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“Personal Responsibility” Means Nothing Anymore
Today Walter Williams in his syndicated column reminded me (like I needed to be reminded) that people simply don’t care about personal responsibility anymore. He gives a number examples of how the culture has changed, and writes about companies that advertise the ways people can get out of their debt. They promote steps people can take to “quickly be debt free.” Essentially, because someone carelessly and thoughtlessly used a credit card to satisfy their materialistic needs, the companies are paying for it. Even Dave Ramsey, a financial expert and person of high moral values whom I greatly admire, encourages people to negotiate with companies to lower their debt, and for a fraction of what they owe.
Then we have the Federal Student Aid program, which provides a means for students to have their loans forgiven, canceled, or discharged. At first, when looking at the requirements, I thought that the criteria made sense; then I realized how any creative person could play with those guidelines:
- Your school falsely certified your eligibility to receive the loan based on your ability to benefit from its training, and you did not meet the ability-to-benefit student eligibility requirements (for example, you did not have a high school diploma or General Educational Development certificate).
- Your eligibility to receive a loan was falsely certified because you were a victim of identity theft.
- The school certified your eligibility, but because of a physical or mental condition, age, criminal record, or other reason, you would not meet state requirements for employment in the occupation in which you were being trained.
- The school signed your name on the application or promissory note without your authorization, or the school endorsed your loan check or signed your authorization for electronic funds transfer without your knowledge, unless the loan money was given to you or applied to charges that you owed to the school.
On second review, I realized that almost anyone who wants to qualify for this program could do so easily. For example, on bullet point three, how difficult would it be to incriminate the school? And why should a school be responsible for your poor decision in choosing a study major for a job that doesn’t exist? Or one that’s hard to find?
Then there is the Mortgage Forgiveness and Debt Relief Act, which was renewed for 2017, but as far as I can tell, is in limbo in Congress at this time. This law protected mortgage holders who were underwater when they lost their homes from having to pay unpaid income taxes on those homes, up to $2 million. I realize that some people lost their homes due to losing a job, but there are also many who insisted on buying homes which they could ill-afford. The reasons a person loses a home have no relevance to whether a person can take advantage of this program. A limit of $2 million protection for a tax bill is a pretty hefty forgiveness.
There are other ways that people have been able to cut back on or eliminate their debt. In almost every case, somebody else pays for those losses. People want to point to the “rich businesses” who can afford it, or to the government. Or they simply believe they are entitled to get help. Well, I have news for them. We are the ones paying their debts: the business customers and the American taxpayers.
But even that isn’t what bothers me the most. It’s the lack of personal responsibility. The other day as I was loading my groceries into my car, I saw a bag of green onions that had slipped out of sight and not been checked through. For a moment I thought about just throwing it in one of my grocery bags. But I didn’t. I plodded back into the store and paid the $.99. Did that make a difference to anyone—to another customer? To the store? I don’t know. But it made a difference to me.
Personal responsibility is part of my make-up. If I take on a task, I finish it. If I make a commitment, I fulfill it. If I incur a debt, I pay it. If it is hard to complete my responsibilities, I have no one to blame but myself, and I look to no one else to bail me out.
I think we have lost this precious and important value, this commitment to ourselves, our families, our communities, our country.
No one cares about personal responsibility anymore.
Published in Culture
On the contrary, it is damn near impossible to actually qualify to have one’s student loans forgiven. Listen to the travails of this guy:
Did you catch that? Being blind and on SSDI isn’t a hopeless enough situation to get one’s student loans forgiven.
Oh, and the “Income Based Repayment” program that’s touted as the reason we indebted students don’t need the option of bankruptcy forgiveness for student loans that’s available for every other type of loan? There’s the minor catch that if you stick with the program for twenty years — and assuming it’ll even be in existence in twenty years after the Baby Boomers wipe out the federal budget with their welfare programs — all the forgiven balance is imputed as income. In my case, (assuming for the next 16 years I can at least pay off the interest to keep my balance from growing) I’ll trade $280K in student loan debt for $100K of income tax debt that has a five year repayment term. Boy, can’t wait until I can get off scot-free!
Sorry to hear about your situation, @amyschley. How did you find yourself so deeply in debt for student loans?
Law school was $100K; @mramy losing his job and relying on student loans for three years of living expenses was another $100K, and then 8 years of not being able to even pay the 6.8% interest getting compounded. I don’t want a handout; I’d just like the same ability to testify that I just can’t pay my loans and have them discharge the way I could dispose of my house in foreclosure and the deficiency payment in bankruptcy. But that’s beside my point, which is to say that the criteria for student loan discharge are so onerous that it’s not something that everyone who applies can qualify for. In fact, it’s basically impossible because as noted, even when the federal government is paying you because you can’t work, a judge can decide that your chances of finding remunerative work aren’t really “hopeless.”
And I should have noted on that third bullet point that a few law students have tried suing their school for publishing fake placement statistics and salaries. It was denied on the theory that everyone ought to know that schools lie about their statistics and potential students should have known better than to believe what their schools were shoveling. An investment banker who tried to pull that stunt would find himself in jail; because the swindler is a law school, the con men get to continue scamming people while their victims are trapped in debt peonage.
I understand. I have a question for you. I assume you didn’t know the forgiveness program was in place, or it wasn’t even in place yet, and probably didn’t explore whether you could deal with a delinquent student loan through bankruptcy. Why would you? I’m sure you expected to meet your obligations. And I know that hindsight is always 20/20, but were you concerned when you signed on to so much debt at the beginning? Was being a lawyer worth that level of obligation? I’m not trying to be obnoxious here, but I just wonder if you ever considered not pursuing law school because of the huge financial commitment? I hear lots of people calling Dave Ramsey on his radio show with horrible student loan debt; many of them gave little to no consideration about the kind of burden that kind of large loan could be. If you’d rather not get into this, it’s fine.
I would classify running up the national debt, and our unfunded liabilities to be immoral. We are living beyond our means, and stealing from our own children.
Oh, and on this point …
I worked for Citi Bank in their collections department. They are generally quite happy to have people negotiate, and the reason is two fold:
The relationship between the universities and colleges and the federal government is its brightest in the bankruptcy reform bill. The only two entities that can never be discharged are student loans and taxes. What does that say about how tight higher education and government organizations are with each other!
The colleges and universities were able to give loans to people and not care about what happened to those people afterward. Why? Because the colleges will never lose money. That’s the personal responsibility that is missing.
The fault in so many of these situations was in high-pressure irresponsible sales pitches. (By the way, the International Monetary Fund has engaged in similar practices, and it has come under criticism from the countries it was supposedly helping. They have never made enough money to pay back the IMF loans.)
If we say that bankruptcy is legitimate in any way, then at the top of my list of those eligible would be many of the students who are having trouble repaying those loans. And they are the ones who most need the financial relief.
I think you’re missing my overall points, @amyschley. Of course the companies will take the deals. That doesn’t mean they like it. They have so many customers who are in debilitating debt that they want them off their books. (I had a friend who also worked for Citibank in collections.) But in these times, lots of people don’t seriously consider how racking up debt is extremely irresponsible. They are getting out of their debt by making these deals, but they are ripping off the companies no matter how you color it. Yes, the companies may charge exorbitant interest rates; yes, they will negotiate. But as Williams tries to point out, the consumer doesn’t care that they ripping off the companies because they can’t budget or won’t manage their expenses or just don’t care. The point here is about the moment at which the person runs up the debt: where is the personal responsibility?
Checking out for this evening but will be back on tomorrow.
I almost completely disagree, @marcin. I think it is a good idea for the colleges to counsel students about taking out loans, but to blame the colleges completely is simply not right. I wouldn’t object to bankruptcy being extended to student loans, but I can’t go along with the students not having any responsibility in their decisions. How do you know that all of them succumbed to high pressure sales pitches? To make the student innocent doesn’t fly with me. Off for the night, back tomorrow.
When I agreed to go to law school, I was expecting to take out ~$50K, and my law school was bragging about 95% placement rates and an average starting salary of $55K. That seemed like a reasonable investment for a career that one can work into one’s 70s.
We lived on the Kansas side, and when I matriculated, the rule was that those who worked in Missouri were eligible for in-state tuition. Then the state legislature ruled that Missouri residency, not just Missouri employment, was necessary for instate tuition. We’d already bought a house though, and it was 2007, so moving didn’t seem like an option then. In retrospect, of course, selling even at a loss would have been smarter. So now we were borrowing $100K, which while not great, wasn’t insurmountable. After all, while average salaries started in the fifties, they climb pretty rapidly.
Then ChefSly’s programming company employer went under. Well, that’s not quite true. It stayed bobbing at the surface throughout law school, making us think that if he just worked for free a little longer, it’d all work out. And well, we could borrow living expenses for this semester, and then next semester we wouldn’t need to … for six semesters.
And then the law market collapsed. Forget 95% placement; it was 75% placement if the Dean counted non-traditional law jobs where a JD was a help. (And my law school was one of the better ones: placement rates 9 months after graduation for full-time JD preferred positions for the class of 2010 were 64% nationwide.)
It has only been since December of last year that I’ve been able to get any work where a JD and bar license were required, and if you’d asked me if it was worth it, the answer would have been “Hell no!” I am finally now earning a salary in the $50K range, so I feel like I can at least take off profanity, but it still weighs enormously. It was a mistake, but there’s no way to fix other than muddling through. I can’t discharge my loans, so it doesn’t do me much good to dwell on how bloody stupid I was to sell myself into debt peonage because I thought I needed another degree to get a job.
We’ll just have to agree to disagree. I respect your opinion on this.
However, I know many young people who got sucked into the financial aid bubble and never got out. Young people are now wary of the scam, but for about ten or fifteen years, thousands of young people were harmed by unscrupulous student aid advisers.
I don’t know of any other financial advisers who are immune to malpractice lawsuits.
If we don’t write a lot of these off, these young people will never get on their feet. The fresh-start rationale that underlies the concept of bankruptcy should apply to student loans.
And the government (that’s us) is largely to blame here. We had the knowledge and expertise to understand these loans. And what good is our having the Bureau of Labor Statistics if we don’t use it to predict employment and salary trends?
The financial aid advisers in the colleges and universities have liability here. A lot of it. A loan is a judgment call. Half of that judgment call fell to the financial aid officers. The onus was on them to realize and compensate for the fact that they were working with young and inexperienced people.
On that note, how many generations back is the debt we’re currently paying off?
Next time you go looking into their student loan situation, you might explore why it is that three states have lawsuits against Navient, which was formerly called Fannie Mae.
Navient utilizes fraudulent methods to abscond with the bank balances of those who are in debt. This household is experiencing this situation right now. We were told in January we were given an extra month to have our yearly payment application into them. That meant that until the end of April, we had a student loan payment of less than $ 300. But Navient “forgot” that they had given us this extra month, and now are making a demand that we pay $ 1,300. By Wednesday.
I hope that in addition to student loan debtors, you were equally annoyed by all the fraud perpetuated on the middle class when the mortgage companies, Big Banks and Geithner/Bernanke took us all to the cleaners and “Bailed Out” the people who created the Economic Collapse of 2008. The total cost of those bailouts was something like 25 trillion dollars.
Curiously, the federal effort to help lower-income folk get houses leads to . . . hurting people who are trying to get houses.
I wrote about some of this, or something closely related to this.
Interestingly, in the Republic of Plato Socrates suggests one rule that would have prevented our little financial crisis: Lenders lend at their own risk, taking responsibility for their actions.
Far be it from me to claim to understand the financial mechanisms, but I think one of the consequences of Fannie, Freddie, and the Community Reinvestment Act was that lenders were not even allowed to take responsibility.
Good grief. No wonder there was trouble.
Personal responsibility means nothing anymore.
This is also a gun control issue.
I’d like to inject responsibility in the corporate sense. Do corporations have a responsibility other than maintaining a set share price? A director in a corporation almost never faces responsibility for his actions. Directors can make terrible deals and never be responsible to the shareholders. They can go bankrupt (just ask our president) and leave their creditors holding the bag. The people causing the bankruptcy are never personally touched. This all may be a good thing, I don’t claim to know. But is it right that a student who takes on debt that becomes impossible to discharge should be treated differently than a corporation?
Perhaps things have changed, but my stepson simply and easily declared bankruptcy to get out of his student loans. That was in the early 90s – perhaps the reason things are tight now, if they are, is that people took advantage of the system as he did.
A high-pressure sales pitch is not the same thing as coercion. I think people need to take responsibility and use their heads. When my husband and I were looking to move out of the area we lived in when we were first married, some of the various real estate agents we came across initially showed us properties that we thought were out of our comfort range. They explained to us how much loan we could be approved for — again, out of our comfort range. We patiently told them that we were not going to be chained to our house payment, and that our comfort range for a mortgage was lower than what we qualified for. End of story. Eventually they understood. The point is, we knew what we could comfortably afford, and no one was going to talk us into spending more.
Likewise with student debt: it seems reasonable that if someone is going to take out a large amount of student loans, then it is simply prudent and responsible to do the necessary research on one’s own and find out whether or not the school’s rosy predictions of future employment actually hold water.
How much do these (typically large) corporations care that a certain percentage of their customers can be expected to be delinquent? Both the corporation and the customer are taking a calculated risk that the customer will be able to pay back. Williams is an economist. He knows this.
The line between irresponsibility and simply having taken an “acceptable” risk based on the knowledge you had at the time, then losing, isn’t a bright line.
As for debt relief, if Bob finds himself in a hole where debt relief would improve his credit rating, well, credit rating is the universal standard for measuring personal financial responsibility. It would be irresponsible for Bob not to do what was permitted to repair his credit. Bob doesn’t get away scot-free: he will have worse credit than he would if he had avoided the hole in the first place. Would it be better if Bob had avoided the hole in the first place? Of course. But Bob can’t change the past. All he can do is whatever’s permitted to get him out of that hole.
It has become normal to borrow, but wasn’t always so. Low downpayments, longer terms, seem to keep people indebted. If homeowners had to have 30% down or more, there would not be so many houses being built, especially with granite, etc.
The old saying about going bankrupt slowly then fast seems true.
I may be wrong, but I think American bankruptcy laws acknowledged that entrepreneurs take risks, and those are good for everyone. Henry Ford went bankrupt before making it big, and that is what is hoped for. Thomas Jefferson inherited debts, which we don’t anymore. Now it is common that bankruptcy is filed for personal debts, which, I think is not a good thing.
Correct. It’s been tightening for decades, and the current system was last modified in 2005.
Exactly. How in xxxx does it help anyone to get them into a house where after a year or three they can’t possibly make the huge payments? Better far to help them get a ‘starter’ house they can pay for and then work up to what they want if/when they are able to actually pay for it.
All this program did as to the housing situation was create false demand which inflated prices further damaging those who were given loans they couldn’t sustain.
All parties involved share some blame, the lenders for being willing participants in an unsustainable scheme, the regulators for constructing the ‘guidelines’ that not only allowed but encouraged this fiasco, and the borrowers for letting themselves be led down the rosy path to quick and easy ownership of what they couldn’t afford. Also, parents and educators who failed to inform and prepare youngsters about real world finance were delinquent.
Bankruptcy is a serious remedy for those who can’t work their way out of crushing debt and it comes with long term consequences as it should. To withhold this option from those who actually are in a position where this makes the most sense is probably despicable especially when done to protect the well connected.
That said, when one of our grown children faced a large debt he had no hope of paying off, I first asked him what he thought he should do, bankruptcy or pay it off. After he chose to pay it I proposed that he move in with us (he was single) and we would cover his expenses while he used his income to pay the debt. He was able to negotiate a lower interest rate through one of the debt reduction agencies which made sense as they now had stronger reason to expect payment. I believe that, in his case at least, this approach helped him become better at controlling spending, more interested in increasing his income and will better serve him for a successful future.
Avoiding debt is better than getting out of debt but everything you see on commercial media is designed to convince you otherwise. Our kids need to be better prepared to see through and resist this message as those who proclaim it will not be reformed or stymied. The debt free message of Dave Ramsey runs counter to all this and can be hard to sell to those young enough to ‘know’ everything but it offers true financial freedom.
“The borrower is servant to the lender.” is still wisdom worth acquiring whether one accepts Biblical authority or not. Debt closes off options so while some debts are wise, borrowing for consumables is never a good idea. We are fortunate to have learned this early in our marriage, it has served us well.
I was and am. It was a giant rip-off. To what degree we lay blame at people’s feet or the government’s or the banks’ is a tough call. I do wonder how many people who lost their homes will again make the same foolish decisions because they so much want a home and “this time will be different.”
Great essay, @saintaugustine. I hope you don’t mind if I excerpt two paragraphs:
Read along from an excerpt of Plato’s Republic (Book VIII, 550d-566), and see if any of it sounds familiar. It’s the tragic tale of a declining republic, a tale of war, money, and politics all gone wrong through a combination of bad judgment and disordered cravings. We begin with moneylenders who have a nasty habit of lending money to people they know will use it irresponsibly, especially to youths whom they encourage to fritter it away on useless luxuries. They prefer that their money be wasted on frivolities; the more of it is wasted today, the more they can charge in interest tomorrow.
But their clients are just as bad, if not worse. By spending others’ money on frivolities, they fail to take responsibility for themselves. A group of people recklessly spending other people’s money soon becomes a leech on society: a class of those who have ruined themselves burning through borrowed money.
We had almost exactly the same kind of situation, @painterjean, trying to sell us a home that we didn’t want to buy because we felt it was beyond our means. We bought a beautiful condo in San Clemente that actually had a yard. We loved it and we made a nice profit to pay for our home in Florida.
I admire Dave too, and his book makes a great graduation gift for a high schooler. However, someone should point out a person has a moral obligation to repay the debt. Neal Boortz (former radio talk show host) did just that after he came out of personal bankruptcy.
A lawyer by training, he told his audience all bankrupty means is your creditors cannot go after your assets. However, it does not erase the debt. After he got back on his feet and started making the big bucks, he went back and – much to the surprise of his creditors – paid them back in full (no word or whether or not he included interest).
It’s possible what Dave was referring to is the average person, who probably wouldn’t have the means to repay a huge debt over his lifetime. I don’t know, but that’s never stopped me from commenting!
You are absolutely correct, Midge. And the differences in our pespectives on what “acceptable” is can vary greatly. Obviously, I weigh in on the conservative side, as best I can.
You both showed a lot of wisdom here, @okiesailor. Everyone sacrificed some (privacy and independence, for starters) to make it work. Very impressive.