It’s Not My (De)Fault

Continuing our adulthood theme for today, Erin O’Connor (who is awesomesauce, as my students might say) examines an intersection of a couple of topics I’ve poked at here — higher education and strategic defaults. Her comments are prompted by the case of one Elie Mystal, who did both undergrad and law school at Harvard, running up what we in the rhetoric biz call “a big honking debt” in the process. Young Mystal is trying to welch on unilaterally renegotiate his debts, as he has discovered they make his life uncomfortable. His justification for blowing off the obligation he took on at the age of 22? “I was young and did dumb things.”

So did we all. Heck, some of us were older than that. Although I made it through my first two degrees without taking on debt, I did take some student loans for the Ph.D. (using them to pay primarily for stuff like day care for the Spawn), and although my loans aren’t huge, neither is my salary, and I expect to make payments on them for a long time to come. As I’ve said before, I was taking a gamble, and I knew it. Part of being old enough to gamble is paying up when you lose.

And the thing is, as both O’Connor and others note, it’s disingenuous of Mystal to claim he wasn’t aware that 1) Big-time law is not everyone’s cup of tea — in fact, it can be a huge grind (If it was unadulterated fun, you wouldn’t have to pay people large sums to do it), and 2) People who loan you heavy sugar expect to be repaid. After all, this guy is ostensibly bright enough to get into Harvard — twice — and we’re supposed to believe that he naively gave the lenders license to pick his pockets while he was distracted by the tall buildings. Gaw-lee!

Let me describe a different situation. I’ve mentioned that we didn’t have a great deal of money when I was a kid. One of the reasons for that was that my brother was born with the same congenital heart defect my mother had, but while my mom was able to survive until she was seventeen and able to have it surgically repaired, my brother needed the work done when he was six months old. Already strapped for cash, my folks borrowed the money for the surgery, and worked like hell for years thereafter to pay back the loan. This was not easy, either for my folks or us kids (we ate so many 19-cent frozen turkey pot pies I still can’t stand the sight of them more than thirty years later, and my suburban classmates were… less than graceful about the fact that Mom would work cleaning their homes because we needed the money.)

Because I was a reasonably bright, perceptive kid, it occurred to me when I was about 10 that if my folks bailed on the debt, we’d have more money to spend, and it wasn’t like the doctors would show up and undo my brother’s surgery. So one day in the garage, I asked my dad why they didn’t do that. “Because those people gave us money that saved your brother’s life, and they did it because they trusted us to pay them back.” And so they worked hard for years and paid it off.

Unlike Mr. Mystal, my folks didn’t want to be in a situation where they had to borrow money — they were forced into it by circumstance. But rather than griping about how unfair their burden was, they carried it, because that’s what adults do. Mr. Mystal chose his burden. He may claim he didn’t fully consider the ramifications of his choice (although as we’ve noted, that’s a dubious claim), but the fact is, the lenders trusted him to pay them back. Adults do all they can to live up to their obligations — including the trust others place in them. Overgrown children don’t.

About profmondo

Dad, husband, mostly free individual, medievalist, writer, and drummer. "Gladly wolde he lerne and gladly teche."
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9 Responses to It’s Not My (De)Fault

  1. majormaddog says:

    I’m not that familiar with the back and forth between this guy and his critics. I’m not going to say that I’m on his side or agree with his actions. But I guess I have to jump in on his side here. Why does this guy or any consumer get held to a higher ethical standard than do the loan makers or big companies? He’s not committing a crime by defaulting and his personal situation (finances, ability to get future education, jobs) will suffer because of his decision. The people to whom he owes money will be able to sue to recover the money from him, perhaps not now, but at some point in the future they can garnish his wages if he hasn’t already made arrangements. He did not make some sort of blood oath, he entered into a contract, just as the company or bank did. When the companies or banks don’t fulfill the terms of their contracts, I don’t hear the preaching from people on the right about how it spells the end of a way of life. They just get taken to court and then sometimes (but not always) the aggrieved party gets made whole.

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  3. Kristen S. says:

    Eventually everyone pays the consequences of their actions. This Mr. Mystal, I am unfamiliar with, but his situation is eerily familiar. I attend the college of Mondoville, and I can tell you with certainty that most of the students who take out loans to attend our college will have an excruciatingly difficult time paying them back.
    Now, a minor disclaimer- I do not have any loans, as I am on a full scholarship. That aside, I will say that my parents put the fear of God into me about borrowing money I couldn’t pay back. It may be going out on a limb, but I would bet that most students my age weren’t raised with the same financial ideals or what have you. Their train of thought goes so: “Graduate high school, get to college, and the rest of life”. Many of them have been raised to believe that going to college will get you a job, and you must do anything you can to get there (including taking out loans that put you into indentured servanthood before you know it).
    I’ll play devil’s advocate and agree with majormaddog in that “his personal situation (finances, ability to get future education, jobs) will suffer because of his decision”. However, borrowing money you know you can’t pay back could be considered wrong, immoral, etc. The borrower gets slapped with bad credit at the very least, the company gets screwed over, and in the end, everyone is the bad guy, and nobody wins. The end.

  4. dave schutz says:

    Mystal maybe went with the flow of ‘everybody’ thinking your education was your most important investment, and now he is finding in the cold light of morning that paying off is no fun. And, you know, useta be true. More than it is now, for sure, for law school students, although even before the apple cart got upset there were a lot fewer $145000 starting jobs than there were law school grads who thought they should get one.
    I put up a comment elsewhere (University Diaries) which I will bring in here, it seems on point to me:
    Much of the problem seems to me to stem from the inability to go bankrupt on student loans – both for the schlubs who have to pay the loans and for their younger selves finding willing lenders.

    I Googled around and found that lawyer Russell Demott has the following up on a bankruptcy site: “Student loans were dischargeable throughout most of the 20th century. In 1976 Congress enacted the Education Amendments, and in section 439A of that Act made student loans non-dischargeable if the first payment came due within five years of bankruptcy unless the debtor could prove “undue hardship.” In 1978, Congress repealed the Bankruptcy Act of 1898 and replaced it with the Bankruptcy Reform Act of 1978—the “Bankruptcy Act” then became the “Bankruptcy Code.” The bankruptcy Code adopted the Education Amendment provision in original section 523(a)(8): no discharge unless the first payment became due more than five years prior to the bankruptcy filing or the debtor could demonstrate undue hardship.
    The call for the non-dischargeability provision in the Education Amendment dated back to the early 1970s. The perceived need for a non-dischargeability provision stemmed from a few extreme cases of doctors, lawyers, and other professionals discharging student loans prior to beginning lucrative careers. The idea was that if the remedy of a bankruptcy discharge was disallowed for five years, those students would become established in their careers and be able to repay their student loans.
    Prior to the passage of the Bankruptcy Reform Act in 1978, the House and Senate disagreed strongly about the dischargeability of student loans. The House favored the pre-1976 Education Amendment standard of treating student loans like any other unsecured debt, while the Senate supported the Education Amendment provisions limiting discharge. In the end, however, the Senate won out, and Congress adopted the non-dischargeability provision of the Education Amendment.”
    Where I am going with this is, the vampires now making loans to students who will obviously have no prospects of repayment (and let me bring in the sob stories of the students from not-for-profit universities who graduate with degrees called ‘…Studies’ and $100K in debt, too) will stop doing it if bankruptcy discharge becomes possible again. Yes, this will mean that if we want to have LPNs graduate in large numbers we have to pay for public community college programs to get them, but it will cut the bloodsuckers out of the picture and loans will get made only to the people with good prospects for repayment.

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  6. splspl says:

    Well said, Profmondo! Personal accountability–sometimes we call it integrity: would that more Americans possessed it.

    Disjointed comments regarding majormaddog’s post: 1) Just because others (gov’t, corporate big-wigs, individuals) default on their obligations doesn’t mean you (or I) should do the same and doesn’t make it a right or acceptable action. 2) The “people to whom he owes money” are you and me if his are federally subsidized student loans, and I can’t sue him for it. Can you? 3) A contract IS a 21st century blood oath. 4) You aren’t listening if you “don’t hear the preaching from people on the right about how it spells the end of a way of life.” People on the right holler all the time about this. They do not favor bailing out banks, car companies, solar energy start-ups, students–or anybody else.

    “Adults do all they can to live up to their obligations — including the trust others place in them. Overgrown children don’t.” Amen!

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