Home > Commentary, News > A Pledge of Refusal to Pay Student Loans

A Pledge of Refusal to Pay Student Loans

Now this is an interesting idea.  NYU Professor Andrew Ross is advocating that student loan debtors band together and sign “A Pledge of Refusal” in which they would agree to collectively stop paying on their student loans once the pledge reached the 1 million signatures mark.  According to Ross:

…while individuals are subject to heavy financial penalties if they stop paying on their student loans, a mass action by 1 million would make the banks take notice.

“There is a lot of talk about student debt, but no one takes any action, and that’s what Occupy Wall Street is about,” the professor of social and cultural analysis said.

I found this by chance but had just been thinking something similar myself.  As far as I know, this is a fairly new idea, and I’ve yet to see an actual petition online.  Not sure I’d sign it myself as I am currently in a position where I can make my payments every month, even if making them means living in a hovel in a bad neighborhood without a bed.  Additionally, I am licensed to practice law, and, even though I don’t actually do that for a living, I’d be a little afraid of being disbarred. But for people out there who are already in danger of defaulting – heck, what do they have to lose? 

I’ll keep you all posted if/when this thing develops more momentum.

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  1. swazc101
    November 3, 2011 at 1:29 pm

    i agree with most students. i am for one a college student and understand what it feels like to struggle from day to day and put any or all of our money into bills and loans we had to endeavor for our education. the economy is at a downfall and you cannot get any jobs without an education in this day and time. of course members on wall street have an opinion of a misunderstanding between others and the struggles of paying our bills. if we all could have a job like that we would never have to make pledges like this.

  2. DYM
    November 17, 2011 at 7:17 am

    I just finished paying off my student loans after 20 years, and never missed a payment. It wasn’t always easy. I attended a public university and I was also a Pell Grant recipient, which tells you that I came from a family with very limited resources when I was in college. I worked hard and fulfilled my responsibilities. So first, why would we encourage people to not fulfill their financial obligations? Is that something we want to teach our young people? It’s just not wise, and it will hurt their credit. If you have an issue with the law, then teach them how to advocate to Congress to get the law changed. Second, the federal student loan programs are now funded directly by the federal government. Banks no longer fund these loans now. So by not paying them back, you are not hurting banks but you are contributing to the deficit situation. I disagree with the approach Professor Ross is taking. But more importantly, his research, analysis, and conclusions of what the situation is and how to impact it is flawed.

    • Administrator
      November 17, 2011 at 10:20 am

      Thank you for your comment, and in a different economic situation/higher education system, I would agree with you. However, at this point, it is no longer about teaching our young people to not fulfill their financial obligations – it’s about the fact that they have been and are being saddled with financial obligations that are now so large, many of them will NEVER be able to pay them off unless they hit the lottery. In the past 20-30 years, the cost of tuition has risen more rapidly than inflation and family income. In 1980, the cost of tuition at a public, 4-year institution was 13% of the average annual income of the lowest-income families – by 2000 it was 25%, and it’s been increasing ever since.

      More and more people spend so much money paying their student loans that they can’t contribute to the economy in other ways – from larger purchases like buying houses and cars to smaller purchases like furniture and, for some, basic necessities. With the economy in the tank, more people than ever can’t pay them at all, and their credit is already being ruined with no sign of relief since it is virtually impossible to even declare bankruptcy. Further, most people don’t have only federal loans – college is so expensive now that many people have private loans on top of that, and those loans are, again, nearly impossible to discharge in bankruptcy – it is unlike any other debt.

      As I said in my post, I think that if people CAN pay their loans, they should. I plan to. But there is a large portion of young people (and older people, actually) who are barely getting by, and at some point, the situation gets so bad that people need to band together and say, “No more!” The point of the pledge is to get a critical mass of people willing to work together to say, “Forget it, we’re done” so that individuals don’t face the dire consequences that would normally come if they didn’t pay. Once they have more money in their pockets, they will be able to put it back into the economy, but right now, you have a huge swath of the population whose spending has been cut so far that they are contributing far less than we need them to to get our economy back on track.

  3. DYM
    November 17, 2011 at 11:22 am

    I agree that students are borrowing more than they can afford to pay back and it’s not a good situation. I work in the financial aid field. We spend quite a bit of time and effort counseling students to borrow less. Unfortunately, they believe they will be able to easily pay off the loans once they have a job. It is difficult to convey what those monthly payments will mean to their lifestyle. They simply don’t understand – even MBA students. They will already have a mortage, and perhaps even a car payment – their student loans. It seems that we’ve reached a point where many families of lesser means need to either send their kids to a community college and then transfer to a 4-year public to complete the bachelor degree, or go to a nearby public university and live at home. And those are valid choices and you can obtain a quality education at a lower cost. It’s important to learn to NOT spend beyond your means – whether it’s buying consumer products with credit cards, or overborrowing from the student loan programs to pay tuition, room, and board at a university that is too expensive for you to afford.

    • Administrator
      November 17, 2011 at 11:44 am

      Community colleges and public universities are viable options for many students, but there are some problems. First, many states do not have particularly good institutions of public higher education or they have only one – and not everyone can go there. One of the best states in the country for public education, California, has been having tremendous problems over the past few years because there has been a huge glut of students applying to their community colleges, and they simply can’t accommodate them all.

      Second, many states are slashing their education budgets resulting in huge hikes in tuition at what used to be lower-cost schools. Students will still typically pay much less than for a private school, but public schools do not provide nearly the savings that they used to, and many will still have to take out student loans.

      Third, and this is perhaps a minor point, not everyone has the option to live at home and attend school. Sadly, there are many parents out there who have an 18 and out policy. I would guess that this is not the majority of parents, but it is still an issue.

      Finally, and most importantly to me – I think it says something really sad about our country that a student can study hard all through high school with dreams of aspiring to escape their background, only to be told that they have almost no choices for college because they come from a lower-income background. If you live in California or Michigan or one of the other states that has an amazing public university, that’s one thing. But if you do not, it is simply not true that a student will get the same education at a public institution as they will from some of the better private ones. Class sizes at public universities are typically huge, and certain private schools open doors into various internships and career paths that some public ones just don’t. I am going to be posting more on this topic soon to more fully explain my argument, but what it comes down to is, shuttling lower-income students into one set of schools and higher-income students into others is going to perpetuate the division between the classes. Until major employers start treating a degree from, say, the University of South Carolina, the same as they treat a degree from Harvard, students are going to have real reasons to try and get into the highest-profile college they can, public or private.

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