Seriously, This Has to Stop

Yesterday I wrote about how somebody searched for “can i serve jail time to pay off student loans?” last week and ended up on this site.

Today somebody searched for “will going to prison reduce your student loan?” and also ended up on this site.

Jail Time II

These are your 20s and 30s. These are the times to get out there, explore the world, take risks, and learn more about yourself and what makes the world go ’round. They’re not supposed to be spent behind a razor-blade-tipped chain-link fence and metal bars so you can pay off the four years you spent getting an advanced education.

Just how big of a crisis do we have on our hands when multiple people would willingly be incarcerated to pay down their student loans?

I want to know the demographic of people who are investigating prison as an alternative to paying down loans. Surely these aren’t the same people who can’t pay off their loans because they’re living way beyond their means by flying out on a vacation every other month, getting bottle service when they head to the bars, shopping Gucci and Armani, driving a Benz, and starting every morning with a Starbucks latte. To consider prison as an option to pay off student loans, I’m guessing these folks have completely and utterly exhausted every single other method to pay down the debt. We’re not talking about Max here. Somebody considering prison must have cut out every single minuscule discretionary cost, sold all of their non-essential stuff, and is working 80+ hours a week. And yet they’re at the end of their rope and willing to give up every single one of their liberties for an extended period of time just to be done with their debt.

Bankruptcy isn’t an easily viable option for student loans. And neither is prison. Are these folks unaware of the income-based repayment plans (IBR) for federal student loans? If you have any insight into the IBR–I’m not a first-hand expert–post it below. Why might it not be an option for somebody considering prison? Perhaps because it covers only certain types of federal loans?

I’m sort of speechless right now…I had no idea we were dealing with a problem of this magnitude. Am I overreacting? Is everybody else unfazed? I know MJ’s with me based on the commentary from yesterday. Are there any other thoughts?

Edit: I just got this email from a college friend:

You realize the more you talk about prison and student loans on your blog the higher you end up in search engine results for prison and student loans, right? It’s this little thing called search engine optimization. 

I get that. I almost included the disclaimer in my post, but I decided it would be a moot point since my position is that people shouldn’t be searching for prison + student loans, full stop.

Comments

21 responses to “Seriously, This Has to Stop”

  1. Joel Hooper Avatar
    Joel Hooper

    I agree it is out of hand. Another consequence of the ease of credit is the rate of increase in educational costs. Institutes have been able to raise their tutions in percentages larger than inflation for a number of years, because they know student will just rely on credit to pay ANY increase.

    Reply
    1. Joe Mihalic Avatar
      Joe Mihalic

      Bingo. The demand is almost completely inelastic.

      Reply
  2. Barbara Avatar
    Barbara

    I am happy you are writing again

    Reply
    1. Joe Mihalic Avatar
      Joe Mihalic

      Thanks Barbara. You appear to be one of the unfazed ones 🙂

      Reply
  3. Angie Avatar
    Angie

    Income based repayment can be helpful if you are working to pay off other debt, but your debt will be there unless you’re on income based repayment for 25 years you will have to pay back it at some point. Here is a great website that explains it: http://studentaid.ed.gov/repay-loans/understand/plans/income-based. The other thing to know is that if a person is on income based repayment for 25 years and gets it forgiven there will be a tax bill for the amount forgiven that will be due at the end. Finally, there is also the possibility of your federal loans being forgiven for working for a non-profit for 10 years.

    Reply
    1. Joe Mihalic Avatar
      Joe Mihalic

      I’d much rather chip away at my debt for 25 years or work for a non-profit than go to prison..Teach for America… or Sing, Sing? Wounded Warrior…or Attica? Make-a-Wish…or San Quentin?

      Reply
  4. TheGoodFightAgainstDebt Avatar
    TheGoodFightAgainstDebt

    Graduated a top 10 undergrad, top 50 law school, nearly six-figures of debt, but for the past 2 years I’ve been mostly unemployed with only a few jobs here and there. Sold everything, spent five months living out of my car, applying to real jobs all day from public libraries. I believe in doing an honest days work, so I never resorted to pan-handling or welfare. However, I’ve learned I’m not above working as a day laborer doing landscaping alongside migrants. I’m now proud to say I’m living indoors.
    I’d never wish to be behind bars, even if it were a possible solution to my debt problems. But, when I was living out of my car there were some nights I would’ve appreciated free heat and food. The only way I can imagine paying back my debts (which I do sincerely wish to do) is to get a gov job or join the military.

    Reply
    1. Joe Mihalic Avatar
      Joe Mihalic

      Unfortunately, when you put it like that, it actually does lend a lot of credibility to the prison option.

      I’m glad you have a roof over your head. And there’s absolutely nothing wrong with landscaping.

      Reply
  5. MJ Avatar
    MJ

    These are desperate times, nothing surprises me, except that there haven’t been more such searches.

    I’d like to hear your thoughts at some point to the recent “changes” in student loans that the President endorsed. Helpful? Hopeful?

    Also, how about a post on the legal implications of student loan debt and marriage. How does that work, does the new spouse’s debt become a joint liability?

    As you can see, I’m totally with Barbara 🙂 Keep up the writing, musing and leading.

    Reply
    1. Joe Mihalic Avatar
      Joe Mihalic

      MJ, did you just give me homework?? 🙂 Those are definitely a couple of good topics that I should tackle at some point soon.

      Reply
      1. Jennie Avatar
        Jennie

        The short answer is, in general, the debt one acquires before marriage will stay that party’s sole and separate debt. However, if the parties both have student loan debt (or credit card debt) and choose to consolidate it in the name of both parties, the consolidated amount does become a joint liability. (This is why people shouldn’t co-sign any loan unless they can sleep at night knowing they can afford to pay the loan if the other party is a deadbeat…or loses his or her job, etc. In other words, if the bank doesn’t trust the person to make the loan payment, why should you?)

        Reply
        1. Joe Mihalic Avatar
          Joe Mihalic

          Can always count on Jennie for the legal perspective. Thanks for jumping in here 🙂

          Reply
  6. Joe Avatar
    Joe

    Perhaps the search was made by someone who is going to prison anyway and wants to know what will happen with their loans.

    Reply
    1. Joe Mihalic Avatar
      Joe Mihalic

      Good thinking. I hope that’s the case.

      Reply
  7. Kivan Avatar
    Kivan

    We just had this discussion on our radio show.

    We were saying the reason tuition is so high is because universities know that the money will come from the government through student loans. Obviously if everyone stopped using loans or just stopped going to college for a few years the tuition costs would drop significantly. The trick is getting everyone to comply with that. Easier said than done of course.

    If you guys want to listen to the audio from that radio show you can find it here: http://www.smithfloyd.com/mds_0813/

    Reply
  8. Arch Stanton Avatar
    Arch Stanton

    I have over $100kin debt as an art student (yes, I know) and make $35K/year. Worthless. I’ve often wondered if I could pledge my life to work for the FBI or CIA (or some nefarious party) if it meant my family would be free and clear.

    Reply
  9. Alex from My Student Loan Plan Avatar
    Alex from My Student Loan Plan

    *Facepalm* That is quite desperate. Even if it did help with debt, who would want a criminal record?

    Reply
  10. Laura Avatar
    Laura

    This information doesn’t seem to apply to anyone who has posted above, but IF you have huge student loans AND you have some serious health problems (which would include mental health problems) you can get a complete discharge of the student loans if you can get an M.D. to sign off on a simple one-page form that you can download off the SallieMae website. You do NOT have to meet the standard of disability set by the Social Security Administration or by a private disability insurer, and you get to choose the doctor you want to use..

    If your paperwork is in order, Sallie Mae discharges your debt immediately, and all collection stops, but you do have to provide them with updates on your income for three years. As long as you are below around 18 or 19,000 for the three year period, the discharge becomes permanent.

    I’m not sure what happens with “private loans” so this may not solve everybody’s problems.

    Part of all of the discharged debt will be considered taxable income by the IRS and by many state governments, but there is IRS Form 982 (Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment).

    If you are despondent about being unemployed and hopelessly in debt, please consider the above option. Suicide and prison are not good options.

    My life was absolutely blighted by student loan debt and a horrible divorce and custody fight. But things have gotten a lot better over the years.

    God Bless anybody going through anything similar.

    Reply
  11. save. spend. splurge. Avatar
    save. spend. splurge.

    This kind of annoys me that people think they can skate out of student loans when they know FULL WELL what they signed up for when they took them on.

    Or at least.. they should have known.

    I could have also skated out of the $60K I owed but I didn’t think it was even an option… although I will say that in the U.S. it seems to be more of a scam than in Canada if people are considering prison and suicide.

    Reply
  12. Taylor Avatar
    Taylor

    Well, I’m officially one of those people who googled if I could go to jail over student loans. This came after a court summons was delivered to me at home on Saturday evening. Never being in trouble or having to deal with anything legal, that “irrational” thought was my first inclination. Rewind to 2007, came from a lower middle class family. First person in my immediate family to graduate high school with honors and go to college. I had a partial scolarship to cover tuition, but needed to pay for room, board, living expenses, and books. Worked 3 jobs, including a resident assistant in my 2nd year to offset the cost. I worked so much, my GPA fell, right below a 3.5 a 3.48 to be exact. I lost my scholarship and didn’t want to be a drop out. I wasn’t able to qualiy for enough federal student loans because my parents had started to make more money, weren’t doing the plus loan (not that I blame them) and so my only option was private loans. I had a decent paying job at 18 and worked for a company that did tuition assistance, but you had to be there 2 years before the benefits kicked in. I stayed with that company and attended school full time after being transferred to a different state. Multiple life events happened, bought a house, got married to an awesome person in the Air Force, starting having health problems, quit my job because we got orders to move out of state. Moved to Oklahoma. Became unemployed for over 10 months. Traded in my car to have something cheaper. Sold every tangible peice of clothing, electronic devices, etc. that I could to help make ends meet. Applied to over 200 jobs a month. Went on interview after interview. Decided to start graduate school so I could make myself more competitive in the future. And we arrive at present day. My spouse is TDY or deployed 10 months out of the year, we don’t have a roommate, but we do have 7 animals. (Call us crazy, just putting the entire story here) Since 2007, I’ve had 8 major operations, all orthopedic in nature, hip, shoulder, neck, etcetera. I did land a GS 06 government job in January 2012. I’m doing secretarial work with a batchelor’s degree in marketing. Again, I’m not afraid of an honest days work, just so long as my body can tolerate it. I was placed with the priority placement program because we PCS’d to another base. Wonderful government program, but like anything else, always has a bit of room for improvement. Still in graduate school full time and expected to graduate next May. Since starting graduate school and my new government job, my father was diagnosed with cancer and given six months to live, my grandmother finally succumbed to COPD and suffered the same fate, my home was hit with a tornado and our lives were uprooted and all personal belongings destroyed, and I’ve had 3 surgeries about to have number 4. It’s been a rough few years since graduating with my bachelors in 2009. I was paying on my private loan debt, even with the awful loan shark methods and skyrocketing interest rates. Upward payments of 600 a month, until I became unemployed. And then, I stopped paying on everything and used my savings to stay afloat for 10 months and still contribute to the household income. I’ve not been on vacation unless you want to count the 2 weeks I took off every month without pay to help my dying father in the end stages of his life for 6 months, and my grandmother 2 months after his death. Granted, I might take a small weekend trip to see my friends or a milestone event. However, living paycheck to paycheck is still a way of life in my household. Fast forward to today, I’m fully aware I owe student loan debt, but I’m still not at a place to pay a “mortgage” note every month back to these people. I was berated, harassed, and finally stopped answering the phone. The collection letters continued to come, and I continued to ignore. Looking back, I wish I could have shaken that 20 year old student and told her “No!”, but she was trying to be wise, stay in school, and not return home a college drop out. Being served a court notice was extremely scary. And it’s not that I don’t want to pay, because trust me when I say I would love to have my credit back, but I feel that I’m truly not able. We are currently dealing with a mold situation in our home after the contractor we hired to fix our home after the tornado damage took our money and ran. Haven’t seen him or heard from him since we moved back in. I know this is a long list if “excuses,” but this is my life. And, if going to jail, socislizing with felons in the yard, and being stripped of all liberties would fix it, I’d honestly go.

    Reply
  13. Manisha Avatar
    Manisha

    You should check out MoneyThink. My friend, Ted Gonder, started an organization that promotes K-12 financial literacy.

    Reply

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