Lee Siegel foolishly touts the virtues of student-loan default in a New York Times op ed essay

Lee Siegel, a successful writer, defaulted on his student loans;  and he bragged about it in the New York Times.

In a Times op ed essay, Siegel admitted that his loans paid for a valuable college experience. In fact, Siegel wrote, his education "opened a new life to me beyond my modest origins."

So why didn't Siegel pay off his loans? Apparently because meeting his financial obligations would have destroyed his "precious young life" by forcing him to take a job that would have stifled his creativity.

Siegel was vague about his loan obligations in his Times essay. He did not say where he attended college, how much he borrowed, or how much he now owes. Nor did he say how he manages to live comfortably with a huge debt hanging over his head, although he advised defaulters to marry or at least live with someone who has good credit. Thanks for the tip, Lee.

Siegel described his philosophy as one of "desperate nihilism," but I would be surprised if there is anything desperate about his lifestyle. He writes for the nation's most prestigious journals, he has written books, he appeared as a celebrity guest on CNBC. He has probably traveled overseas on numerous occasions. Perhaps he vacations in the Hamptons.

I think it was a mistake for Siegel to brag about defaulting on his student loans in the New York Times. He may think his essay displays his edginess, even his nobility. But basically he told the entire world he is a deadbeat.

Most student loan defaulters enter a world of pain.

Fortunately, Siegel stopped short of urging others to default on their student loans; it is a tort after all to interfere with others' contractual obligations. He did suggest, however, that a mass number of student-loan defaults might trigger wholesale reform of the way higher education is financed.

But Siegel is wrong about that. According to the Consumer Financial Protection Bureau, 7 million people are in default on their student loans and 9 million more are not making loan payments because they are in some form of deferral or forbearance.  Another million and half or so are in income-based repayment plans, and half of the people in those plans were kicked out for not reporting their income on an annual basis.Those are big numbers, but the massive meltdown of the federal student loan program has not prompted Congress to reform it.

It is totally irresponsible for a successful writer to tout student-loan default as a noble course of action. Most of the defaulting millions have had their lives wrecked by their failure to pay off their student loans. Their credit is shot, their wages are garnished, their income-tax refunds are levied, and they are hounded by debt collectors. And, if they are elderly, their Social Security checks are subject to garnishment.   Is there anything noble about that scenario?

Moreover, the New York Times acted irresponsibly when it published Siegel's essay. Siegel's self-serving defense of voluntary student-loan default may encourage other people to take the same reckless course of action; and most people who default on their student loans will enter a world of hurt.

It is true, of course, that millions of student-loan debtors are morally entitled to have their loans forgiven. People who were lured by fraud or misrepresentations into worthless for-profit college programs should have their loans wiped out. Many naive young people who borrowed money to enroll in mediocre programs at elite private colleges are also morally entitled to loan forgiveness.

But many people who borrowed money to attend college have done quite well; and apparently Lee Siegel is one of them. It is the height of arrogance for someone in Siegel's position to say, in essence, that the taxpayers should pay for his college education, an education he admits was valuable to him.

I have said, and I say again, that a reasonable bankruptcy process is the proper way to determine which people are legally entitled to have their student loans discharged. People who borrowed money for worthless college experiences; people who fell on hard times due to a job loss, illness, or divorce; people who tried to maximize their income but were unable to make enough money to pay on their student loans--all these people should be legally entitled to bankruptcy relief.

But simply walking away from student-loan debt is not an option. In fact, people who default on their student loans suffer catastrophic consequences. The Times would serve its readers better by editorializing in favor of bankruptcy relief for oppressed student-loan debtors, rather than publishing Siegel's very foolish essay.

References

David Marans, This Author Called for A Student Loan Boycott, And CNBC Was Not Having It. Huffington Post, June 8, 2015. Accessible at: http://www.huffingtonpost.com/2015/06/08/cnbc-student-loan-boycott_n_7537432.html

Lee Siegel. Why I Defaulted on My Student Loans. New York Times, June 7, 2015, Sunday ReviewSection, p. 4.

The Inuits Flipped a Duck at the Federal Government in 1961: A Suggestion for Mass Protests Against the Abuses of the Federal Student Loan Program

 In May 1961, the Inupiat people of Barrow, Alaska staged their first mass act of civil disobedience in the long and noble history of the Inuit people. Perhaps their community protest offers some lessons for the millions of Americans who suffer under the burden of crushing student-loan debt.

The Barrow Duck-In of 1961

Here's what happened. Under the Migratory Bird Treaty Act, ratified by Congress in 1918, spring hunting of migratory waterfowl was made illegal in the United States. The ban on spring hunting was justified as a way to protect migratory birds during the spring nesting season.

But no one consulted the Inuit people of Alaska about the spring-hunting ban. The Inuit had hunted ducks and geese for centuries and depended on spring waterfowl hunting to obtain essential food after long arctic winters when their food supplies were depleted.

For almost a half century, the federal government had not enforced the Migratory Bird Treaty Act against the Inuit. But in 1961, three years after Alaska became a state, federal game wardens began arresting spring duck hunters. The Inuit protested to everyone they could find at both the state and federal level, but no one would listen.  Federal bureaucrats were convinced that Eskimos could buy their food in the grocery store just like everyone else and that it would actually be cheaper for them to buy store-bought food than shotgun shells.

On Saturday, May 31, Alaska state legislator John Nusunginya, himself an Inupiat, met with two federal game wardens in Barrow to explain the Inuits' point of view. As it happened, Nusunginya was carrying a shotgun as he and the wardens were strolling down a street in Barrow. When a flight of eider ducks flew by, Nusunginya "pumped a couple of them down" and was promptly arrested.

The Inuit faced down the federal government in 1961

The Inuits quickly organized a town meeting in the local theater and invited Harry Pinkham, one of the federal game wardens, to attend. When he arrived, 138 Inuit men each presented him with a duck and a signed statement confessing to hunting ducks out of season.

Pinkham admitted that he couldn't arrest them all: "I can't handle that much paperwork" (Burwell, p. 6). And of course federal agents had to preserve all the evidence, which meant flying nine sacks of ducks down to Fairbanks.

As I heard the story from an Inuit man who claimed to have participated in the "duck-in," Inuit women turned themselves in as well, forcing the federal government to arrest every adult in Barrow and take on childcare responsibilities for the entire village. But this recollection may be apocryphal.

Michael Burwell's account of the duck-in, presented to the Alaska Historical Society in 2004, is undoubtedly the most accurate rendition of these events; and apparently no one was actually jailed.

But the Inuit had made their point.  As one Inuit man recalled:

We were so well organized that if they had arrested every man in Barrow, the womenfolk were going to be next. And then the children. At the time there was not a jail big enough in the state of Alaska. They would have had to have a C124 coming in and out for days to move Barrow out to jails in the States! (Burwell, 2004, p. 7)

Eventually, the Inuit won a legal exemption to the Migratory Bird Treaty Act, which they enjoy to this day.


We Need Mass Protests to Demand Bankruptcy Reform for Student-Loan Debtors
Student-loan debtors should take a lesson from the Inuits' creative act of civil disobedience.  Currently, there are 7 million student-loan debtors who have defaulted on their student loans; and 9 million more have obtained economic hardship deferments and are not making loan payments. Millions of these people are suffering under the burden of massive student loans. Some have had their paychecks garnished, and others have had their income-tax refund checks seized. More than 50,000 people had  their Social Security checks garnished last year.

For the most part, these miserable people suffer in silence. The colleges and universities have their lobbyists and lawyers, as do the banks and the student-loan collection companies. They protect their interests in the halls of Congress and in the courts.

And when overburdened student-loan debtor attempt to discharge their loans in bankruptcy, the federal government and the loan collectors send their attorneys to court to stop them from getting relief. The U.S. Department of Education actually opposed bankruptcy relief for a quadriplegic man who was working full time but could not make enough money to sustain himself because he had to pay a full-time person to feed him, dress him, and drive him to and from work.

The federal government and its loan-collecting henchmen can easily beat down a few lonely souls who attempt to obtain relief in bankruptcy court. Three or four lawyers are generally enough to squelch the intrepid individuals who file adversary actions to discharge their debts.  And the federal government and the scholarly commentators spread the word that it is almost impossible to discharge a student loan in bankruptcy, so most insolvent debtors don't even try to shed their loans in bankruptcy.

But change is in the air. Several bankruptcy courts have ruled sympathetically for student-loan debtors over the past couple of years; and a couple of research articles have reported that student-loan debtors actually stand a pretty good chance of obtaining partial or total relief from their student-loan debts if they file for bankruptcy and bring adversary actions against their creditors.

So what would happen if every student-loan debtor who is truly insolvent and who took out student loans in good faith filed for bankruptcy and brought an adversary action for debt relief? And what would happen if these insolvent debtors filed for bankruptcy without a lawyer, relying on the facts of their cases and the sympathy of a bankruptcy judge in the hope of obtaining justice?

I tell you what would happen. If 1 million worthy individuals filed for bankruptcy during a single year, the whole rotten, stinking, bloated and predatory student loan program would collapse because the federal government and the higher education community would have to publicly admit that the present system is unsustainable. 

Something like an Eskimo flipping a duck at a federal game warden.

References

Michael Burwell. (2004). “Hunger Knows No Law”: Seminal Native Protest and The
Barrow Duck-In of 1961. Alaska Historical Society Meeting, Anchorage, AK. Accessible at: http://www.uaa.alaska.edu/cafe/upload/Hunger-Knows-No-Law-AAAMarch2005Last.pdf

Note: My account of the Inuit Duck-in of 1961 is taken entirely from Mr. Burwell's excellent paper, which is posted on the web.