Re-post: Why It Pays to Pay What You Owe

Default shouldn't be your default

A good name is more desirable than great riches;
    to be esteemed is better than silver or gold.” -Proverbs 22:1 (NIV)

A couple of years ago, the New York Times published an op-ed piece by Lee Siegel titled “Why I Defaulted on My Student Loans” in which the author explained — duh! — why he wasn’t paying back his student loans. Let us at least give credit to the editors of the Times for accuracy in titling this article. Further, let’s give one cheer for this window into one man’s capacity for rationalization. Now let’s explore why this should approach should not enter the thoughts of a man of consequence.

Arm wrestling, bet, money, win, lose, strength

When you owe a legitimate debt, you shouldn’t have to wrestle your conscience. (photo credit: Ryan McGuire)

It’s called theft

If I could only express one objection to Mr. Siegel’s default it is this: he earned and received a college degree — getting all the benefits it provides — and only then decided not to pay. This is stealing, pure and simple.

That’s one of the top ten

Whether you believe in God or not, whether you practice your faith or not, you cannot ignore the profound influence of the Ten Commandments over civic law and personal ethics. I point this out first to note that nearly every culture frowns on stealing. I also point out that even my atheist friends don’t want people stealing from them, so even if they deny the existence of a Transcendent law-giver, they appreciate the utility of the law.

In his article, Siegel addresses the “what-if-everbody-defaults” issue by glibly claiming that this would be a good thing, as the greedy profiteers would be exposed. Not coincidentally, the author bio at the end of his op-ed says that Lee Siegel is the author of five books who is currently writing a financial memoir. I wonder how he would feel if consumers — inspired this piece of his — simply stole his books.

Going the extra mile

The late financial counselor and author, Larry Burkett, used to have a radio talk show — in many ways it was similar to what Dave Ramsey does now. Callers would explain their situation and Larry would help them figure out a path to solvency. One bit of advice I heard him give has stuck with me for years: Larry Burkett always recommended that people make their creditors whole — paying every penny — even if the debt had been erased through bankruptcy. This was essential to maintaining one’s reputation

Higher stakes

In addition to your reputation, and your ability to sleep soundly, there are other benefits to paying your bills. Society flourishes or fails according to the strength of its families and its markets. Interestingly, both depend on the ability to trust and to be trusted. I have the same opinion of people who steal as I do of those who take solemn vows and break them.

In God We Trust

Consider whose likenesses appear on US currency. To name a few: George Washington — to whom legends attribute the statement “I cannot tell a lie;” Abraham “Honest Abe” Lincoln; and Benjamin Franklin — mister “a penny saved is a penny earned.” And on every coin and every note, the national motto: In God we trust. Clearly, our founders emphasized liberty, but even more virtue — the greatest form of self-government. Skipping out on your debts doesn’t just injure the victims of your theft, it also injures your neighbors who have to pick up the slack. And this doesn’t include what it does to your character, your soul.

All others pay cash

Perhaps you can earn a scholarship, or two, or three. If not, I know several young men who are working and paying their way through their first two years at the local technical or community college. There are also co-operative programs that enable a student to alternate semesters or years working and attending school. Serving in the military is yet another way to earn money for education. My late father-in-law earned his bachelor’s degree on the GI Bill following WWII. If you’re determined, there is a way.

I’m actually on your side

I agree with Lee Siegel that the cost of a college education has increased at a rate that has eclipsed its overall rate of return. A man can’t accumulate hundreds of thousands of dollars of indebtedness to take a job that tops out at, say, $35,000 a year. This is, however, an argument for making better and more informed decisions instead of playing the educational equivalent of dine and dash.

If you’re on the hook for student loans, you have a moral and a legal obligation to pay what you owe. Unfair as it may seem, bankruptcy does not discharge student loan debt.

If you haven’t gotten into debt, avoid it and find another way to fund your education. There are already free college courses available online, and other providers are charging a fraction of what residential colleges and universities charge — without the pathologies of Marxist social engineering that make college a hostile environment for men.

I’ve said before that formal education may not fit your budget. Even so, there is no excuse for being ignorant. Cultivate your mind by reading, and cultivate your character — you can start by paying what you owe.

So how about you? Share your story about how you got into — or out of — debt below.

Please note: I reserve the right to delete comments that are offensive or off-topic. Bring your best manners, please.

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