When Did Personal Responsibility Become Public Responsibility?

Guess what 20 million Americans say they intend to do about their student loans

Ric Edelman: It's Thursday, October 5th. Get ready for the next hit to the economy. It's the student loan debt crisis. Because of the pandemic, it's been nearly four years since anyone has had to make any payments on their student loans. But starting this month, payments resume. The problem is that a lot of those borrowers didn't do what they were supposed to do when the payments were suspended. They should have done is pay down other debts with that money or invest that money or save that money. That was why the government said you don't have to repay.

But instead of doing that, tens of millions of these people simply spent the money on other things. The money they were spending on student loan debt got spent elsewhere. Hey, this was great for the economy, but it was terrible for their own personal finances. And a lot of them got into new debt. They bought cars. They borrowed against credit cards to pay for vacations and clothes and dinners and whatever. And now that their student loan payments are restarting, they don't have the ability to pay those loans. They're busy using their income to pay for the other stuff they've been buying over the past four years. And besides, Joe Biden kept telling everybody that he was going to forgive their student loans. And these people took him literally. But the court shot that down, as you know. 

So you're stuck with the debt. And this month, the requirement to make your monthly payment exists. There are 37 million Americans who owe money to student loans. They owe a total of $1.7 trillion. The average monthly payment is about $400. That's 8% of the average household income. So if you suddenly have to start spending 8% of your pay on student loans on top of 30% of your pay on housing and 8% of your pay on the average car loan, we're talking 46% of your income to just those few things. And when you consider another 20% going to taxes, you've only got a third of your income left. You haven't even bought food yet or paid the gas bill.

So all that money that people were spending, that they were injecting into the economy, that money is now going to go toward debt payments on their student loans. The economy is going to take a big hit. Less money spent at restaurants, on clothes and jewelry, travel and on and on and on. So guess what two-thirds of student loan borrowers say about all this? They say they're going to boycott their loan payments. Half of them say they're not going to pay because they can't afford to. 75% say they're going to vote for candidates who promise to eliminate their debts. 

I can't even put it into words, the horrible ethics of all of this. Well, okay, maybe I can. I am a podcaster, after all. You borrowed the money in good faith. You got the education. You got the knowledge. Even if you didn't get the degree that money was given to you by other citizens via taxes. If you stiff them, you're harming everybody else who financed student loans. Why should anyone give anyone a student loan in the future if there's a high risk they won't ever get repaid?

You damage the future of future students. We need you to repay your loan so we can recycle that money to new college students so they can get the education you got. If you think your college experience was a bad deal and you wish you hadn't borrowed the money, well, too bad. That's life. We all make bad decisions from time to time. That doesn't give us the right to walk away from our responsibilities and our obligations. That's what being a member of society is all about. And if you're going to be a member of our society, then act like it. If you don't pay your student loans, the government will come after you. Your credit record will get destroyed. You won't be able to borrow again. Forget about qualifying for a mortgage or a car loan. 

And lots of employers look at your credit record, too. So forget about getting a job. Yeah, I know you're in a difficult situation. Too bad nobody forced you to go to that expensive school and get a degree in a field that doesn't pay enough for you to repay your loans. Too bad.

Boycotting your loans; that's not a boycott. That's an abandonment of your personal adult responsibilities. Yeah. You're an adult. Act like it. And if that means you've got to make radical changes in your lifestyle, so be it. Move in with others, cut your spending, hunker down, get a second job, or get a third one. Do whatever it takes so that you can do what you need to do that you deep down inside know you're supposed to do. Be an honorable person and encourage everybody else to be honorable, too. Yeah. Maybe you'll take a hit. Maybe the economy will take a hit. But enough hits out there.

Maybe Congress and the White House will finally come up with the solutions we need that work for everybody. Meanwhile, do your part and pay your bills. And I'm not just saying all this out of an ivory tower. I'm not telling you this because I'm a rich guy and I could afford to pay whatever debts I came across.

When my wife and I got married, we had student loan debt. Jean had $10,000 of it. What did we do? We hunkered down. We lived in a basement, one bedroom apartment. We ran an ad that said moving family must sell everything. We sold all of our personal possessions, even our television, and we worked our butts off. At one point, between the two of us, we had nine W-2s. Not afraid of hard work in order to raise the money we needed to pay our debts. We lived on cash, the little bit of cash we had. At one point, we spent only $25 for the entire week for food. We had no furniture in our house for four years, didn't own a television for four years, and we never spent any money at all.

We discovered pretty quickly. There's a lot of great things out there, perfectly free parks, the public library, the communities that offer a lot of free entertainment and social environments without having to spend any money. You do what it takes. And what we discovered is that our relationship got closer. Instead of being distracted by all the opportunities and electronic media today, Jean and I focused on each other. We grew to not miss that television at all.

And by the way, not watching so much TV or in today's world, not paying attention to social media, we weren't being bombarded by advertisements on a every moment basis. We weren't being encouraged to spend money that we didn't have. So yeah, we did it. And I know that's how you can do it too. If you really want to learn more about how to get out of debt, read my chapter on that in my number one bestseller, The Truth About Money. I'm not here to beat you up. I'm here to help encourage you to do what you know you need to do. We did it. And that means you can do it, too. You're listening to The Truth About Your Future. I'm Ric Edelman.

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