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Wednesday, June 10, 2015

Bad Advice

On Saturday, the New York Times op-ed page went all in on the fact-free faux-populism surrounding student debt. In anexceptionally tone-deaf piece—and that’s saying something, given the competition in this area—cultural critic Lee Siegel, author of un-ironically-titled Are You Serious and three-time grad of Columbia University, urges borrowers to default on their student loans, just as he did. Siegel argues that student loans are in fact immoral, and that defaulting is the path to liberation...
Melodrama aside, this is, quite possibly, the worst advice you could give. Defaulting on student loans leads to damaged credit, relentless hounding from collection agencies, garnished wages and tax refunds, and—most importantly—an increase in the amount of money you will owe (to cover the cost of collection). Siegel dismisses credit worries by encouraging borrowers to sign up for as many credit cards as possible prior to defaulting (!), and advocates marrying well and finding a “stable” living situation.
Bad advice for students is one thing. What’s most interesting is the political damage that Siegel’s piece does to advocates’ push for loan forgiveness. Indeed, if you listen carefully, you can literally hear cracks forming in the growing coalition advocating for generous loan forgiveness (a coalition I largely disagree with).
The few reasonable arguments for loan relief opt for a “Clintonian” view of borrowers: many who are working hard and playing by the rules can’t get ahead of their debts because they paid skyrocketing tuition prices and graduated into a soft economy. Siegel comes across as the polar opposite of this: a self-indulgent, effete writer who flaunts the rules and poo-poo’s the idea of working at a shoe store as being below him. His advice isn’t actually directed toward the work-a-day borrowers who are making good on their responsibilities—a group he probably feels sorry for—but to the white collar creative class who see adulthood as a choice between dream jobs and selling out. Siegel seems to fancy himself some sort of nihilistic revolutionary; he is, in fact, an entitled whiner.
I largely agree with Siegel on one thing: “The rapacity of American colleges and universities is turning social mobility, the keystone of American freedom, into a commodified farce.” But if there’s one thing that will set low-income college graduates back even further, it’s defaulting on their loans. More troubling, the systemic costs of mass defaults will fall predominately on the shoulders of the needy in the form of credit constraints and scarcer resources for need-based grants.