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One hot button issue in the personal finance (and political) world lately is the government bailouts surrounding the mortgage crisis.  In this article at My Two Dollars, the writer expressed a lot of my sentiments.  While I do feel very sorry for people who genuinely didn’t know what they were getting into, I think a lot of people just wanted what they wanted, let the consequences be darned. And I don’t necessarily want my tax dollars going to help these people, for the obvious reasons and for personal reasons as well. 

This hits home in a more personal way to me too, because I made a mistake in taking out a lot of loans to get a law degree that I am not using.  And, since I don’t have the anticipated $100K+ a year job that is supposed to enable me to pay back my $119,000 in debt, coming up with the $1000+ a month payment is a stretch for me.  However, I realize that it was my choice to get that education. I realize it is (to some extent) my choice not to get a high paying job in a law firm.  And so, I am making the sacrifices necessary to not just pay off my loans, but to pay them off early. 

Furthermore, if I choose not to make extreme sacrifices to pay off my loans, or if I simply became unable to… well I can’t just have a Short Sale of my Education, or default on my student loans and have them discharged in bankruptcy.  If I tried to default, or walk away (like people are doing with the homes, they can’t afford) not only would have I have the accompanying black marks on my credit report, but the lenders (including the US government) would be able to garnish my wages, tax returns, etc.  and go to otherwise extreme legal measures to recoup their money.  I am in a sense even more stuck than all the people who bought into the sub-prime mortgage mess.

I’m not alone here.  Many young students are in a similar situation, with loans they took on that they just can’t afford.  Like many of the people struggling to pay their mortgages, they didn’t understand what they were getting into when they took these loans.  Some people, 18 year olds freshly minted and only just able to sign legal contracts, really had no idea what the long-term consequences would be of taking on student loan debt.  I know that no one told me what my monthly payments would be, or that student loans were debt that is almost impossible to discharge (unless you become totally disabled or die). 

And, even for those that were knowledgeable about the loans, some of them were adversely affected financially because they attempted to do the responsible thing and consolidate their loans.  These people, who only tried to get an education and then behave wisely about their debt, are now locked into interest rates much higher than today’s rates and because of an (apparently?) arbitrary law that you can consolidate only once, they have no escape.   

So, here is my question to a government who wants to use our tax dollars to bail out people who took mortgages they had no prayer of affording. What are you going to do for the people who took out student loans that they have no prayer of paying back because the jobs in their field just don’t pay enough or because they just plain and simple didn’t understand what they were getting into?  Can we get those forgiven, especially if we default on them or are in economic forbearance?

It would probably help the economy if we could divert all the money we are using to pay back this debt into consumer spending.  Many of us would probably feel more able to select jobs we love, and would excel at, as opposed to jobs that we need to take to pay bills.  I’m sure that would be good for business.  And, heck, some of these loans are even loans issued by the government, so it should be even easier for them to bail us out of this financial pickle.