliated. They’re charging more for tuition because they’re getting decreasing support from the state coffers while seeing costs skyrocket for a variety of reasons, only some of which have to do with delivering education. Regardless, they’re hardly “rapacious.”

Beyond that, Siegel wasn’t “groaning under the weight” of his debt before finally crying Uncle. He simply decided not to pay—even when the money from his presumably successful career as a writer starting rolling in. Because, hey, he wanted to keep the money.

Siegel’s piece is the third most popular at the NYT site at the moment, so he’ll spark a much needed conversation about the way we finance higher education in this country. But he’s actually a very poor example of the crisis.

_________________
*People I trust elsewhere–and Wikipedia editors as well— are of the impression that the Lee Siegel in question is in fact the cultural critic. That syncs with the age information and “five books” but I was thrown off by ”I transferred to a state college in New Jersey.” If it’s the same Lee Siegel, he transferred back to Columbia and stayed for three degrees. He’s also been very well paid for a long time, diminishing my already low level of sympathy even further.

FILED UNDER: *FEATURED, Education
James Joyner
About James Joyner
James Joyner is a Security Studies professor at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. LaMont says:

    Seigel’s experience may not be a great example but I see nothing wrong with his actions on principle alone, which is largely my impression on why he chose to default. We all know the cost of education in this country is a farce. Perhaps Seigel is using his example, however weak it is, to bring light to a problem we should all be outraged over. Fact of the matter is, if enough people choose to default as he did it might literally spur an act of Congress on behalf of the kids paying these ridiculous fees. If nothing is done then it’s business as usual as the total student loan debt increases toward $2 trillion while banks and the government profit off the interest – inevitably heading toward the new bubble that Siegel’s suggestion is attempting to deflate. If nothing meaningful is done we will all lose anyway.

  2. Gustopher says:

    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. Our economic system ensures that so long as you are willing to sink deeper and deeper into debt, you will keep being enthusiastically invited to play the economic game.

    Seems like he has his justification for not paying off any other debts worked out, too. The rates are stratospheric, the lenders are predators, the loans are subprime — he would be a fool to pay them back. He’s just hitting back at the system, playing the rules in a way that the rule makers never intended, selflessly fighting the good fight for all of us.

  3. KM says:

    Having managed to get a PhD without my parents paying for it or going through debt, let alone in such volume that it would have dictated my career options, I’m rather confused as to how Siegel managed to get into this bind to begin with.

    Sickeningly easily. Having just paid off my student loans last month ($100K in 7 years, baby!!), I naturally wanted to celebrate. Friends who I went to school with, including a woman who graduated with me, were reluctant, even furious when I proposed a night out on me. Turns out all of them still had at least $50K+ to go and resented the hell out of it. The woman in particular has since her balance significantly go up due to repeated deferments and paying only the minimum payments with a crappy salary. Medical issues, family troubles, cost of living and the ever-present poor pay jobs were all cited but I know for a fact there are also vacations, new TVs and cars as well as a house she couldn’t afford being throw into the mix.

    Can’t speak for Siegel but recent experiences has shown me people treat student loans like a millstone: it’s a once useful rock until you get out in deeper waters where it drowns you. It’s never a priority; hell, it’s bottom of the barrel at best for most. There’s always another bill to pay, always something else to buy/do/own. That’s precisely why it’s a drag – unless you kill it quickly, you’ll pile on a mortgage, kids and you know, life. Siegel probably just let it go and go and go until it was too big a hassle and then said screw it.

  4. KM says:

    Beyond that, Siegel wasn’t “groaning under the weight” of his debt before finally crying Uncle. He simply decided not to pay—even when the money from his presumably successful career as a writer starting rolling in. Because, hey, he wanted to keep the money.

    Siegel’s piece is the third most popular at the NYT site at the moment, so he’ll spark a much needed conversation about the way we finance higher education in this country. But he’s actually a very poor example of the crisis.

    Damn right. The man sounds selfish as hell. If he’s had almost 3 decades to pay it off and couldn’t, there is either something seriously wrong with his circumstances (which he was have cited for pity) or something seriously wrong with him as a person. He’s looking to stir up Millennials like myself who were screwed into large loans to justify being a deadbeat. A young and newly graduated student making $30K with a $70K bill+ has reason to complain; a middle-aged or more man who’s had decades to deal with this has only himself to blame that the bill’s bad enough he needs to walk away from it.

  5. Tony W says:

    I get that Siegel is just following the well-worn path of Donald Trump and many wealthy hypocrites before and after him, but it’s not ethical to make a promise then fail to keep it. As he himself points out, if everyone behaved that way there would be chaos. Unfortunately I don’t think it’s the chaos he imagines where Congress finally wakes up and takes action against the multitude of worthless schools getting folks in debt. Instead we’d see tightening of the credit market overall, and usury rates like we saw in the late 1970s.

  6. superdestroyer says:

    I suspect that this version of “Lee Siegel” is living outside after seeing his interview on CNBC and then reading the article. His last statement on CNBC was he suggested his daughter marry a Norwegian.

    However, Ms. Siegel seems to represent the basic premise of the Occupy Wall Street types and most liberal whites these days: The laws and policies of the country need to be rearranged so that the standard of living of free lance writers improves.

  7. Mikey says:

    I have no sympathy for this guy. None. He claims, “I chose life…” No, he took on an obligation he is now refusing to honor, and because his loans are government guaranteed, he has put the rest of us on the hook to pay them back.

    Dude’s a selfish and narcissistic asshole.

  8. superdestroyer says:

    @Mikey:

    Isn’t that the point when Senator Sanders proposes free undergraduate for all. That law, people like Mr. Siegel could have stayed at his private liberal arts university and still become a writer. Of course, what Mr. Siegel fails to understand is that everyone will have to pay more taxes to fund free undergraduate for all. What Mr. Siegel also seems to not understand is that if everyone has a bachelors’s degree that the value of the degree will go down, the pay for people with only an undergraduate degree will go down, and that incomes taxes will have to go up. If he refuses to tax a job that would generate income to pay back his student loans, then what has he paying in taxes.

  9. Modulo Myself says:

    It’s totally legal to default on a loan. So the argument seems to be why can’t Lee Siegel take legal advantage of his rights?

    I will make a minor prediction: a lot of people who cheer on the rights of the wealthy to structure their wealth to avoid paying taxes will find Lee Siegel’s actions to be theft.

  10. Gustopher says:

    I do wonder whether there is someone helping him push his story, someone who would like to put the most unappealing face possible on student loan default. This man is almost a caricature.– phrases like “live with or marry someone with good credit” seem ready-made to make people dislike him.

    Does this man even really exist?

  11. Mikey says:

    @Modulo Myself:

    a lot of people who cheer on the rights of the wealthy to structure their wealth to avoid paying taxes will find Lee Siegel’s actions to be theft.

    And I, who don’t cheer that on at all, also find his actions to be theft.

    Unfortunately, we can’t send the repo man out to grab the education he stole from the rest of us.

  12. Hal_10000 says:

    The problem with the push for free education is that it isn’t free. And there’s a very good case to be made that the fed’s open-ended commitment to education is one of the factors driving up the cost of education (as trainloads of federal money tend to do everywhere, be it defense spending or construction). There’s a good case for helping people afford education; there’s a poor case to be made for just handing out money instead of insisting on some value. And the student loan system has made the government the world’s largest predatory lender. There are fees and practices in student loans that are illegal anywhere else and student loans can’t be discharged in bankruptcy. Still, you take on the obligation, you should honor it.

    FWIW, the rising cost of education is not an inevitable feature of our system. Mitch Daniels has been holding down education costs at Purdue and has frozen tuition for three years. I’m convinced most universities could do the same if holding down costs were a priority. But they seem more interested in expensive empire-building.

  13. MarkedMan says:

    A few factoids FWIW
    – He sounds like a real tool (to me, anyway)
    – The comments at the NYT are running overwhelmingly negative
    – Per the comment above, there are debts that survive bankruptcy. Some years back Congress made student loans one of those.
    – I’m all for a system where if you are willing to work hard, you will enjoy a decent standard of living. Considering that union busting has bought us to the point that college is required for a chance at a decent standard of living, making it available to everyone without incurring crushing debt is important. (I’m still not defending this guy)

  14. Guarneri says:

    What’s the problem? Having been told “we”must pay for people’s food, clothing and shelter, what’s wrong with paying for their education, cell phones, cars, child care, internet connections, beer, health care, parents care……. God forbid they must manage their own affairs like adults. That might require responsibility, trade-offs or sacrifices. Hard to boink chicks for four years at I felta thigh when you are worrying about student debt. Might be a blow to self esteem or micro aggressive. And anyway., if the “government pays” it’s free, right?

    Party on, Wayne.

  15. Mikey says:

    @Hal_10000:

    And there’s a very good case to be made that the fed’s open-ended commitment to education is one of the factors driving up the cost of education

    I don’t think there’s any doubt this is the case. Unfortunately, we Americans have basically put all our eggs in one basket as far as lifestyle attainment by tying all the high-paying jobs to having a college education. It’s been discussed here on OTB before–there are jobs for which the employer has set “Bachelor’s degree” as a requirement, but which could be done just as well by a high-school graduate with proper training. This just inflates the bubble ever more.

    Moving to a more European-style system has its pitfalls as well. It’s expensive, for one thing, although they do ration access. At the same time, though, they still have a respect for skilled trades and hands-on jobs that America’s push to college-educate everyone has all but destroyed here.

  16. george says:

    I’m not sure why a student debt is treated differently than any other kind of debt.

    Big companies (and lately banks) bail on debt (or get gov’t assistance) all the time, its part of the cycle. How many of them feel bad about defaulting?

    Disclosure: I never needed a student loan; my degrees are in science and engineering, and I had summer jobs, scholarships, teaching and research assistantships all the way through – I don’t think nearly as many are available in the liberal arts, especially in graduate studies.

    I agree free post secondary education isn’t likely to be a good thing (or fair, what about all the mainly poorer people who end up subsidizing the kids of the wealthier who go to college), though the current system is disastrous. A happy medium would be nice.

    And even a free college system still often leaves debt, since there’s always the cost of living.

  17. Mikey says:

    @george:

    I’m not sure why a student debt is treated differently than any other kind of debt.

    It’s to keep people from graduating and immediately declaring bankruptcy to discharge the loan.

    And even a free college system still often leaves dept, since there’s always the cost of living.

    Yeah, my daughter had full scholarships and sponsorships all the way to her PhD and still has some loans. And she worked, too. It’s just expensive to live sometimes.

  18. Rafer Janders says:

    @Mikey:

    And I, who don’t cheer that on at all, also find his actions to be theft.

    Except it’s not, in that defaulting on a loan is not a criminal act.

    Loans anticipate default. All commercial lenders anticipate that a portion of the loans they make will never be repaid, and thus price that possibility into their model.

  19. DrDaveT says:

    First, as already noted, he attended school from roughly 1975 to 1985, before the massive spike in the cost of attendance.

    Waaay before. I attended a prestigious private university from 1980 to 1984, for about $10,000 / year — before figuring in scholarships, etc. My student loans were at interest rates ranging from 3% to 7%.
    @Modulo Myself:

    It’s totally legal to default on a loan.

    It’s totally legal to spit on your grandmother, too. “Totally legal” is a really low bar.

    I wonder what Mr. Siegel’s credit rating is like. I sure as hell wouldn’t ever lend him money…

  20. Rafer Janders says:

    @Mikey:

    It’s to keep people from graduating and immediately declaring bankruptcy to discharge the loan.

    And yet companies are allowed to declare bankruptcy to discharge their loans, and no one accuses them of being “immoral.”

    It’s fascinating how the language of guilt and morality and obligation is trotted out to shame individual borrowers who make rational, self-interested economic decisions, when that same language is never applied to corporate entities who do the same. Hell, companies who cut their losses are celebrated as hard-headed and clear-eyed.

  21. Mikey says:

    @Rafer Janders:

    All commercial lenders anticipate that a portion of the loans they make will never be repaid, and thus price that possibility into their model.

    Yes, they do–and that’s why people like Siegel are themselves responsible for the high interest rates about which they whine so loudly.

    What he did is theft–he borrowed money to finance something he wanted, and has refused to pay it back. You can pick the nit that it isn’t legally theft, but in practical and moral terms it is. And the rest of us–taxpayers and current and future college students–are all on the hook to pay for it.

  22. EddieInCA says:

    Dear Dr. Joyner –

    I’m a deadbeat. I defaulted on a $350,000 loan. At least in the eyes of the law, I am. Yet, I make a great living, and have a sterling credit record. How is that possble?

    Well, I got a mortgage in 2007 for $365,000, from Countrywide, at an adjustable rate of 8%, which ballooned up to 9.6% by the beginning of 2008. My payments were $3200 per month, including insurance and taxes. The loan was supposed to be a temporary loan that would be refinanced in one year. I had documents from Countrywide stating that they would refinance it to a fixed rate in June of 2008.

    We all know what happened next. Financial crisis. Countrywide was sold to Bank of America. Bank of America has no interest in refinancing my mortgage, and I’m now between jobs with no income to show. Mortgage Interest rates start dropping. However, my interest rate stops at 7.5%, even while the rates keep dropping. Turns out not only could I not refinance, but my mortgage had a “floor” under which the interest rate could not go below. So by 2010, Mortgage rates are under 4%, and I’m paying 7.5. I’m working, making great money, and yet Bank of America will not refinance my mortgage. Other’s won’t touch my mortgage because “I’m not distressed”. I’m was paying $3200 per month on a mortgage that should have been $1700 per month, based on the market.

    I tried relentlessly to get my loan refinanced. I filled out more than 100 different documents for Bank of America. Tried every program. Each time, it came back. They would not refinance me. To this day, I don’t know why not.

    Finally, early 2011, I went to Bank of America, and told them, flat out, “If you do not refinance this mortgage, I will save $100K, and buy a house, then turn this one over to you, because it makes no sense for me to pay an extra $18000 per year in interest when I don’t need to.” They said “No, you won’t. Nobody does that.”

    I dd just that. I make a good living when I choose to work, and I went to work non-stop for a year. I saved $120K in about 10 months, bought a lovely 3-2 Tarzana home for $525K, and walked away from the old house in another part of the Valley. I was smart enough to finish the transaction for the new house before walking away from the old house, and I made sure I had three credit cards in great standing – knowing my credit would take a hit from the deed in lieu transaction with Bank of America.

    Here’s the irony. AFTER completing the purchase of my new house, and walking away from the old house, Bank of America offered to help me refinance. I told them to “Go F**k Themselves”. I felt bad saying that to the poor woman on the phone, but it was cathartic.

    Three years later. My credit rating is back above 840 and I’m loving the new house…. with a 3.35% fixed rate mortgage.

  23. JKB says:

    @Mikey: Unfortunately, we can’t send the repo man out to grab the education he stole from the rest of us.

    The “education” no, but defaulting (or discharging through bankruptcy) should require the surrender of the credential and the schools only acknowledging attendance vice transcripts or conferment of degrees.

    The individual can keep the knowledge they gained but they lose the piece of paper. If anything, it would raise the value of studying in college.

  24. michael reynolds says:

    Silly me. I was just this kind of twat for much of my life, but it never occurred to me to present my juvenile narcissism as a virtue.

    I had some minor student loan money, very minor since it was a single semester at a state school in 1975. I mostly used the money to buy food and medicine. (Okay, Twinkies and weed, if you want to get technical about it.) I think it was a couple grand and I am quite sure I never paid it off. I have to assume it was written off at the bank’s end. I wouldn’t even know who to repay now.

    But how blind of me not to celebrate that. Yay me! I’m kind of a hero, apparently.

  25. EddieInCA says:

    Why is it immoral for individuals to default on loans, but not businesses?

  26. gVOR08 says:

    @EddieInCA: A question many asked during the housing implosion.

  27. James Joyner says:

    @EddieInCA: I don’t argue that it’s per se immoral to default on a loan. Maybe you were making $100,000 a year when you took it out, got sick, lost your job, or had other circumstances outside your control befall you. Bankruptcy is sometimes the only resort and it’s not immoral under that circumstance.

    Were Lee Siegel faced with a choice between feeding his family and paying his school loans, I’d be sympathetic to his choosing the former. Instead, he’s just a selfish twat that decided that, having financed two and a half degrees at an Ivy League university, he’d rather not pay back the money. That’s immoral.

  28. Mikey says:

    @EddieInCA: It’s not de facto immoral for individuals to default on loans. We’re not talking about everyone, we’re talking about Lee Siegel. And yes, what he has done is immoral.

    There are situations, especially recently, in which people legitimately have no choice. You have to eat. But this guy apparently has had no problem earning an income; he just doesn’t feel he has to pay back his loans.

  29. JKB says:

    Well, we could have publicly funded college education. The government will set up a fee schedule like we have for Medicaid and Medicare treatments. So much for a class in mechanics, less for one in say 20th century French lit. And we’ll have one of those boards like the Obamacare “death panels” that decides who gets to study what and where.

    The idea of student loans is for students to take out a salary advance to pay for their higher education given the presumption that college leads to higher paying jobs. Instead, everyone wants the blue collar workers in Compton to pay for the 5-yr party for the kids of Beverly Hills or those in the Bronx to pay for the snowflakes of the Upper East Side.

    Why do so many want to take from the poor and working class to support the upper middle class brats in the manner to which they’ve become accustom?

  30. Rafer Janders says:

    @Mikey:

    What he did is theft–he borrowed money to finance something he wanted, and has refused to pay it back. You can pick the nit that it isn’t legally theft, but in practical and moral terms it is.

    What I find fascinating is that this language of “theft” and morality is never applied with any regularity elsewhere in business. I actually work in corporate finance, and see loan defautls, bankruptcies and restructurings all the time. When Company A defaults on a billion dollar loan it took out from Bank B, no one ever claims it was theft or whines “they stole from us!” It’s simply treated as the cost of doing business, priced into the model, and we have a workable system in place to deal with it.

    And yet let Person C default on a $50K loan from the same Bank B, and suddenly he’s a criminal? Why is his rational, self-interested economic decision theft, while Acme Company’s rational, self-interested economic decision isn’t?

  31. gVOR08 says:

    @James Joyner: “Twit”. I’m sure you meant to say “twit” and spell check got you.

  32. Jimbo OPKS says:

    @Tony W: Are you saying Columbia is a worthless school?

  33. JKB says:

    @Rafer Janders:

    No problem, what should the student loan originators require for collateral to secure the loan to students? Few business loans don’t have some underlying asset that can be take in the even of default.

  34. Rafer Janders says:

    @Mikey:

    What he did is theft–he borrowed money to finance something he wanted, and has refused to pay it back. You can pick the nit that it isn’t legally theft, but in practical and moral terms it is.

    That’s not a nit, that’s the essence of it.

    If he had borrowed from a friend or a family member, someone to whom he had a personal obligation, then yes, I’d be willing to say he had a moral obligation to repay, based on reciprocal ties of loyalty and trust.

    But he didn’t. He borrowed from a business whose business it is to lend money, and which anticipates that some of their borrowers will default. Morality simply doesn’t come into it. Do you think the bank thought that it had a moral obligation to lend to him? Do you think that, if Siegel had genuinely fallen on hard times and begged for his loan to be forgiven, the bank would have written the loan off out of moral reasons?

    No and no. If the bank, as a business decision, does not factor morality into its dealings with the borrower, then the borrower, also as a business decision, must not factor morality into his dealings with the bank.

  35. Jimbo OPKS says:

    @gVOR08: Spell check or not, I think Joyner was on to something.

  36. Modulo Myself says:

    @michael reynolds:

    He’s not claiming to be a hero. He’s saying basically he made the right choice. Guy wanted to write. He did not feel that he could do this by having a job. So he defaulted on his loans and wrote his books.

  37. superdestroyer says:

    @MarkedMan:

    And what form of union do you really think could exist in today’s global economy that could pay high wages, not handicap the company that has a unionize workforce, and not be slowly replaced by capital?

    Just like there is no going back to the 1950’s on social issues, there is no going back to the 1950’s on economic issues.

  38. michael reynolds says:

    @Rafer Janders:

    This is where the Greed is Good ethos fails. Virtue is necessary in business, it’s not some add-on, not free floor mats, it’s actually necessary, because if business exists in a sphere divorced entirely from virtue it eventually becomes clear to the peasants that morality is only for them, and therefore an unfair and one-sided burden which can be justly rejected.

    Now, try to explain that to a Wall Street type who doesn’t see a moral issue in firing a thousand people to improve the size of his bonus check.

    The people’s resentment is simmering and could easily boil. That poll on income inequality should send a chill up spines at Goldman Sachs.

  39. superdestroyer says:

    @Rafer Janders:

    A company that declares bankruptcy (the right kind) is liquidated. The owners lose everything. There is a reorganization that is to create more time to pay debt and to write down some types of debts but a company never really benefits from a bankruptcy in the long run.

  40. EddieInCA says:

    @James Joyner:

    Lee Siegel isn’t nearly as unique as you think, Dr. Joyner. Here’s an article from 2012

    The largest share of student loan deadbeats are celebrating their 25th college reunions.

    Borrowers age 40-49 have the highest proportion of loans that are at least 90 days behind, according to new data published by the Federal Reserve Bank of New York. And that’s been true each quarter since 2005.

    Here’s a profile of who holds student loans as of the first quarter of 2012:

    There are 14 million more student loan borrowers now than there were in 2005, for a total of 37 million.
    About 25 million are age 39 and under.
    More than 7 million are age 50 and older.

    And then it comes to debt levels:

    Thirty-somethings have the largest share of debt, about 1/3, or $307 billion. On average, their balance is $28,906.
    Debt levels of those in their 50s increased to $106 billion, from $34 billion in 2005. The average balance is $23,183.
    Those age 60-plus are now carrying more than $43 billion, up from $8 billion. Their average balance is $19,225.

    The explosion in student loans — as well as mounting delinquencies — has some experts worrying that it’s the next financial bubble to pop.

  41. michael reynolds says:

    @Modulo Myself:

    I pushed a vacuum and scraped sh!t out of toilets while I was trying to write. I ghosted Sweet Valley books while I was trying to write. I have zero pity for this guy.

  42. Mikey says:

    @Rafer Janders: Well, we’ll just have to agree to disagree, then. I’m pretty far from conservative, but I was still raised to honor my obligations to the best of my ability.

    It would be unfortunate, certainly, had Siegel legitimately fallen on hard times and been unable to pay. I would definitely avoid attaching the term “theft” in that situation. And I’d probably even be angry at the bank for trying to squeeze blood from a rock.

    But that isn’t what’s happened here. We have a guy who has simply decided not to honor an obligation he is able to fulfill. At that point, yes, morality definitely enters into the discussion. And I don’t see how you can read his piece and still think he didn’t factor morality into his decision. The whole thing is a morality statement.

  43. Rafer Janders says:

    @michael reynolds:

    Virtue is necessary in business, it’s not some add-on, not free floor mats, it’s actually necessary, because if business exists in a sphere divorced entirely from virtue it eventually becomes clear to the peasants that morality is only for them, and therefore an unfair and one-sided burden which can be justly rejected.

    Right, but that’s the con. Banks would love it if we looked at a guy who defaulted on his student loans as immoral, because that makes many, many people who really would be better off defaulting beggar themselves to repay.

    They don’t, however, themselves want to be seen as immoral when they make a self-interested decisions to cut their losses. I’m pushing back on the idea that this language of “shame,” “stealing,” “immorality” is targeted mainly against small, individual defaulter and never against large, powerful defaulters.

  44. Rafer Janders says:

    @superdestroyer:

    A company that declares bankruptcy (the right kind) is liquidated. The owners lose everything. There is a reorganization that is to create more time to pay debt and to write down some types of debts but a company never really benefits from a bankruptcy in the long run.

    Um, between the two of us, one of works in Wall Street corporate finance and the other doesn’t, so trust me when I tell you that what you wrote above is absolute nonsense, and you have no idea whatsoever about how business actually works.

  45. al-Ameda says:

    @Mikey:

    Yes, they do–and that’s why people like Siegel are themselves responsible for the high interest rates about which they whine so loudly.

    What he did is theft–he borrowed money to finance something he wanted, and has refused to pay it back. You can pick the nit that it isn’t legally theft, but in practical and moral terms it is. And the rest of us–taxpayers and current and future college students–are all on the hook to pay for it.

    I am not amused by Lee Siegel.

    Both of my daughters are graduates of liberal arts colleges, have student loans with moderate/modest balances, and both have made personal choices to work in non-profit non-profit organizations, that make it tough live in the Bay Area, pay rent and debt service on their loans. Neither of them have considered doing as Siegel did and discharge the obligation without paying.

    Now, everyone has a difference circumstance, so perhaps there is more to Siegel’s story than I (we) know, but based what is presented here, there is not much to like.

  46. Mikey says:

    @michael reynolds:

    Now, try to explain that to a Wall Street type who doesn’t see a moral issue in firing a thousand people to improve the size of his bonus check.

    I used to work for Canadian telecommunications mega-manufacturer Nortel. Back in 2003, as the company was pushing to recover from the dot-com implosion, the CEO and CFO cooked the books to make it appear the company had turned a profit. They stood to reap multi-million-dollar bonuses. In 2004 their malfeasance was discovered and they were fired, but the confidence of both investors and customers was utterly shaken and the company never recovered.

    In 2009 Nortel declared bankruptcy, and by the end of the year it had been broken up and sold off in pieces. It was a truly sad end to a company that had existed for over 100 years and had been called “The GM of Canada.” Now it’s “Canada’s Enron.”

    Nortel’s demise wasn’t all that CEO’s fault, but his actions were the turning point into inevitable corporate death. All to pad his bonuses.

  47. Rafer Janders says:

    @Mikey:

    We have a guy who has simply decided not to honor an obligation he is able to fulfill.

    Right, because he’s decided it’s in his rational economic self-interest not to.

    At that point, yes, morality definitely enters into the discussion

    Again, I think that if morality didn’t factor into the bank’s decision to lend him the money (and trust me — it didn’t), then morality does not factor into his decision to repay the money. Since neither of of these two actors have any personal ties of loyalty, family, friendship etc. between them, theirs is purely an arms-length economic relationship and they can treat each other on those terms. The bank has no moral obligations to Siegel (and even it if did would ignore them) so I think he’s perfectly rational to apply the same calculus.

  48. Tyrell says:

    @EddieInCA: A very good story, but I don’t know how you could get a high credit score like that after walking away from the mortgage on the other house. I have found BOA hard to work with concerning lowering credit card interest.

  49. Mikey says:

    @Rafer Janders: The problem with this view is Siegel and the bank are not the only parties involved. The American taxpayer is involved because these are government guaranteed loans, and future students are involved because Siegel’s actions result in higher interest rates or a lower likelihood of getting a loan.

    If it were purely a relationship between Siegel and the bank, you’d have a strong point, but his action impacts others without their consent. And that’s a moral problem, isn’t it?

  50. EddieInCA says:

    @Tyrell:

    Because it’s wasn’t a foreclosure. It was a “deed in Lieu”. It’s only a three year hit. Other than that issue with BofA, I’ve never had a late payment, never defaulted on any loan, and I’ve been a homeowner since 1982, with a few income properties over the years as well. So, even though it was a big hit, it was temporary (three years). Once that fell off, the rest of my credit history kicked in.

  51. Mikey says:

    @Rafer Janders:

    I’m pushing back on the idea that this language of “shame,” “stealing,” “immorality” is targeted mainly against small, individual defaulter and never against large, powerful defaulters.

    See my comment to Michael Reynolds regarding Nortel. It doesn’t get much more thieving, shameful, and immoral than what happened there.

  52. grumpy realist says:

    @Rafer Janders: What seems to keep companies from doing this off the bat is the “thinly capitalized” status as well as the legal ability of courts to go after the personal assets of the company owners if they try this. (“thinly capitalized” == greater than 1 debt to equity ratio.) Plus the tax authorities look very suspiciously on stuff they run into that they discover is thinly capitalized–> assumption of tax schemes. Which means if the IRS discovers that you are running a thinly capitalized company, they’re very likely to audit your personal taxes.

    So you’ve got to have at least a healthy-looking company at some point in the game.

  53. Rafer Janders says:

    @Mikey:

    It doesn’t get much more thieving, shameful, and immoral than what happened there.

    Well, sure, but that’s an entirely separate issue than here. I remember that case, and seem to recall it involved widespread and outright civil and crimiinal fraud by the top management.

  54. Rafer Janders says:

    @Mikey:

    If it were purely a relationship between Siegel and the bank, you’d have a strong point, but his action impacts others without their consent. And that’s a moral problem, isn’t it?

    But the actual contract governing the loan IS only between Siegel and the bank. “The American public” is nowhere to be found on that document as a third-party beneficiary.

  55. grumpy realist says:

    @Rafer Janders: I remember a lot of discussion about “jingle mail” and the morality of using that as a method to walk away from a loan that was underwater.

    The problem is–demanding morality only from one side of the equation (the lendee) as opposed to the other side (the lender) puts the two on an uneven playing field.

  56. gVOR08 says:

    @superdestroyer:

    And what form of union do you really think could exist in today’s global economy that could pay high wages, not handicap the company that has a unionize workforce, and not be slowly replaced by capital?

    German ones?

  57. Rafer Janders says:

    @grumpy realist:

    The problem is–demanding morality only from one side of the equation (the lendee) as opposed to the other side (the lender) puts the two on an uneven playing field.

    Yes, and if you suggested to the lender that he had a moral obligation to make the loan in the first place, he’d laugh in your face. The lender doesn’t make the loan out of any sense of morality — he makes it so he can make a buck from the borrower in fees and interest. Similarly, the borrower should be allowed to consider his rational economic self-interest, and not “morality”, in his decision to repay the loan. Both parties should get to stand on the same level.

  58. superdestroyer says:

    @Rafer Janders:

    Have companies not declared bankruptcy and gone out of business? Or is Circuit City still around? Have companies not gone through organization and gone out of business later.? Have investors not been adversely affected by companies going out of business.

    Please name a company that declared bankruptcy and is not the darling of Wall Street. One does not have to work on Wall Street to notice that over time business go out of business or does working on Wall Street make one forget about the long term.

  59. Tony W says:

    @Jimbo OPKS: Columbia worthless? I know your question is tongue-in-cheek, but no it is a good school. That said, they certainly didn’t do a very good job educating him on societal norms during his time there.

    The bigger problem to which he is trying to attach himself is the Brywood College of Dental Assisting (R) which charges $35K per year for a program that qualifies you to get an entry level job after two years of training. That is a real problem and really does victimize people. I’d be a lot more sympathetic to this story if he was suckered into one of those programs.

    And “Brywood” is a fictitious name I just made up for this post.

  60. superdestroyer says:

    @gVOR08:

    The German automobile manufacturers cannot even duplicate their process in the U.S. Being in Germany with a goverment that protects established companies and is very German cannot be reproduced anywhere else in the world. Most of Europe cannot reproduce the corporate culture of Germany. Do you really think that it can be done in the U.S. Also, the Germany manufacturers are very capital driven and are helped by the extremely low birthrate of Germany.

  61. wr says:

    @george: I’m not sure why a student debt is treated differently than any other kind of debt.

    It’s to keep people from graduating and immediately declaring bankruptcy to discharge the loan.”

    Actually, no. It’s because when the program was founded in the early 70s, Republicans didn’t want to help all those horrible students who were protesting their lovely war and wearing their hair long, so they insisted that unlike every other kind of debt, college loans not be dischargable through bankruptcy.

    What I find sad about JJ’s passionate contempt for Siegel is that he never seems to have a problem when companies and states decide that it’s simply too hard for them to pay the pensions they negotiated and owe. Debts to working people by the powerful are actually a terrible drag on the economy that must be voided, while debts by working people to large entites must be respected at all costs.

  62. wr says:

    @Mikey: “But that isn’t what’s happened here. We have a guy who has simply decided not to honor an obligation he is able to fulfill. At that point, yes, morality definitely enters into the discussion. And I don’t see how you can read his piece and still think he didn’t factor morality into his decision. The whole thing is a morality statement.”

    Sure. Except that “morality” in the current business environment is a sucker’s game. Because we as citizens are expected by the morally upright among us to uphold our obligations to the giant corporations because that’s the moral thing to do — but when the corporations steal from us, or take huge government ballouts after the exects tanked the economy to feather their own pockets, or dump coal ash into the drinking supply of an entire state, we’re informed that a corporation simply can’t act morally because their sole obligation is to ensure profits for their stockholders.

    And you can play that for a while — as evidenced by all the pearl clutching here. But at some point it’s gets to be like black communities are seeing the police — once people realize that the rules are actually rigged against them, they stop playing by them.

  63. michael reynolds says:

    @wr:

    This is the point I was trying to make up-thread. @Rafer’s argument has some weight. What is your moral obligation to repay the mob loan shark? (We’re clear on the practical value of repaying mob loan sharks.) In a corrupt and morally bankrupt system, why should the little guy be the only one left following the rules?

  64. Mikey says:

    @Rafer Janders: It’s a government guaranteed loan. The American Public is on the hook to pay it if the borrower can’t or won’t.

    Also, again, Siegel’s action impacts future borrowers by increasing their interest rate and/or reducing their ability to borrow.

    Also also again, my problem isn’t with the fact of Siegel’s default, it’s with his stated reasoning. Factual vs. normative.

  65. wr says:

    @Mikey: ” It’s a government guaranteed loan. The American Public is on the hook to pay it if the borrower can’t or won’t.”

    Oh, please. What are we talking about? A couple hundred thousand dollars? Meanwhile, every Republican is trying to eliminate the inheritance tax to spare a handful of familes this terrible burden, even though the rest of us will then be on the hook for the hundreds of millions the rich heirs won’t have to pay.

    You don’t lile Siegel? That’s fine — I’ve always thought he was a putz. But what he has done, whether you approve or not, will have absolutely no effect on anything besides his credit rating.

  66. Mikey says:

    @wr: How does any of that relieve an individual from an obligation he entered into freely, and has the ability to fulfill?

    And as I’ve told Rafer, my issue isn’t with what Siegel’s action did to the lender, its with what it does to the rest of us. It’s a government guaranteed loan, which means the government covers the debt if the borrower defaults, which in turn means WE are on the hook to pay for HIS default. Additionally, future students will themselves have to pay more in interest when borrowers capable of repayment refuse to do so.

    You may be happy sticking the American taxpayer with this guy’s bill because he’s making some Grand Statement against corporate malfeasance, but I’m not.

  67. wr says:

    @Mikey: There is simply no effect that this default will have on interest rates. There is simply no effect that this default will have on anything. There is not terrible bill the American taxpayer will be stuck with. You’re simply being silly.

  68. Mikey says:

    @wr:

    Meanwhile, every Republican is trying to eliminate the inheritance tax to spare a handful of familes this terrible burden, even though the rest of us will then be on the hook for the hundreds of millions the rich heirs won’t have to pay.

    While I agree with you this is a crappy thing, it’s also a bit of a red herring in the current discussion. The two are really entirely unrelated.

  69. Mikey says:

    @wr: Of course we won’t go broke covering his loan, but you’re missing the point, it’s the PRINCIPLE of the thing.

    How much money does it have to be before it’s wrong?

  70. Mikey says:

    @wr: Actually, student loans that had been in repayment for more than five years were dischargeable in bankruptcy until 2005.

  71. Keith says:

    What bothers me about our student loan system is that a loan is generally characterized by risk on both sides. That risk, generally, ensures that the issuer of the loan has done basic due diligence on the borrower’s ability to pay back the loan. Since these debts aren’t dischargeable via bankruptcy and the US government backstops 100% (or nearly 100%) of them, there’s no risk on the issuer of the loan. There’s no reason to exercise any prudence in lending. To me, that’s part of the reason you get for-profit colleges charging $80,000 for an MBA. It matters not to them if the education will ever create the sort of income needed to pay it back; they’ll get paid either way.

    I think you can extend the logic even further–if the issuer of the loan has no risk, is it really a loan? I think it can be argued that a loan under those terms ceases to be a loan and becomes something more like voluntary indentured servitude. And while it may not be a good idea to get student loans, I can certainly understand why people do it.

    (All of that said, the gentleman in the article makes a poor spokesman for this line of thinking.)

  72. Rafer Janders says:

    @Mikey:

    It’s a government guaranteed loan. The American Public is on the hook to pay it if the borrower can’t or won’t. Also, again, Siegel’s action impacts future borrowers by increasing their interest rate and/or reducing their ability to borrow.

    Which, again, is already priced into the model. The banks know and anticipate that a certain percentage of borrowers won’t and/or can’t repay. That future impact is already baked into the system, it’s already accounted for by the pricing and risk algorithms. There is no loan book in the world that has a 100% repayment rate. Default is part of the process.

  73. Rafer Janders says:

    @Mikey:

    Of course we won’t go broke covering his loan, but you’re missing the point, it’s the PRINCIPLE of the thing.

    That’s the point you’re missing – there is no principle of the thing. You’re attempting to hijack the language of morality to what should otherwise be seen as an arms-length economic transaction between two self-interested and supposedly rationa actors.

    Do you think the bank had a moral obligation to make the loan to Siegel? Unless your answer to that is yes, I don’t see how you can say that Siegel had a moral obligation to repay. Lender beware.

  74. grumpy realist says:

    @Mikey: They’ve also make student loans quasi-dischargable (you pay a certain percentage of your salary for X years, then anything owing after that is written off.)

    Would be good if they a) made the percentage small enough, b) made the number of years X reasonable, and c) clamped down hard on student tuition.

    Heck, if the loss of a loan were split between the government and the college/university, maybe they might not be do eager to jack up tuition rates.

    It would also be good if universities could get rid of the assumption that they need that entire middle layer of Assistant Deans and similar.

  75. Mikey says:

    @Rafer Janders: The difference here is the loaner isn’t going to simply price default into its model, it’s also going to ask Uncle Sugar to cover the loan.

    I don’t care much if Bank of America has to eat Siegel’s loan–you’re right, they expect to eat some of them. But I do care that the rest of us have to eat it too, and it doesn’t matter to me if it’s an infinitesimal fraction of the federal budget because the principle is still valid.

  76. Mikey says:

    @Rafer Janders: The moral component is in how his choice to default impacts others who were not a party to the original transaction.

    He chose to take the loan, the lender chose to lend the money, the business transaction occurred between the two of them. It’s a business transaction, not a promise to a brother. That’s the factual part.

    The normative part is how he SHOULD consider the ways his subsequent action impacts others.

    The factual part isn’t arguable. You’re absolutely right about it. It’s the normative part about which I want to express my opinion.

  77. grumpy realist says:

    Speaking of defaults, it looks like Greece has almost completely fallen off the ledge. (Greece is also a textbook case of the axiom: “Yes, you CAN piss off your banker enough that he won’t loan you any more money.”)

  78. jukeboxgrad says:

    Rafer Janders:

    I actually work in corporate finance, and see loan defaults, bankruptcies and restructurings all the time. When Company A defaults on a billion dollar loan it took out from Bank B, no one ever claims it was theft or whines “they stole from us!”

    Yes. And here’s a nice example from the life of Mitt Romney:

    … in the early 1990s, Bain & Company overextended itself after an ill-advised decision in 1985-1986 by the firm’s eight founding partners to take $200 million out of the firm, for themselves, with borrowed money … Romney was brought in to fix things … Romney drove a hard bargain with the firm’s creditors … lenders accepted 80 cents on the dollar, realizing that a default would leave them with even less

    Notice that the threat of complete default is how Mitt got the lenders to accept partial default.

    James Joyner:

    Didn’t he feel badly about stealing the money? Not at all.

    Did Mitt “feel badly” about helping his pals “stealing the money?” I guess not, because there is a double standard. There is a double standard because the real religion in this country is money. The deification of the rich is why they are allowed to do things mortals cannot.

  79. wr says:

    @Mikey: “While I agree with you this is a crappy thing, it’s also a bit of a red herring in the current discussion. The two are really entirely unrelated.”

    In New York state, developers who erect new buildings often face big property taxes. So many of them magically get the legislaure to pass bills specifically exempting them from a big chunk of these taxes for no reason other than — presumably — they know who to pay off.

    And you can say that’s not the same as failing to pay back a college loan and you’d be right. But it is yet another way that those who have all the money use that to rig the rules to benefit themselves while the rest of us are forced to live by them. And yet no one calls the people who use their influence to have laws rewritten to suit themselves “immoral.” Because what you’re calling “morality” is actually a set of behavioral codes designed to make the lower classes reamain obediant sheep while the wolves prey on them.

  80. wr says:

    @Mikey: “Of course we won’t go broke covering his loan, but you’re missing the point, it’s the PRINCIPLE of the thing. How much money does it have to be before it’s wrong?”

    But that’s entirely the wrong question. It’s much more a matter of “How little money does it have to be before it’s wrong?” Because when rich people and corporations act in predatory and destructive ways, that’s just business and can’t be judged on the basis of morality. It’s only when a poor or middle class guy makes a rational financial desicion like this that we’re supposed to apply moral codes to the behavoir.

  81. wr says:

    @grumpy realist: ” (Greece is also a textbook case of the axiom: “Yes, you CAN piss off your banker enough that he won’t loan you any more money.”)”

    And also “Yes, you CAN piss off your borrower enough that he won’t repay you any more money.”

    This is a case where a rational compromise is in the best interests of all parties, but relationships have become so polluted by questions of “morality” that both siides are choosing mutual destruction rather than cooperation.

  82. Rick DeMent says:

    A few points that have already been made but I think when you take them together it’s instructive, at least for me.

    The guy is a twit, I went to school in the late 70’s early 80s. It was pretty inexpensive to finance your tuition if you went the route of community college for the gen ed stuff, and then went to a 4 year school close enough to home where you didn’t’ need room and board. The fact that this guy decided to go to an out state private university for a journalism degree make him a first class idiot. Having said that …

    We live in a place where we actually have a term for what he did and it’s called “strategic default”. It’s hard for me to get all moral and righteous about an individual doing what business do all the time and never lose sleep over. Having said that …

    Credential inflation is way out of control. Jobs are asking for 4 year degrees and Master’s degrees that simply don’t require anything more than a High School education and some working experience. I work in the computer industry and the last time I looked for a job my 25 years experience seemed to mean nothing. The were sure that since I didn’t get a degree in computer science in 1982, that I would not be able to work on anything now because … well look at all the big iron out there and reasons. Having said that …

    I could mention about a dozen things that have made higher education so much more expensive that have nothing to do with Government (other than shrinking support for it) or the alleged “explosion” of administrators. Things that have more to do with the complexity and expense of equipment and software that you need to lean current jobs and accrediationdation reporting requirements, and marketing to compete for students but that would take a rant of too many pages and this comment it too long already.

  83. Mikey says:

    @wr: I apply the same moral codes to everyone. When my former employer’s management cooked the books and killed the company, it was wrong, legally AND morally. They lied to get fat bonuses and tens of thousands of people lost their jobs as a direct result. A company that had existed for 120 years was broken up and sold off in pieces.

    I have no problem calling that immoral, and neither does anyone else who was caught up in the aftermath. Which would be about 50,000 of us.

  84. Rafer Janders says:

    @Mikey:

    Well, but it wasn’t just immoral. It was also an outright criminal conspiracy involving accounting fraud and other fraudulent and criminal actions.

    That’s the reason why I’m unsure why you’re bringing up the Nortel case, other than your understandable personal experience with it — it’s just a giant truckful of apples to one tiny orange comparison to the Siegel case.

  85. Rafer Janders says:

    @Mikey:

    I apply the same moral codes to everyone.

    Fine, but do you get that the lenders themselves don’t? That the rich and powerful want there to be one standard of morality for one, and another for everyone else? We’re just saying why, when taking out a loan from, say, Bank of America, shouldn’t Siegel then get to play on the some playing field vis a vis morality as BOA? Why is he supposed to take morality into account when they’re not expected to?

  86. michael reynolds says:

    We have two competing moral systems, one for the haves, one for the have-nots. The haves can lie, cheat and steal, the have-nots cannot.

    I respect both sides in this, the ones who say, “A freely chosen obligation cannot be discharged because of someone else’s wrongdoing,” and the one that says, “I live in a corrupt world, why should I be the only sucker following the rules?”

    The mere fact that this is an argument being advanced by decent human beings points to the problem. We have a corrupt and morally bankrupt system in which the haves effectively prey on the have-nots. It’s unsustainable. The number of people willing to play the sucker for the haves is diminishing. That’s the true path to becoming Greece.

    Corruption and amorality cannot be made the sole property of the economic elite. Sooner or later the peasants figure it out. And then a system that operates on an assumption of virtue falls apart.

    In a world where every businessman, Republican and Libertarian maintains that corporations have no moral obligation to their employees, their customers or the country that nurtured them, it’s simply unrealistic to assume that the peasantry won’t eventually repay that rapaciousness in kind.

    When the game is rigged only a fool follows the rules.

  87. Mikey says:

    @Rafer Janders:

    That’s the reason why I’m unsure why you’re bringing up the Nortel case, other than your understandable personal experience with it — it’s just a giant truckful of apples to one tiny orange comparison to the Siegel case.

    Well, that’s part of it, but wait! There’s more! The CEO in question–Frank Dunn–was never convicted of any crime. From Dunn’s Wiki:

    On January 14, 2013, Dunn was found not guilty of falsifying financial reports in what prosecutors said was a scheme to report profits and gain bonuses. This came four years to the day after Nortel sought bankruptcy protection and began liquidating.[4]

    On December 19, 2014, remaining civil charges from the OSC and SEC were simultaneously dropped against Dunn and several of his former colleagues.[5] Ultimately, no civil or criminal charges were successfully brought against Dunn or any others individuals connected to the Nortel accounting scandal.

    A lot of us were kind of pissed off about that. Dude should be in jail.

  88. grumpy realist says:

    @Rick DeMent: I’ve got a friend who was a UPI news reporter for years and years and years, yet can’t get organizations-reporting-news to even LOOK at his resume because “you don’t have a degree.”

    Between the standard idiocy of HR and the ability to electronically scan resumes, companies are putting higher and higher barriers in front of hiring people and then complaining when nobody fits their requirements.

    And then, when they actually do find someone who fits their requirements, they’re outraged that said applicant is requesting any salary higher than that of your standard McJob.

  89. Mikey says:

    @Rafer Janders:

    Fine, but do you get that the lenders themselves don’t?

    I do get that, but is there any evidence they didn’t with Siegel? I mean, if they were really trying to screw him from the get-go I can see him telling them to pound sand, but there doesn’t seem to be any indication that was the case.

    I took out a loan a few years ago for grad school, so far no problems. I needed money, they were happy to lend it, it was a straight-up business transaction as you’ve said. But aside from the negative impact on my credit score if I default, I wouldn’t think of doing so because “Mitt Romney’s an asshole.” The two don’t connect in my mind. I agreed to pay back the money, and until I’m unable, pay it back I will, because I said I would.

    You can consider that the height of naivete if you want, but it’s how I see things and it’s done me pretty well so far in life.

  90. I went to college for a computer science degree. I got into two schools: Penn State and Carnegie Mellon. Now on paper that’s not even a close choice. Penn State is a good engineering school, but the computer science program at Carnegie Mellon is the best school in the country for that field.

    But I didn’t want to graduate $100,000 in debt and eventually reached the conclusion I simply couldn’t afford a Carnegie Mellon education. I’ve done perfectly well for myself with my Penn State degree, but it will always be one of the big “what might have been” momments in my life.

    It was a tough choice, but sometimes in life you have to make tough choices.

    Not so for Lee Siegel. You see, he’s SPECIAL. He’s not one of those normal schlubs who goes to a state school, only a super expensive private school like Columbia is good enough for him. And if he defaults on that loan and leaves those normal schlubs to pay for both their education and his, well, that’s just the price they pay for the glory of getting to live in Lee Siegel’s world.

    I’m sick of self-proclaimed elites who think they deserve free Lamborginis because they’re just too good to settle for a Toyota.

  91. grumpy realist says:

    @michael reynolds: This reminds me–an article in The Economist talking about the stock market in Italy and pointing out that because Italy doesn’t have any laws against insider trading there’s the default assumption anything offered for sale on the stock market is being done so for a hidden (and negative) reason.

    All of which means that people don’t purchase stock a) at all, or b) without a discount pricing in the risk of the hidden information. As a result, the Italian stock market is smaller and more inefficient at pricing, with knock-on effects on the rest of the economy.

  92. grumpy realist says:

    P.S. By the way, this Siegal guy is the same guy who got suspended from The New Republic for sockpuppetry.

  93. anjin-san says:

    @Guarneri:

    Do you really no realize that when that magical day comes when America decides to allow the poor to live in abject third world misery and we have to step over their dead bodies on the sidewalk that there will be a lot of angry, desperate folks with nothing to lose looking to kill people like you and me?

  94. wr says:

    @Stormy Dragon: “Not so for Lee Siegel. You see, he’s SPECIAL. He’s not one of those normal schlubs who goes to a state school, only a super expensive private school like Columbia is good enough for him”

    Thank you, Stormy, for getting right down to the crux. Because at its heart this argument is “how dare this lower class loser dare to think he’s as good as the rich guys. How dare he get so uppity he thinks he should have a chance to break through like his betters — and we know they’re his betters because they’re rich.”

    Not you. You knew your place. You knew better than to get all uppity and to think you’re as worthy as anyone else. And now you’re ready to tear down anyone who tries to join the upper classes in their world of privelege.

    It’s rare that we see this obvious truth expressed to nakedly. So again, thanks.

  95. wr says:

    @anjin-san: “Do you really no realize that when that magical day comes when America decides to allow the poor to live in abject third world misery and we have to step over their dead bodies on the sidewalk that there will be a lot of angry, desperate folks with nothing to lose looking to kill people like you and me? ”

    Yes, but on the bright side, Stormy Dragon and the rest of the “liberatarians” will have a lot of people to feel morally superior to.

  96. humanoid.panda says:

    @Rafer Janders:

    Um, between the two of us, one of works in Wall Street corporate finance and the other doesn’t, so trust me when I tell you that what you wrote above is absolute nonsense, and you have no idea whatsoever about how business actually works.

    I am increasingly convinced that there are only 2 types of people who can write the drivel the “free market conservatives” here write
    1. People who have no knowledge whatsoever of our economic system.
    2. People who are greatly benefitting from it.

    Since people in group 2. have better things to do with their lives , that leaves option 1.

  97. humanoid.panda says:

    @superdestroyer:

    And what form of union do you really think could exist in today’s global economy that could pay high wages, not handicap the company that has a unionize workforce, and not be slowly replaced by capital?

    Shorter Superdestroyer: Germany, with its obligatory unionization and mitbestimmung is a burning husk of a nation, and not at all an economic superpower.

  98. anjin-san says:

    Once upon a time, my family went from killing poverty to upper middle class in one generation because my grandfather, an immigrant who worked as a spotter at a dry cleaner, was able to send his daughters to one of the world’s great universities.

    The America that once was…

  99. @wr:

    Yes, because the problem is the existence of priveleged elites at all, not merely making sure the priveleged elites there are get selected at random.

    Note that Siegel didn’t do something like “instead of repaying my loan, I’m going to use that money to pay of another Columbia student’s loans so he can start life debt free” or “now that I’m a wealthy writer, I’m going to finance scholarships to help other peop”. Nothing he did benefitted anyone other than Lee Siegel.

    He’s trying to pass off his narciscism as a virtue.

  100. @wr:

    And wr shows how this is really all about tribal loyalty. The conflation of the first world problems of a millionaire writer angsting about how to pay for three ivy league degrees (because obviously no one could be expected to escape the lower classes with merely ONE degree from Columbia) with the struggles of actually poor people who can’t afford to go to any school is obscene.

    How many Penn State degrees could society have paid for price of Seigel’s three degrees? Why does Siegel deserve to spend his time gilding the lilly instead of a dozen state school students with our “lower class loser” degrees?

    But whatever. He’s on your team, so you’ll back up his argument even however ridiculous it is. So whatever. Yeah, I went to a state school as part of seem evil libertarian conspiracy to keep down those poor ivy league millionaires.

  101. Rafer Janders says:

    @Stormy Dragon:

    You keep calling Siegel “wealthy” and “a millionaire writer.” Not even getting into the essential absurdity of the phrase “millionaire writer”, where on earth are you getting this information or belief that Siegel, who’s day job is as a freelance cultural critic and writer, is rich???

    Once again: he’s essentially a freelance writer and critic. I doubt he clears six figures a year consistently.

  102. Mikey says:

    @Rafer Janders: Siegel lives in a city where the average household net worth is over $750K, median family income is $114K, and 40% of white families have incomes exceeding $200K.

    I suppose it’s possible he could be barely scraping by, but…I doubt it. Not a guy who writes for the outlets he does. Stormy may be incorrect in calling him a millionaire, but if he’s not a 1%-er, I’d be quite surprised.

  103. jukeboxgrad says:

    40% of white families have incomes exceeding $200K … if he’s not a 1%-er, I’d be quite surprised

    “1%-er” means income exceeding $400,000. FWIW.

    Stormy may be incorrect in calling him a millionaire

    “Millionaire” is unsupported speculation, and so is “1%-er.”

  104. Mikey says:

    @jukeboxgrad: Either way, it’s quite legitimate to infer he’s clearing six figures annually with consistency, given what we know of where he lives.

  105. Rafer Janders says:

    either way, it’s quite legitimate to infer he’s clearing six figures annually with consistency

    Nonsense. From what??? Again, he’s a CULTURAL CRITIC AND MAGAZINE WRITER. Who on Earth do you think is paying him six figures, and for what??? How much do you imagine professional writers get paid these days?

  106. Rafer Janders says:

    @Mikey:

    I looked up where Siegel lives, and it’s Montclair, New Jersey. where, per Wikipedia:

    the Census Bureau’s 2006-2010 American Community Survey showed that (in 2010 inflation-adjusted dollars) median household income was $95,696 (with a margin of error of +/- $5,396) and the median family income was $126,983 (+/- $8,950). Males had a median income of $83,589 (+/- $5,955) versus $66,063 (+/- $3,616) for females. The per capita income for the township was $53,572 (+/- $2,671). About 4.6% of families and 2.7% of the population were below the poverty line,

    So no, given his profession, it’s not at all likely that he’s making six figures with consistency. Montclair is a bedroom community for New York, with many media, finance and law professionals living there, which drives up the average income dramatically. Siegel, as a freelance writer with an erratic income, is undoubtedly on the low end of the wealth scale in that town.

    Seriously, people, this notion of Siegel as a “wealthy millionaire” is…it’s laughable. I know quite a few freelance critics and writers, and there’s hardly one of them who’s at all economically secure. Most of them live on the knife edge.

  107. Rafer Janders says:

    @Mikey:

    and 40% of white families have incomes exceeding $200K.

    Those are the families of the corporate lawyers, hedge fund analysts, network executives and investment bankers, not the families of freelance writers.

    I suppose it’s possible he could be barely scraping by, but…I doubt it. Not a guy who writes for the outlets he does.

    You have a bizarre and entirely unrealistic sense of what outlets such as Harpers, The Nation, and the LA Times Book Review pay….

  108. MarkedMan says:

    After reading the article I came away with a very different impression of his net worth. I think he is a pauper. He talks about how good it is for him that there are always companies willing to give him new credit cards no matter how bad his credit is. He suggests to people following in his path that they first sign up for as many credit cards as they can. And he also refers to how important it is to have a significant other that has good standing. The guy is a free-lance writer, not a prestigious staff member of a major publisher. And further, he seems congenitally unable to handle money in a sensible way. He’s roughly 50 years old and his financial affairs are like a 22 year old who works at a loading dock and parties too much. I would be surprised if he is earning $50K in a year, maybe half that.

  109. jukeboxgrad says:

    it’s quite legitimate to infer he’s clearing six figures annually

    This is what you said before:

    if he’s not a 1%-er, I’d be quite surprised

    “1%-er” means $400,000, so your claim just shrank by 75%, but it’s still just speculation.

    As others have explained, freelance writers don’t usually make a lot of money.

  110. Rafer Janders says:

    @MarkedMan:

    Exactly. He defaulted on his debt not because he had the money and didn’t want to pay — he defaulted precisely because he didn’t have the money. His debt exceeded his ability to pay it off on his income.

  111. Rafer Janders says:

    I have to say, it’s instructive to realize how many people seem to have literally no idea what those in various professions are paid. Baffling, yet instructive.

  112. Mikey says:

    @Rafer Janders: @jukeboxgrad: I concede, you win this point. We have no idea what Siegel makes. He could be on the poor end for Montclair, or his wife could be the one making all the money. My Google-fu is usually pretty good but I couldn’t find anything about his income.

    It’s irrelevant anyway, he decided to foist his student loan debt onto the rest of us long before he started writing for the NYT.

  113. Xenos says:

    @grumpy realist: strangely enough, the Italian stock markets are now pretty much dead now that Italien companies can easily get listed on the London Stock exchange where the FSA is the strongest and most effective regulator in Europe. When the buying public has more faith in your honesty you can issue stock at much better priced.