An Open letter to my Government On Student Loan Forgiveness: Thanks; But No Thanks

Dear Mr. President, Majority Leader Schumer, Speaker Pelosi, and all of the other members of Congress that have taken the time to highlight and offer solutions to help those dealing with student loan debt. 

There is only one appropriate way to start any response to someone that wants to pay $50,000 of your student loan debt: Thank You. Thank you for highlighting the impact that student loan debt has on many young people throughout the country. Thank you for talking about the negative impacts it has on our economy and our society as a whole. Thank you for offering one possible solution that would most certainly provide some relief to many Americans who would appreciate it right now.

I, like many Americans I imagine, have a complex relationship with my college experience. On one hand, I love my alma mater dearly. It’s why I have such a strong appreciation for Shakespeare. It was where I learned the virtues of hard work, dedication, and delayed gratification. It was where I developed many of the communication skills that I use each day in my personal and professional life. It was where I developed leadership skills that help me be a better husband, father, brother, son, and colleague. It was where I learned lessons about victory and defeat, success and failure, love and heartbreak that I will be able to share with my children and grandchildren for the rest of my life. It was where I met and got to know the people who I can honestly say will be my friends for my whole life regardless of money or status or geography. 

But it’s also why I’ve had a hard time sleeping for most of the last decade. It was why I never even tried to go to law school even though I wanted to. It’s why I had to ask my wife to return to work after our daughter was born even though she didn’t want to. It’s why we had to move halfway across the country; away from all of the family and friends we knew. It’s why we were a one-car family for the first five years of our marriage. It’s why I’ve stayed at jobs that make me miserable for much longer than I should. It’s why we hardly ever travel or go on vacation. My college debt is a constant cloud that shadows every experience of my life, good and bad alike. While shopping, I think: never buy name brand products. On the rare occasion of a vacation, I think: maybe we should only go out to eat once. At Christmas, I think: who will not get a present this year? My wife and kids ask me to buy a pet and I think: We already have two pets, Navient and American Education Services and they must be fed their $1,500/month to keep them happy.

When I graduated college in May of 2010, I left with $125,633.74 of debt for my bachelor’s degree. Now, after over ten years of hard work, sacrifice, and consistent payments, I still owe $87,340.88. That means that on average, over the last ten years, of the over $1,500 I pay each month, less than $320 has gone to reduce my debt. Where the rest went, I don’t know.

Don’t get me wrong. My family and I live good lives and we like it. Our lot is far better than most get. When it’s hot out, we’re cool. When it’s wet out, we’re dry. When it’s cold out, we’re warm. When we’re hungry, we eat. When my kids get sick they go to the doctor. I’m not telling you all this so you can hear me complain and feel sorry for us. It’s so that you will believe me when I tell you that I have spent the last ten years of my life seriously considering the offer of having most or all of my student debt paid off for me. Our lives are good, but they could be much better without my student debt burden. So in response to your generous proposal to forgive $50,000 of my student loan debt I say this: thanks; but no thanks.

One of the things I’ve learned a lot about in the last ten years is debt. I’ve learned about getting into debt and paying off debt. I’ve learned how to avoid debt when I can and minimize it when I can’t. I’ve become an expert in the field of my debt. I’ve learned that as a country we are in a mountain of it. And our debt is still heading in the wrong direction. The sad truth is that we, as a country, do not have the money to pay for your generous plan without accumulating more debt. I’d never pay my college debt down with a personal loan or credit card and neither should our country. Sure, at first it would feel good; seeing those zeros and getting the payoff notices. We may even go out to eat at a fancy restaurant or take a family trip to a theme park. But after a month or two, reality would move back in and the debt would be back, except this time it would come with even higher interest rates and more family sacrifices to make ends meet.

Even worse than that, your proposal would mean that my friends, family, coworkers, neighbors, and fellow citizens I have never met and will never meet would have to help pay my debt for my education. A debt that they never signed up for, for an education they never received or experiences they never got, for skills they never developed. I’d never pay my college debt with a personal loan, but I would certainly never ask my friends, family, colleagues, or complete strangers (especially those that chose not to go to college themselves) to co-sign for the personal loan. I, like many Americans I’m sure, have worked hard these past ten years to develop a reputation as a man who works hard, fulfills his promises, faces the truth even when it’s difficult, and pays his debts. By accepting this proposal I would be throwing all of that hard work and sacrifice away. I’d be transferring my burden onto my friends, family, children, future grandchildren, and fellow citizens. This, unfortunately, cannot be an option for me.

I watched Majority Leader Schumer’s press conference announcing the proposal on February 4th. They made many great points and I believe much of what they said. Though I am not a minority, I believe them when they say that minorities (especially first-generation college-educated minorities) are disproportionately impacted by student loan debt. I believe that student loan debt is an anchor holding many in our society back. I believe that many young people were misled by educators, colleges, media, and society into believing that a college education was the only way. It’s also radically unfair and un-American whenever big banks or airlines or auto companies are bailed out by the government for their bad choices. 

But none of these facts change the fundamental truth at the root of this issue. I chose to attend college and receive an education. I signed an agreement to have someone else pay for that education upfront. I made a promise to pay that money back, plus interest, for as long as it takes until my debt is reduced to zero. I could have made better choices. Choices that very likely would not have resulted in the debt that I carry with me today. I could have chosen to live at home and spend my first two years at community college for almost no cost. I could have then transferred to a local state school that would have charged me far less and stayed with my parents while I did it. I could have joined the military and served my country. Then I would have received a college education at no cost, or very close to no cost. I could have chosen a major that was in the hard sciences that would have put me in a better position to find good-paying employment far sooner than I did. But alas, I did not. And now, like many Americans I imagine, I must pay all that debt back.

I signed the promissory notes, I got the education and experiences so I’m going to be the one to pay for it. Not my fellow citizens, not my friends and family, not my kids and grandkids. Just Me. I’m gonna be better. Even if it takes another ten or twenty years to do it. Some things are more important than money, vacations, Christmas gifts, or pets. This is one of them. As my first teacher (my mother) taught me very early on in life: Two wrongs don’t make a right. So unlike the big banks, airlines, and auto companies; I’ll be saying: “Thanks; but no Thanks” to your proposal. 

All that being said, I do appreciate the intent and effort and I want to help find a solution.

Please humor me with a brief set up. For many years now, the government and student loan companies have been collecting interest on debt. The understanding between borrower and lender is that the extra payments (or the interest portion of the payments) are meant to cover some modest account management expenses, provide for some profit, and compensate the lender for the risk of default. This is why people with low credit scores and no payment histories pay higher interest rates. The risk of default is greater. Furthermore, unlike other types of debt like car loans or mortgages, there is no tangible asset to recover in the event of a default. If I default on my student loans, no one can repossess my education or skills. This situation creates a pretty risky environment for lenders to navigate to provide student loans to students. 

The way that the lenders and government worked through this was by establishing a program that created a government guarantee for student loans. Meaning that even if the student loan borrower defaulted on their loan, the government would step in and compensate the lender for the amount owed. As a result, the risk of default was eliminated and the floodgates were opened for students to borrow whatever they needed to support their post-secondary educational needs. The only problem was that the lenders were still charging interest. And substantial amounts at that. This environment created the same situation everyone criticized with the big banks in 2008. The risk was socialized and profit was privatized. Speaking for myself, have loans that exceed 6%, some even getting as high as 11.5% interest. Why am I paying that extra 6%, 8%, 11.5% when there is no risk? Why was this allowed to happen? 

I can understand a modest rate to cover account maintenance, overhead, and other extraneous costs. But as long as the U.S. Government guarantees these loans, there is no risk of loss to the lender. This should be corrected immediately.

My proposal would be this. Every direct loan for education from the U.S. Government should have its interest rate immediately reduced to 0%. If what I was told before college is true, and college-educated people make over a million dollars more than non-college-educated people over their lifetimes, then the government is making a fine profit from me through my higher taxes. Furthermore, the government should reduce the total amount already paid in interest on those loans from any outstanding principal. For many, this will reduce their debt to zero. For all others, it will dramatically decrease their debt and put them much closer to their payoff date. For those entering college now and in the future, it will ensure that they do not pay twice, through interest and taxes, for their education.

For private lenders that operate under the umbrella of protection the federal government provides, I suggest something slightly different. Like direct government loans, I suggest an immediate and dramatic reduction in interest rates to just enough to cover standard operating costs and an extremely modest profit. Let’s be honest, running a bank is not like refining oil or operating the International Space Station, it doesn’t take a huge amount of investment to keep things running smoothly. Also like the direct loans, any overage payments made in the past should be immediately applied to the principal balance on the “back-end” of the loan. For many, this will reduce their debt to zero. For all others, it will significantly decrease their debt and put them closer to their payoff date. If the lenders don’t like that option, that’s fine. They can simply opt-out and step out from underneath the umbrella of protection provided by the federal government. The student loans they carry will be treated like any other loan; fully dischargeable in bankruptcy and no government guarantee in the case of default. 

The added benefit of this plan is that it costs taxpayers essentially nothing out of pocket. All we would be doing is ensuring that all of the money that students have paid since their exit from school goes to the proper place. Students should be expected to pay what they owe for their education and nothing more. It would correct the mistakes of the past for graduates and prevent them from recurring for future students. I believe this is a bipartisan plan that everyone can unite on (except for the lenders, of course). It will relieve many thousands of dollars of debt from the backs of millions of student loan borrowers while at the same time preventing that debt from resting on the shoulders of Americans who never signed a promissory note. 

This proposal is, of course, extremely rudimentary. But I believe that the principles that comprise its core form a sturdy foundation on which we can build something truly great that can help Americans in need of student debt help without punishing those that made different choices. With your help, we can build on this and make a difference.

The February 4th press conference didn’t announce any new legislative proposal. It simply revealed that members of Congress had been proposing that the president act unilaterally through executive action. Majority Leader Schumer stated that the President has the authority because similar actions have been taken in the past. But the question is not “Can the President take this action?” The question is “Should the President take this action?” For me, the answer is clearly: “No.” 

This course of action would inevitably expand the already substantial divisions in our governing bodies and drive us further apart. Congress should act together as one united body working for the best interests of both the country and its citizens. I believe the possibilities are endless if Democrats and Republicans can unite together under this proposal to provide huge relief to student loan borrowers at no additional expense to the government. Who knows, maybe the American people will even start to trust their legislators again. 

Thank you for your time. I sincerely hope that you will seriously consider my proposal. Not as a final deal, but as a rough draft that can be built upon to ensure we truly are meeting the needs of the American People. As I said earlier: Some things are more important than money, vacations, Christmas gifts, or pets. This is one of them.

I’ll leave you with this slightly modified version of a prayer I often find myself repeating:

 

May God watch over you and keep you safe

May he let you govern to the best of your abilities

And if the opportunity presents itself to excel

May you accept the challenge 

An Eternally Grateful American,

Jeremy Beaudette