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Student Loans

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  • Sun, May 24, 2009 - 10:14pm

    #1

    millerem

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    Student Loans

I’m new here, apologies if this has been discussed before, point me in the right direction if it has. I saw Chris speak via video-link yesterday at the Transition Towns Conference in London, and I’m a U.S. post-grad student currently studying in the UK. Thanks to continuing my education I’m also $75,000 in debt, which is scary on the best of days. I’ve just started watching the Crash Course and when Chris was talking about loans and money it made me wonder what would happen to my student loans if the dollar spiraled into inflation and our currency system essentially collapsed.

The future I hope for myself is to own a nice plot of land and live as self-sufficiently as possible, but I also know that my loan master promissory notes say that defaulting on those loans gives the government the right to repossess my property to help pay it back. I guess my main question is: if I default on my student loans because our currency is made essentially worthless through inflation, does the government have the right to repossess my property? I ask because I’m really hoping to invest my future earnings in more secure and tangible things like land and food and energy security, but if it can all be legitimately taken away in a currency crisis it’s a bit self-negating. Any thoughts?

  • Mon, May 25, 2009 - 02:52am

    #2
    Peak Prosperity Admin

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    Re: Student Loans

"if I default on my student loans because our currency is made essentially worthless through inflation, does the government have the right to repossess my property?"

Short answer… YES. Uncle Sam is just about the only entity that can literally take everything you own, no matter what state you live in, as payment for debt. I think the gov will have no problem whatsoever foreclosing on people’s government loans (which is what subsidized student loans are) or collection of tax penalties and then auctioning off their repo’d stuff in a desperate attempt to stay afloat. You can’t bankrupt yourself out from under federal gov’t loans and levies either… the minute you earn money or get property they’ll be right there waiting for their piece of the pie. There could be a slim (microscopic) chance that debts will be forgiven or forgotten if the dollar and government completely collapses, but I certainly wouldn’t put too much hope on that miracle. I wish you lots of luck getting and keeping employment that pays enough to get out from under that educational debt before things go "pop". You’d have better luck staying in the UK or emigrating to another country to set up your self-sustaining life… Uncle Sam can’t repo property it doesn’t have any jurisdiction over.

  • Mon, May 25, 2009 - 08:06am

    #3
    Peak Prosperity Admin

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    Re: Student Loans

 Welcome millerem.

I hate to break it to you, but you’re best hope to get out of a $75K student loan debt and acquire a sustainable homestead any time soon in this economic landscape is the devil we call hyperinflation– the worst nightmare for virtually everyone who is a member of this community.  

Inflation favors debtors and punishes savers, so hyperinflation is even better for folks who are deeply in debt.  If hyperinflation kicks in and assuming you’re professional salary tracks with inflation and goes from $50k to $100K virtually overnight, you’re debt would remain fixed at $75K and you would now have double the income to potentially apply toward the debt.  Isn’t that great?  Yes, if you’re in debt and have no savings.  Unfortunately, while you’re happily and rapidly paying down your newly acquired student loan debt with those hyperinflated dollars, those of us who have worked HARD for decades and lived within our means and saved money responsibly would be WIPED OUT rapidly if we left all our $75K savings in dollars as the price of everything doubled overnight due to hyperilnflation. And the day that the mature generations get their life savings wiped out is the day that the torches and pitch forks show up in Washington and Wall Street to take it back.  You will be in the process of rapidly paying back that huge debt with inflated dollars when my generation revolts and plunders back at the bankers and politicians and plunges us all into some period of temporary chaos and anarchy.  Not a good option for you either, but you probably won’t have to pay all the debt back because we burned Wall Street and Washington to the ground after we finished plundering it and we’ve officially liquidated them in a fire sale auction on EBay.

Student loan debt is one of the few debt types that can NOT be discharged via bankruptcy in the U.S., so if you default on a student loan  and have any hard assets like land, etc., you’re going to lose them to Uncle Sugar. Period.  Oh, wait– unless Uncle Sugar ceases to exist itself, which is your only other easy way out of student loan debt– which would mean that you’re now free of the debt but you’ve possibly lost your country and your personal liberty in the process…

As you can see, you’re options are severely constrained from any easy or painless escape from the potential outcomes (much as the U.S government and financial system will soon re-learn and accept as self evident).  Time to suck it up and pay it off for how ever long it’s going to take to hoe that row, because you’re only other options are suicide, jail, or go on the run from the U.S. government for the rest of your life (or the government’s life, depending who is the last man standing between the two…).

Welcome to the harsh reality of the choices we make in life.  I wish I had better news for you, but the future is looking immensely challenging for us all and there is simply no easy button to push that will disentangle us from this web that we wove.  We’re all going to have to fight tooth and nail with all our wits and knowledge and experience to live even a modestly comfortable life in a world with an exploding population, dwindling resources, and a failing financial system.  Until the current financial system has failed completely and a new system is established in it’s place, we’ve all got some tough rows to hoe in this field of bruised but not broken dreams…

One final thought of encouragement to you–  We have to play the hand we’re dealt, so accept that this is your world and your life and make the best of it that you possibly can as you pay off your sizeable debt.  I promise you, there will still be enough joy and wonder and compassion and will within you and us to sustain all humanity beyond this current human crises.  The future may not look anything like our previous dreams, but I am confident that nothing short of total extinction of human kind could ever rob us of our enduring ability to laugh and celebrate life no matter how bad the overall situation or landscape.  There will simply be less parties for a while and more serious work to do.  But all that work can be celebrated if we choose to sing or whistle as we gratefully toil in the field of renewed but not broken dreams…

G’Night….   zzzzzzzzzzzzzzzzzz

 

  • Mon, May 25, 2009 - 11:57am

    #4
    Peak Prosperity Admin

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    Re: Student Loans

Well, sh*t. I have to admit I’m feeling pretty dismayed right now, and also incredibly duped. My whole generation was always told, go to college even if you have to take out loans, you’ll be able to pay it back later no problem, it will be worth it in the end. I now wish desperately that I could have figured all of this out before I sold my soul to the banks in exchange for a fancy degree. These loans were supposed to be the smart thing to do, they would afford me a better life in the future, but now it just feels like a millstone around my neck.

I’ve landed between a rock and a hard place. If I work long hard hours at a job I hate to pay off my loans more quickly, I won’t have the means or time to ensure that I’ll have food and housing security before the bubble bursts, and if it bursts before I can accomplish that I’m in trouble. On the other hand, if I work a small job and put my resources and energy into growing food, building a house and preparing for an unstable future, if the government comes to collect on my outstanding loans and takes it all away I’m even worse off.

I guess my only hope is that I can pay off the loans before everything comes crashing down. This is an incredibly unfortunate time to be graduating from University, and despite all of my higher education I feel almost completely unprepared for the future that is likely to come. I had thought about emigrating, but trying to get a work visa now is expensive and ridiculously competitive, and it’s hard to stomach the thought of possibly being separated from my family for good.

I hardly know what to think, this is very overwhelming. I had no idea things were so bad… I guess one small comfort is that I’m not alone in my predicament, with the rate of debt upon graduation is at it’s highest ever. And there’s always family and community to back me up, but this is still a scary prospect to be faced with. I guess it will just take a while to sink in.

Thanks for the replies, I am very thankful that I’m finding all of this out now and not years down the road. Better late than never, eh?

Erin

 

 

  • Mon, May 25, 2009 - 01:03pm

    #5
    Peak Prosperity Admin

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    Re: Student Loans

[quote=millerem]

If I work long hard hours at a job I hate

[/quote]

Welcome to the real world! I’m reminded of a Drew Carey joke –

There’s a support group for people who hate their jobs. They’re called "Everybody" and they meet at the bar at 5:30.

  • Mon, May 25, 2009 - 01:13pm

    #6
    Peak Prosperity Admin

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    Re: Student Loans

It’s not so much that I would hate the job, and I’m not saying that I deserve better than anyone else. It’s just a massive road block. I would gladly take on an awful job if it led somewhere practically useful (beyond paying back my loans, that is). It’s that this job will, in all likelihood, prevent me from making the majority of practical preparations for life after peak oil and climate change. There just won’t be enough hours in the day. Hopefully I can work through my loans fast enough to make it out the other side before the situation becomes dire.

  • Mon, May 25, 2009 - 01:58pm

    #7
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    Re: Student Loans

[quote=tx_floods]

There’s a support group for people who hate their jobs. They’re called "Everybody" and they meet at the bar at 5:30.

[/quote]

Too Funny Floods

  • Mon, May 25, 2009 - 02:57pm

    #8
    Peak Prosperity Admin

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    Re: Student Loans

 Perhaps I can make you feel better. I have $250K in student loan debt, and recent major cutback in my hours at work. Oh, and no assets to sell to pay anything off. Wanna trade places?

  • Mon, May 25, 2009 - 03:34pm

    #9
    Peak Prosperity Admin

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    Re: Student Loans

I think a lot of (current and former) students are going to be caught in the loan backlash, just like the homeowners with mortgages… for the same reason, too. We all got duped into believing that you had to take on debt to acquire something that every American must have in order to be successful, but that it was OK because you could easily get out from under it in a few years.   LIARS — the greedy little beggars!  But at least Uncle Sam can’t take all my stuff if I default my mortgage, and neither can the bank (thank God, I didn’t get a HUD subsidized loan!). Students have it much worse in that regard.

I know what you mean about getting immigration and work visas. My DH is from UK and was just finally granted US citizenship (we’ve been married for 5 years). We researched moving back to UK, or moving to Australia or New Zealand. OUCH!!  Seemed like he could get visas much easier as a UK citizen than I could as a US one… guess people don’t want "Americans" immigrating to their country 🙁

  • Mon, May 25, 2009 - 03:53pm

    #10
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    Re: Student Loans

Hi Millerem, I feel for you.  I just had a student say to me that they feel like they’re wasting their time in School.  They have 2 yrs to go and are in a large amount of debt.  I have told them to take a look at the Crash Course.  Young people today do have a very unique situation ahead.  We can look at it like they have it worse than anyone in 4 generations has, or because they are armed with information, they have an opportunity to postition themselves and use their youth and energy to build amazing communities and thrive. 

Did you get a chance to look at the Gary Null’s Stimulus plan in another thread?  Check out point # 14.

http://www.garynull.com/gnStimulusPlan.html#17

Best!

KKP

 

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