Written by Carrie, June 04, 2010

I don't think anyone thing or person is to blame for this situation. I do think though that it would be helpful if all kids were given a money management class in high school so that they understood what they were signing when they got to college or into the workforce after college whether it be a student loan, credit card application, or car loan.

Written by Jenny, June 04, 2010

I think everyone needs to take responsibility for their own debt. I have a graduate degree and I'll probably be paying it off for years but my monthly payment is manageable and I didn't take out extra money to buy unnecessary things or go on vacations, which some students did. I agree about a money management class that Carrie mentioned, but on top of that I think it should be much harder to get credit cards so students won't get used to being in debt. I read that credit cards were harder to get before the 1980s and people had to live more within their means. Students getting credit cards is what begins a slippery slope of living in constant debt.

Written by Ashe Mischief, June 04, 2010

I do agree with Carrie about money management classes. I didn't know any better when I signed away my life to my student loans what the real value of my education was going to be. I knew what it was with my credit cards, because we're kind of taught that there's a trade off there, and a costly one... but we really never get that lesson about our educations.

Written by Tanya, June 04, 2010

I would have to say both. An individual may believe whole-heartedly that they can make payments.... but when something comes up, such as an accident, change of job, etc., he/she defaults. The bank knew this was a risk from the beginning in many cases (loaning to low-income people, students, etc.)

I agree with Carrie that many young people are not properly educated in this. A class in high school is the perfect time to teach kids about debt management, saving for emergencies, and so forth.

Written by Meghann, June 04, 2010

To be honest, some of the blame lies with the lenders, yes, but it is the people borrowing the money to keep up with 'the Jonses' as it were, who are ultimately to blame. I know I shouldn't have a $100,000 limit on my credit card, I can't pay that kind of interest, so I don't have one. I know my bank approved us for a $300,000 mortgage for our first house, but we didn't want to be in massive debt, paying every penny to our mortgage. We bought a $200,000 house and we were able to manage our mortgage, and we were able to buy a new (to us) car when our old one died, and didn't have to go into more debt to do it. Stay within your means, and you won't have this kind of trouble. If people stopped living with their heads in the clouds, this wouldn't happen. Always ask, "What if?". What if I lose my job, can my husband cover our bills until I get a new one? What if our car dies, will we be paying every cent into the mortgage and be unable to get another? Think ahead and you won't get into that kind of mess. Though I am sorry for the people who have lost their homes, it really is sad for them.

Written by Terry, June 04, 2010

I agree with Carrie. Money management classes should be offered in high school. I was raised by parents who lived on credit and was never taught the consequences of being in debt. Their philosphy was why save for it when I can charge it. Sadly, I learned the hard way but I am taking responsibilty for my excessive debt. If I knew then what I know now, I would of never ever applied for a credit card to begin with.

Written by Steph, June 04, 2010

I don't think you can pin the blame on just one party here. The banks should have known they were taking a risk in offering too much credit to people who probably wouldn't be able to make the payments. And the people taking out the loan should have had a better handle on what they can afford, but it's scary how many people just plain don't know how to manage their finances. I agree with Carrie, money management courses for high school students are a great idea.

Written by Kristen, June 04, 2010

While I do think that banks are somewhat irresponsible with student loans, I can't say that I feel badly for the woman in the NYT story. I just graduated from a relatively pricey university, but I would not have done it if I couldn't find a way to finance it. For me, that meant working while I was in school, applying for scholarships and visiting the financial aid office often.

I can't feel bad for someone who signed loan papers without thinking about the consequences -- especially since this article hints that the woman majored in some kind of art since she works for a photographer. If you can't afford the school to begin with and then you work in a field that is statistically not a high-paying one... be realistic!

Written by Sarah, June 04, 2010

I agree with Carrie! I'm fortunately not in a lot of school debt, but my boyfriend is $120K under from art school and his parents helped him into loans he has no idea how to manage. I'm scared for him, because the private student loan lender is not helping him out at all. They're extremely archaic with the way the accept documentation (only by fax or snail mail) and they've lost many of his requests to defer, take months to process things and he doesn't have online access to see his limits etc. It's really disheartening. Whereas my small loan with the Federal government has been very easy to track, manage and adjust online.

I think he wouldn't have taken so much out if someone had sat down and talked to him about the process, but his parents haven't taught him and neither did anyone else. I think there are a lot of people like that out there.

Written by Cecile, June 04, 2010

I think people need to seriously take responsibility for their actions. The truth of the matter is nobody gets any financial education in high school, and by this I mean personal finance education. So what do people do when they graduate? they get the credit cards and start spending. "Live now, pay later" is extremely irresponsible. Or that "0% interest til 2012, no payments", because they know people will wait til the last possible minute to start making payments instead of trying to pay it off as quickly as they can. Unfortunately, this economy thrives on people borrowing money. There is no culture of saving for the future like there is in other countries. So the only thing people know how to do is spend. In other countries your local university is free to attend. Their education is very often at a higher standard than it is in the US.
Owning a home is everyone's dream but more often than not, people don't have the money for it, just like they don't have the money to make payments on a brand new car. Yet they still get it. People need to learn to save and live within their means without giving in to marketing telling them what they need.

Written by Kathleen, June 04, 2010

I don't know much about mortgages, but I know my husband and I have been paying off his student loans for 7 years, and we're nowhere near done paying them off. I also know that his degree did nothing to help get him a career where he could make any money- he's now working for a police force, which he theoretically could have done without any university education at all. I hate the loans, I hate the fact that we're still paying them off.

But you know what? Taking out those loans was something he thought he needed to do at the time. He signed the papers, and we're not blaming the banks for any of that debt. Lower interest rates would be nice, but they haven't charged us anything he didn't agree to.

Oh... but he did meet me at school. I think that's worth $40,000, at least! :)

PS- I've thought for a long time that a personal finance class in high school would have had a lot more positive impact on my life than algebra had, but that's just me.

Written by ctreit, June 04, 2010

I agree with the other comments that put the blame on both parties. The bank lends money and charges an interest rate to get paid for the time value of money and the risk it assumes by lending money to somebody who may not pay it back. I think in most cases both parties have the right intentions when they enter a contract. Very few borrowers willingly take on too much debt. They may be ignorant about their heavy debt load though.

Written by LeAnn, June 04, 2010

While lenders are definitely pushing the boundaries of usury laws, people who borrow without being properly informed of the conditions and consequences of their debt are responsible. Being ignorant of what you are signing up for is not an excuse. If it sounds to good to be true than it ususally is.

Written by Gina , June 04, 2010

It's definately the consumers fault. We play the "victim" role in today's society way too much and we need to take responsibility for our own actions. If you lose your job, you need a plan B. We may not like the rules but we must play by them or we are the ones who get burned. When the bank charges fees for overdraft or over the limit, we may not like it, but we broke the rules afterall, so we must pay the consequences. Education is the key. Know what you're getting into and take responsibility for your financial well-being, no one else will.

Written by Sheila, June 04, 2010

I agree with the money management classes. People have to understand what they are getting into and how to budget, etc. While I think that the banks have some culpability, people who bought houses they KNEW they couldn't afford or used their houses as an ATM and now think they should be able to walk away with no repercussions or have their debt reduced disgust me. I bought what I could afford, pay my bills on time and now my taxes will increase to support people who made bad decisions. I don't want anyone to be homeless but I should not have to pay for their greedy mistakes

Written by Skye, June 04, 2010

When I signed up for my student loans, I knew it was what I had to do to afford college, but I didn't actually think about the money. Although I owe far less than the young lady in this story, my monthly payments are much higher than I had anticipated. The ridiculously simplistic financial "interviews" required for my loans were not actually informative. I think a financial planning class should be required for high school students AND for college students, no matter whether they are taking out loans. But people taking out student loans should also be counseled better by the financial aid office and/or lending institution, especially in the specifics of their loans (time period, estimated payments).

Written by Alana, June 04, 2010

So, a person who files for Chapter 7 bankruptcy can get rid of the credit card debt spent on frivolous things, but student loans must be repaid? My student loans were reasonable before law school. Kids need to learn money management skills. I would want my kids to learn another language so that they could go to college in a nation with free or low-cost colleges. The cost of college has increased at double the inflation rate, so people a generation or 2 ago could actually work their way through school and graduate on time. These days, the difference between tuition and incomes are bigger.

Written by Nicholle, June 04, 2010

Without student loans I would most likely still be working my way through college today at the age of 34. Granted I'm still paying the last loan off - but with diploma in hand I'm making much more of a salary than I would without that diploma and am able to pay my loan off faster.

I'm not saying the banks are to blame or not to blame - I think it is also up to the student applying for the loan to be aware and informed before making any decisions or signing any paperwork.

Written by Jill, June 04, 2010

A money management class would indeed be a good idea. Unless you're lucky enough to have well-informed parents who teach you the ropes when it comes to finances, it can be hard, as a young person, it is hard to separate the wheat from the chaffe when making financial decisions. You can easily be preyed upon by unscrupulous lenders, and there are plenty of those! My husband's parents taught him nothing about finances and it has been a struggle for me to bring him up to speed now that we're dealing with big problems like student loans, a mortgage, credit card debt, and so on. Plus, we live in a world where consumption is strongly encouraged. Consumer spending drives our economy and advertising in inescapable, so the lure of overspending is undeniable. However, when it comes down to it, I think the blame can be equally split between individuals, lenders, and government. I don't think individuals are wholly culpable because you can't neglect to give people the right tools to make the right decisions and then blame them for making bad choices. At the same time, many people know what they're getting into and do it anyway. Very complex. My question though is why, when an education is so highly valued and when we need educated workers to help our economy grow, are we not giving students more affordable options and why are we allowing lenders to prey on them?

Written by Paula, June 04, 2010

When a lender makes a loan to someone knowing full well he/she will not be able to repay the loan, that is called "fraudulent inducement" and it is illegal. Under the law, it is the lender's responsibility to make sure the borrower is able to repay the loan. Certainly people make mistakes, and unforeseen things happen, but in these cases lenders shoulder the lion's share of the blame.

Just the other day CNN ran a story about how full-time jobs with benefits are going the way of the dodo bird:
http://money.cnn.com/2010/06/01/news/economy/contract_jobs/index.htm

If CNN can figure this out and publish it for all the world to see, shouldn't lenders be responsible for having this information? Isn't it "fraudulent inducement" to grant tens of thousands of dollars in student loans to people when the job market is bleak? I don't understand why there are not a raft of class-action lawsuits coming down the pike because of this.

Written by Amelia, June 04, 2010

I think we must do a better job of educating people so that they won't fall into these sorts of traps. There will always be loan sharks out there--whether they call themselves mortgage bankers or otherwise.

When my husband and I bought our first home, our real estate agent gave us excellent advice. She said we would qualify for much, much more than we should even consider spending. And, she was right. It was our responsibility to run the numbers and make the correct decision, which we did.

As for student loans, I believe an education and a mortgage are the only worthwhile debts to carry. But, again, consider how much education debt is reasonable. I have a Ph.D., but I worked throughout my graduate training. It was unbelievably difficult at times, but my debt load after graduation was reasonable. I've heard it said that you should not graduate with more in loan debt than you can reasonably expect your first year's salary to equal.

If you can't be poor when you are a student, when can you be? My husband and I had so much fun when we were in graduate school--we didn't have a penny to our names!

Written by LC, June 04, 2010

These situations - housing and education - are a big, ugly mix of policy and cultural factors. As a country we've become so lazy and uneducated about managing our own finances that it is easy for companies to profit off of this and the government can cry 'free trade' to avoid responsibility. That is capitalism, pure and simple - greed.
This ever-expanding system of TAKE is degrading our education system (enter vicious cycle of financial illiteracy) to the point where people are saddled with thousands (sometimes hundreds of thousands) of dollars in debt with no real career help or even prospects. I'm not really sure who invented this idea that institutionalized education is the end-all-be-all AND that it won't be COMPLETELY subsidized by the government (unlike just about everywhere else on the planet).
This is a re-education process that needs to happen and ties not just into student and housing loans, but also to the caste system in this country (we like to pretend doesn't exist) and our culture as a whole.

Written by Nicole, June 04, 2010

First, let me say that I am happy about today's topic. I read this article yesterday and was wishing there was a blog at the bottom for people to weigh-in! Instead, I had the discussion with my boyfriend last night. I agree with money management classes before students leave high school, but strongly believe that it is the individual who made the choice to take on the debt who should be held responsible for the debt. I too went to an expensive college and ended up with a high amount of student loans. I knew however that I would have to work hard when I left college and get a job (if not two) to be able to pay my bills. Fortunately, I majored in accounting and have found a well-paying stable job, but have always known that it was MY debt and I would do whatever it takes to pay it off because it was MY decision to choose the school that I did. I believe the girl in the article needs to take responsibility and perhaps make a better effort to work towards reducing her debt.

Written by Chris, June 04, 2010

It is the responsibility of all people to know what they are signing! If you do not understand the document don't sign it until you understand it. We need to know what we can afford to pay not what a person or bank says we can pay. My husband and I could have had a lot bigger house, we were approved for a much larger loan then we took out but we realized that we were not comfortable with the amount the bank said we could pay.
As far as credti card debt so many people buy things that they don't need they buy because they want it. Bigger TV's, Ipods,all the latest gadgets. If you bought those things you need to pay for them. I do not want to bail you out.

Written by Dana, June 04, 2010

The schools my kids attend do have a program that all students participate in. It teaches budgeting and planning for future expenditures. Will it decrease their need to fund further eduction? No. The costs of a college education continues to increase, scholarships and aid only go so far. We're all told the only way to succeed and compete in the real world is to get that college education. The only alternative is a loan. Seriously, what teenager makes enough to pay $10k a semester? And that's a small town figure.
A full 20% of that tuition cost is devoted to the athletics dept, even if you're not an athlete. The banks are not to blame for fulfilling a need, it's what they do.

As an aside, the housing crash had more to do with fuel prices more than quadrupling and completely eradicating people's expendable income than it did with people buying more than they could afford. Let's not forget quite a few of those foreclosures were people who had been paying their bills on time for years with no problem. A bank can only stay in business if they make money. They're not in the business of giving their money away.

All that said, you know how much you make, and how much you spend. You know what's left at the end of the month. It's your responsibility to handle your money efficiently, not mine, I've got my own to take care of. No one makes me sign to get the money I need for large purchases, I made that decision myself and only after number crunching, deciding if it's a want or a need, and whether it's worth the payment.

Written by Beth, June 04, 2010

I have read some of the above comments on personal reponsibility and that is without needing to be said. The individual who took the student loan is going to be personally responsible whether they think its fair or not, so that argument is moot. But on a higher level of analysis, there is definately some blame that the banks and lending institutions must take on. Most students go to university straight from high school at the young ages of 17/18. And Society in general pushes students from a young age to get good grades and enrol in post secondary education. Then (unless the kid's parents can pay for it) these 17/18 year old full time students are supposed to fork over over 5-6 thousand (or more) dollars a year for tuition, as well as additional amounts for books, transportation and life in general. This smells like a trap to me? Without much alternative, after busting your brains to get good grades and being accepted to a fine post secondary institution the young person feels compelled and is urged to enrol. There are no options, they are left between a rock and a hard spot, and we adults have to work to change this system because its unjust. At least mortgages are backed or guaranteed by a tangible item that has some monetary value. Student loans are backed by nothing but statistics at best. The banks knew what they were getting into giving buckets of cash to kids with no collateral, so they won't get any sympathy here!

Written by Kirsten, June 04, 2010

I really enjoyed reading the above comments. A person needs to understand what they are signing, they need to make sure they are well informed before doing anything especially something as huge as buying a home or getting a loan for school. I think the one way lenders can get aruond the school loans is that you typically don't have to start repaying them until 6 months after graduation, so I guess they think that gives the graduate enough time to get a paying job and figure out how they are now going to pay this debt off. Then again my husband has been paying on his school loans for about 7 years now and they are just never ending. Money management classes in high school would be great, even an investing/saving class for students to learn about the different options and start thinking about the future instead of just today (as i know I did when I was in high school!)

Written by Jasmine, June 04, 2010

It's a habit of consumption. No one forces people to buy pricey houses or go to expensive universities. We choose such luxuries; we think that if they are within our reach we have every right to them. Life is all about choices. You can choose to stay in your home-town to get your education, or you can choose to go away for college. Either option requires certain sacrifices. It's the same with housing. You can choose to save for a few years for a good-sized down-payment or you can apply for a loan that accepts a lower down-payment, but has riskier terms.

Unfortunately, when we make such choices we usually aren't best-equipped to handle the consequences. A student leaving home for the first time might indulge in new things because he wants to enjoy his newfound freedom. But being independent isn't about owning all of the things you've ever wanted. Trying to accumulate everything 'grown-ups' have will only put this student in debt. The person who takes on a mortgage without having saved or prepared for the new burden hasn't challenged herself to live within her means in order to work toward home-ownership. Because she isn't in the habit of saving, every home repair will come as a blow. But such mistakes are common. We want what they want, when we want it.

It seems that those who lend the money shouldn't let people borrow more than they can afford - but when have we ever been able to depend on the kindness of money-lenders? We have to take it upon ourselves to do the research before signing on the dotted line. Even if that means making some hard decisions, and making a few sacrifices. Doing so will make us more mature, and more financially prepared for the things we want when the time comes.

Written by Angel , June 04, 2010

Our debt to income ratio after buying our house was 84%. I won't go into all the reasons we thought it was ok. We were ignorant, plain and simple. And the education has been costly but invaluable. After 4 years and alot of turmoil we are still in the house, doing our best everday to make the payments. If you need advice on how to cut costs or make extra money, I probably have LOTS of ideas for you! But I have to say that as much as paying the loan is our responsibility, if the lender ultimately were to get the house back, I think that is their responsibility too. My guess is 84% debt to income is statistically almost considered next to impossible to maintain.

Written by Rachael, June 04, 2010

When my husband and I were looking at houses the bank told us we could buy a $400K house - and be fine... I feel like you have GOT to go into the situation with some kind of knowledge about what you can afford. You can't allow someone who will make $$ off you to decide how much you can afford. There's NO way we could have maintained those type of house payments w/ our current incomes. I'm not saying all this is the people's fault - but really...? Who makes that big of a purchase and just goes on what the salesperson tells them??

Written by Angel, June 04, 2010

Rachel, people who think "experts" know more than they do.

Written by Cindy, June 04, 2010

It is an individual responsibility to know what contracts you are getting yourself into. I'm not responsible to bail-out anyone who has not done proper research to know what they are doing. Banking is a BUSINESS and offers credit to make money, approach them with your eyes open. If you don't have a substantial emergency fund, don't buy a house! Don't spend every dime you have to get into the mortgage and every nickel you have to make your paymets. That is the definition of gambling with your future.

If you are going to college and you have to borrow all your money this is a huge risk. It IS possible to go to school part-time and work. Many people have found ways to come out without huge debt, but yes it takes planning, thought and PATIENCE.

My last comment is YOU are ultimately responsible for your own life - do it with your eyes open. Don't become a victim - of your own bad choices.

Written by E-mary, June 04, 2010

Well, it depends on what you mean by "can afford." I was paying off my credit cards just fine until my job description was changed to a location 4x farther away, with the resulting gas consumption and no compensating increase in pay. Soon, most of my disposable income was down to essential bills, groceries and gas, with a lot of sweating in between paychecks. That's where it remains today. I won't leave my job because I'm over 50 and soon enough will be vested in the retirement plan. But the credit card companies are panting at my heels and I have no way to pay them. I keep thinking things have to change sooner or later, and yes, I am looking for part-time work, so far unsuccessfully. So there's no one-size-fits-all answer to this one.

Written by Beth L, June 04, 2010

It's interesting to note all the conversation about teaching personal finance in high school. I work with a coalition that tries to help people become more financially stable. One of most recent discussions was about the fact that many of the partner agencies have finanical literacy classes but they are not well attended. It was decided that we need to get into the schools. Junior Achievement is already in many schools. The problem they have - the kids are not listing to the teachers. I guess it just comes down to this...people will learn what they need to learn when they need it. Parents and teachers are not the answer if you don't want to learn.

Written by Sara , June 04, 2010

I'm going to share MY personal story here. I attended GWU down in DC before it became the most expensive university to attend. When I chose GW, it was based on my love at first sight reaction AND the fact that they gave me money to attend, however I now have loans and cc debt that I'm faced with paying off. And no matter how difficult it is, I always end up stretching my money to work things out.

Do I think that banks should earn the brunt of all of this, NO. As individuals we all make choices, sometimes mistakes and we learn from them. My credit card debt is my credit card debt as is my student loan debt. Do I think that banks give out credit too easily. YES! I was an 18 year old who barely knew what I was doing when I signed credit card applications to help my friend earn money for her softball team's uniforms. Yep, I'm not lying, that was their fundraiser. The banks gave them money based on the amount of people they got to sign up for credit card applications. Was I not smart about using them, YES. But it's my responsibility and every time I get stressed out, I just remember that I will work it out.

I do remember at the time thinking that I was attending a great school and that I'd get a great job afterwards where I'd be able to pay off my bills. GW, and maybe all universities do this too, helped me believe that this was my destiny. That it would happen. Of course, my first job after college had me making 24,000 and I was a receptionist. HARDLY the glamorous job I expected upon graduating. But I'd always believed it was okay to use my cards because I'd be able to pay them off as my jobs got better and in my income increased.

I definitely think that students in high school need to learn this lesson, but I think it should be something that families teach as well. Not blaming my parents, but they weren't the best with money and so even though I'm level headed, I definitely might have been a bit skeptical of using credit. But in the end, it all boils down to the person.

Written by Pamela Trow-Johnson, June 04, 2010

I find it horrendous that we live in a country where one has to "afford" an education. If anyone saw the 60 Minutes episode on the "Denmark, Happiest Country in the World", it spoke about how Denmark's govenrment PAYS their people to go to school. I believe if we have educated citizens, maybe we'd have a solution to all this chaos!!!!

Written by Diane, June 04, 2010

I agree that money management classes should be available in high school and in college. People need to be responsible for their actions--from the lenders to the borrowers. The blame game seems
to pop up everywhere and no one wants to be responsible. Well guys, the time has come, be responsible for your own actions.

Written by Debbie, June 04, 2010

When I got my cc 3 yrs ago I was starting a small busn and working 65+ hours a week. I kept up on my payments and managed to find a truck that could be used to go to that job and to be used in my busn. fast forward to 18 mos ago when the bottom fell out of the financial markets. My hours were cut at my job to barely 40 hrs. I notified the cc comp. and the lender on my truck. They didnt want to work with me then.This past Feb I lost my job and havent been able to find another yet. My unemp barely covers my truck payment so I called the bank to ask them for a tempory reduction in payments , They said they couldnt do anything because I dont have a job. If I had a job I wouldnt be asking for help. so yes I feel the banks and loan comp have caused most of the problem by not being willing to work with people

Written by Jackie, June 04, 2010

I also think the key is ACCOUNTABILITY. Each of us (lenders included) is 100% responsible for and in control of our own actions and decisions. We need to experience the consequences of those choices, however painful, if we are to truly learn from them. Banks are reorganizing or closing due to poor lending practices. People are losing property or declaring bankruptcy due to poor choices. We can't blame the other person, our spouse, our parents, the bank, the government or life in general if things don't go as planned or expected. We need to OWN IT. Not understanding something or relying on someone else to make the decision is, in fact, a choice you make. It doesn't absolve you from being accountable for the outcome.

The problem with personal money management classes is exactly that - it's personal. Everyone has vastly different priorities, along with a unique threshold for risk, debt, etc. Choices that are 'right' for me may not work for you because we each live from our own experiences and by our own values. That being said, understanding how credit works, what it actually costs, and how it impacts your overall financial picture can certainly help you make informed decisions. I think most people would be surprised at how many different investment options there are and that they can have more control than they may have realized. Information and classes are available - you just have to choose to find out about them!

"No matter how long you are traveling down the wrong road, when you figure it out, turn around." Turkish proverb

Written by MizBee, June 04, 2010

Someone commented that kids in the personal finance classes taught in her school "weren't listening to the teacher." Maybe the problem is that the teachers weren't reaching the students. Despite all the mathematical formulas involved in planning and sticking to a budget, it's not like chemistry class -- money is fraught with emotion and perceived status differences. It might be best to teach personal finance classes more like theater classes, with role-playing and dialogue.

Additionally, inasmuch as personal debt is a personal responsibility, it is also an emotional issue based on what we think we already know. We thought it was in the banks' self-interest not to lend more than we could repay, and that regulations existed to prevent usury. What we didn't know is that the banks are high-stakes gamblers and searched for loopholes to maximize profits, consumer be damned. So we allowed ourselves to believe that if the bank said we could afford it, we could afford it: wow, we must be more successful than we thought! And successful people can go on big vacations and buy bigger cars and more clothes, etc. -- and their children have to go to the "best" schools in order to be "successful" themselves! So, that's how we perpetuate this overspending into the next generation.

Written by Dee, June 04, 2010

There's quite a tangled web behind who's responsible. Sometimes it's the borrower, sometimes the lender, sometimes both parties. Just in my circle of friends and relatives, I know PLENTY of people who were given way more credit than common sense said should have been made available to anyone in their situation - people in debt up to their eyeballs, on their 3rd (at least) mortgage, with a wallet full of credit cards, etc. or people who hunted until they found a lender who'd give them a bigger loan so they could buy their dream home with what eventually turned out to be their nightmare mortgage. But I can't say the blame falls solely on my friends and relatives. One reason *I* still rent isn't my low income, it's the sleaze balls I kept encountering when I looked into buying. I knew from mortgage calculators what I should be looking at for a loan range, but when I called around NO ONE would discuss that sort of loan. No, EVERYONE wanted to discuss double or triple that amount with some sort of exotic loan. So I can only imagine what sort of loans my friends and family might have been given...

College, well, I agree with the above poster who said part of the problem is we're the only nation who makes you afford college. Worse, we make college (usually a BA or BS) a job requirement instead of keeping around options like apprenticing to train while WORKING. Duh, that's better for the employee and employer.

The other problem is that we give student loan lender/collectors more powers than back alley loan sharks or tax collectors and let them PRESUME that if anything goes wrong with payments (including if the economy tanks) that the borrower is flaking. How is that fair? There's not any provision that asks or better yet requires them to give the benefit of the doubt to the borrower or that treats those who fall upon hardships like disability any real help with dependability or fairness. If I had kids, I'd tell them to skip college until it could be paid as they attended - or to borrow from the back alley loan shark after what I've been through with my loans and unscrupulous collectors due to my disability.

Written by Jennifer, June 04, 2010

I think both society and individuals are to blame. We are each responsible for our own debt. When you sign student loans, usually you are required to attend a meeting where all the details of repayment are clearly explained.

Several years ago, when we were about to purchase our first home, we were told we could borrow almost 3 times what we knew we could afford. Luckily for us, we were smart enough to know what we could afford, and did not depend on the mortgage company to lend us whatever they wanted. We would have been in huge trouble if we had trusted their judgment. You do bear the responsibility to understand what you are signing up for; always read the fine print.

Written by Karen, June 04, 2010

Colleges and universities are also to blame. They give students the impression that the right degree makes one a shoo-in for a terrific career, but too often fail to deliver the practical, hands-on skills that companies require just to get a foot in the door.

Written by Tia, June 04, 2010

My son has $70k in student loan debt and cannot get a job anywhere in his field. He has had to take a job making much less than anticipated and therefore cannot make the minimum payment of $525 per month. It's either pay the loan or eat and have a home. Part of the blame regarding student loans involves the absolute lack of understanding of the banks that the economy is tanking and they need to be willing to work with those who are willing to pay....maybe they just need lower payments for awhile. You can only defer payments for so long and then what do they do? I can foresee student loan payments in my future to help my son if the economy doesn't turn around. My message to the banks: You are part of the problem or part of the solution...try being part of the solution for a change.

Written by Kenia, June 04, 2010

It's funny how everyone is talking about financial classes in high school...because I specifically remember, DURING high school, I felt frustrated when I realized I didn't even know how to fill out a check & balance a checkbook...and I felt embarassed asking my parents about that. I remember thinking how a basic personal finance course should be mandatory in public high school - right alongside algebra, english, & history. I feel all those other classes are important, but if I had to trade out another class for a finance one, I believe it would be worth it simply because the consequence of not having a basic financial education is much more dire than not having read some english literature. Dare I be bold, and also state that I believe the economy would be in much better shape, if the public education system included a personal finance course? I believe everyone is responsible for their own debts, but I also believe the right EDUCATION should be given to people to make right decisions. Especially on a topic that determines the financial health of, individuals, business, & the nation.
When I went off to college, I majored in engineering, so I knew I would start out with a high income right away, and be able to afford however much I was taking out in loans (which turned out to be true). But at the same time, I remember the stupid financial loan overview workshops that they gave us were useless and just made my head swim in confusion. ALL they had to do, was sit me down and say: "As an engineer, you're estimated starting income might be X. If you take out Y amount in student loans over your education period, at Z% interest, you will have to make A in monthly payments, which would be B% of your estimated monthly income" That's it!! Super simple. Straight out of high school, I was way too young to even know to think that - I just winged it, knowing I'd have a high income anyway. But others are not so lucky. I think financial aid offices at universities should explain just what I spelled out above, when they meet with each student individually.
Although people should take responsibility for their own debts, I also agree with what Debbie said above, about how banks should be more willing to work with people. From a pure business/making-money perspective, I don't understand why they don't. If they work with people in lower payments & extending the loan period, they will at least guarantee their getting their money back. By not working with people, they're almost guaranteeing that people default/go bankrupt and then the bank doesn't get it's money back at all. Seems like it would actually be in their best interest to work with people! So why don't they??

But then there are situations that are also no one's fault...I personally know a wonderful couple, in with the husband came down with a deadly disease (he passed away within a year), and the wife had to quit her job to care for his 24/7. Even though they had a very affordable mortgage, they obviously couldn't afford to pay for it anymore. Then there's people who know they can't afford a house, but think they're entitled to it and take out a loan much bigger than they can afford, or people who could work out their debt payments if they would just be willing to make a few sacrifices or look at alternative solutions, but don't because they simply don't want to. To those people I say....yeah, it's your own fault.

Written by Jessica, June 04, 2010

I agree with Carrie that students should have money management courses in school. Even though some deals the banks have to offer are heavily skewed in their favor, the debtor still borrowed the money and agreed to the terms and must pay it back. That being said, the banks seem to forget that debtors are customers, the banks make money from these loans, and could really work with their customers more when they have difficulty paying.

Written by Beth, June 04, 2010

People act like somebody was holding a gun to their head to get student loans, but it really is a very impersonal process initiated by the students and their parents. My own student loans were applied for through my online student account at the college I was attending, the contracts arrived in the mail to be signed and returned, and the money was applied directly to my bill with the extra money being sent to me by check in the mail. I got all the money without ever having to talk to anyone. Yes, in order to graduate, I had to attend a meeting clarifying the repayment process, but there was nothing covered in that meeting that wasn't in the contracts I signed.

The people I actually feel bad for are those that could afford the payments when they took the loan and have encountered some kind of misfortune. They're still responsible, but they're miserable and they're going to be miserable for a while. It's silly to blame the banks in these circumstances, because these were reasonable loans based on the information they had. If the borrower's income really takes a dive and they can't make payments, they may be eligible for a hardship deferral to help them get by. It's at least worth looking into.

The people I don't feel bad for (and the ones that we seem to hear the most complaining from) are the ones that took out massive loans without any consideration that they had to be repaid or under the dillusion that they were guaranteed a job if they graduated. A college degree doesn't guarantee a job and banks know this. Why do you think most student loans require a co-signer? Why do you think parents start taking out loans in their own name when the bank cuts the student off as too high of a risk? Are you telling me that these parents of almost adult children never learned to read and understand a contract before signing it? A high school finance class isn't going to help these parents in their 40s and 50s. As I said, much of the process is very impersonal and there is nobody forcing these people to take out loans they can't afford.

If they do have a loan where they actually sat down and talked to a bank loan officer about how to get more money, they need to remember that they came to the bank begging for money. The banker did not come to their front door begging them to take out a loan. Are they higher risk loans for the bank? Yes, that's why the borrower doesn't get very good terms on these loans. The bank is going to try to minimize the losses if the borrower defaults by charging higher interest and fees. Yes, the loan officer may have been a slick salesman and yes, the loan wasn't as good a bet for the bank, but it doesn't make the borrower any less responsible for the bill. At the very least, that person took a set amount of money from the bank that they would have to repay, even if they had a loan with no interest or fees. While it can't hurt to try renegotiating the loan terms, blaming the banks for giving out money that was requested and using that as an excuse to not even repay the original loan amount is nothing short of theft.

Written by jrzyrock, June 04, 2010

Yes, classes in high school should be mandatory, but what about in the home. How many parents make their children do the bills with them? How many teenagers know what bills there are when running a household? Even basics like food and toilet paper just appear and they have no clue what it costs. it needs to start in the home. All kids should understand how finances work, at least generally, before they even get to high school. Then the education should be increased in the home while introduced in school so that by the time they get out of high school they are ready to handle the financial world including borrowing, investing, and budgeting.
It's like first aid. How stupid is it that first aid isn't taught in schools from kindergarten on? But I sure better know what a pronoun is! That will do much better at getting me through life!
Anyway, not the banks fault. Everyone is responsible for their own actions and borrowing is one of them.

Written by Angela, June 04, 2010

This is really a tough one...I do feel that the people in debt should have been more responsible, but when a mortgage broker is telling you that the loan is a reasonable rate and glossing over all the fine print, it is easy to fall into that trap.

Honestly, I think the banks are the most irresponsible parties in this issue. They are the ones who created these high-risk loans, then pushed them to those who couldn't afford it. Basically, they created the situation, and those in debt participated in it. For awhile it increased business, but in the end it bit them in the butt - except for brokers who shorted those failing banks, but that's another story.

The irritating thing now is, because of the banks being so terribly irresponsible, they have done a complete 180 and are now being ultra-strict. I'm self-employed and have been for years, but when I talk about a mortgage, they scoff at my income because it's 1099 and not W2.

Anyway, I think it's the banks' fault because they created a toxic situation, and had little screening. They're supposedly financial "experts" so why didn't they stop it when they realized it was creating an unsustainable financial environment???

Written by Denise, June 04, 2010

Tough decisions have to be made throughout our entire lives. There won't always be someone or something there to act as a "safety" net. It's not the banks' responsibility to limit your borrowing capacity. Ultimately one must be able to think for themselves and be responsible for ALL of their actions. Credit is only a symptom of the decadent lifestyle Americans live. The skills that we need to make sound financial decisions aren't just budgeting and financial skills. They are LIFE skills. The only way things will ever change is for people to quit being bailed out! It sucks, but until we quit feeling like someone will be there to clean up after us, we will continue to be irresponsible. There is a difference between help and enablement. What is help for some to get through hard times, is enablement for others so that they can get in an even harder situation later. People have to learn to deal with disappointment and get away from instant gratification. It's hard and I'm a work in progress, but I know that nobody is going to bail me out. I can only depend on myself.

Written by Gia, June 04, 2010

Bottomline: the borrower is responsible. We had a choice to accept the conditions of the loan or not. If we choose to accept the conditions & the loan, then we should honor our obligations. I speak from experience. My total debt after more than 8 years of higher education exceeds $250,000 (student loans & credit card debt). I'm a recent graduate & have always paid my bills on time. The economy has me very concerned. What is my budget currently? I don't go out to eat, $0 entertainment expense, $0 clothing expense, no cable, minimize gas, use coupons, & I eat inexpensive produce. My entertainment is budgeting & couponing--no kidding. I wish I wasn't in this situation, but I signed-up for it. In hindsight, I wish I would have made different decisions, but I'm accountable for the decisions I make (good or bad), and now, it's time for me to pay. My primary goal is to get out of debt, get more financially secure, & then maybe I can think about going on vacation some day.

Written by Amanda, June 04, 2010

Students should not be put in the position to have to get a loan on interest in the first place. For one thing, higher education should be free and for another charging interest on loans has in the past been called usury and was considered a crime.

Written by Terri, June 04, 2010

Accountability or lack thereof is the root of the majority of problems, especially financial ones that we are experiencing in this country. Parenting requires holding your children accountable for their actions. People make choices and choices have consequences, both good and bad. It is best, as parents for us to allow our children to reap the benefits or suffer the consequences of their choices. They can then learn from mistakes rather than continue to make the same ones over and over.
Many people make impulsive decisions and they are sometimes costly. Investigation prior to commitment can also be a key ingredient in not making decisions to over extend themselves financially.

Written by sophia richards, June 04, 2010

If you cannot afford to pay back a debt you should not borrow the banks may not be honest and upfront but it is up to the borrwer to know their responsibility.

Written by Renee, June 04, 2010

It's my responsibility --

I'll be 40 this year ... when my sister and I were looking for our 1st condo at 23, we applied to have a pre-approved mortgage. When the bank came back with a figure of ~$200,000, we looked at each other and said "What the heck are they smoking? We can't afford that."

The problem is that most people would say, "Really, I didn't know I could get a house in that price range, okay let's do that." They don't know what they are doing to themselves financially ... because most of us don't "get" money and how it works.

I agree that "we" as a people should learn about money management, but we need to be taught by people who are already successful at managing their own money. When it comes to this particular topic, I disagree with a teacher who takes a course to teach and not have the same success with their own personal finances.

What I've learned in this economy is that we have to get out of debt, including our mortgage, as quickly as possible. Once we do that we can start building our own wealth instead of making our lenders wealthy. And it doesn't matter how long it takes you ... just do it, every extra dollar to your debt now can grow you thousands in the future. And, when you get to the point where you can start growing wealth, believe me, it feels GREAT!

Written by Denise, June 04, 2010

Well, you know what they say, 'it takes two to Tango'.

Mind you, having said that, the people who work at financial institutions are quite aware of of whether or not, IN REALITY, as opposed to ON PAPER, a loan is the best option for those involved.
To be put in a position of such fiscal authority,one needs to be properly educated, not just in 'numbers' but lifestyles.
However,I believe that we all need to take personal responsibility
again, education is a nesseccity.

It's definitly way too easy to get into debt big time.

Way to go Renee,we need toget out of debt A.S.A.P.

Remember there is 'good debt' & 'bad debt'.
Good being borrowing for something that will be an asset, & bad being borrowing just so that you can give as much of your hard earned money away, say 'good-bye money'.

It sure does feel great to be on top of all your finances.

Written by Jennifer, June 04, 2010

I find it sad that there are only two or three comments here about the insanity of turning education into a business in the first place. No one should have to take out a loan to pay for education. It should be at least subsidized to a realistic level for students and preferably free. If a country wants an equal and educated society, paying private businesses to provide that won't work!

Written by MJ, June 05, 2010

I have watched so many good friends lose everything. They were not in debt over their heads but when the credit card companies jumped interest rates "because they could", and the nation was seeing thousands of jobs lost - it created the perfect storm of financial crisis. Most of the people I knew were raised with the expectation that they would graduate from college and be able to pay their student loans with their new jobs, they would work at one place for forever, and retire from that place with a pension. We have all seen that fall apart. The dynamics changed and we didn't. Should we be more responsible - yes. Should it be easier to get a higher education- yes.

Written by Jennifer, June 05, 2010

It ultimately still remains YOUR personal responsibility WE are all adults , students , homeowners. If you cant stand the HEAT get out of the KITCHEN!!!! or hell for that matter. If you cant afford -dont get into it in the first place( SIMPLE REALLY). Students kind of have other options and so do HOMEOWNERS. Just because you get a house doesnt mean you stop making payments and its yours..... ? DUH

Written by Amy Cairo, June 05, 2010

I would not have been able to go to university without loans. I graduated 20 years ago and it took my 10 years to pay them off although that was because I'd received a small settlement and earned a couple of scholarships so the loans weren't huge. Well, $10K+ to a college grad seems like a million! People shouldn't borrow what they can't pay back, but I was taught not to lend what you can't afford to lose as well. I always found it rather strange that people with tenuous creditworthiness were getting loans. There should be equal liability for both parties. If the bank made a loan that would otherwise be considered unsound yet done for the soul purpose of bilking the borrower, they should not expect to collect the entire debt and instead work out an adequate refinancing plan to payback the loan for less. No one should get off the hook. America needs to learn to "mend it, wear it out, make do or do without".

Written by melissa, June 05, 2010

I just want to know when people will start taking responsibility for their own actions again. All of a sudden we a society of blamers and nobody is responsible for themselves anymore. Its time for this nation to grow up and own up. And by the way, my husband and I were preapproved for a mortgage amount that we knew we couldn't afford. Guess what we did! We bought a house for a price that we could afford. And we're still making our payments.

Written by jocelyn, June 05, 2010

I went to public college, because that's what I could afford, and that's where I knew I would benefit the most with my academic abilities. I encouraged my son to go to a private ivy league school, because he benefited the most academically, since he had a superior intellect. He was a national merit scholar, and could have parleyed it into a free ride for 4 years, but decided to go his own way, and take out loans. In the end he had $70,000 in loans, an Ivy league degree, and the experience of a lifetime. For Him! This spurred him on to take one job, master it, and then move onto another job that paid double. Having that 'debt', definitely motivated my brainiac boy, to become more money conscious. I think that teenagers aren't savvy enough to make these financial decisions and should not be able to take out loans that indebt them for life. And their keep-up-with the Joneses parents should NOT be allowed to take loans out for their kids without THEIR taking financial courses 1st. I have friends whose kids went straight into business and learned on the job, or got certificates in 2 years or less, and are making $40 - $70,000/yr. The banks do not force you to sign on the dotted line. Only greed and denial about consequences and not wanting to live within your means causes crazy loans. Banks just see a business opportunity.

Written by Jaime B, June 07, 2010

Thank you Amy Cairo. All sides of this equation are to blame. Banks ARE the experts and should know better than to extend loans to people when the risk is too high. People know what they are or are not making, for real, and so should not accept loans for more than they can afford to pay. If people should sink or swim, so should banks. Individuals aren't the only ones getting bailed out so they don't have to face the consequences of their decisions.

And yes, I think colleges needs to be frank and straight forward when counseling students and their families about their financial options. From a reputation point of view, they will be viewed much better if they start helping their enrollees see the potential financial folly than if they just keep taking, taking, taking tuition moneys. There are many factors for why a particular family chooses a particular educational institution - even with real financial information (cost, avg salary after graduation, interest, potential payments, etc) plenty of families will still choose based on emotional reasons, tradition, educational reputation, etc.

Overall, I just say this - GET REAL. People need to stop being afraid to share real costs and numbers. Lenders, borrowers, government, the whole shebang need to get their act together and start communicating and stop being afraid to say no or admit that they can't afford something.

Written by Patriot, June 07, 2010

To those who say that education should be free: know that NOTHING is ever free. By demanding free education, you are demanding to pay more in taxes - and STILL watch as both federal and state governments fall further and further into debt. Government run college-level education just isn't sustainable if we are to remain free of socialism, and no private individual/company in their right mind is going to take on such a monumental task with no compensation. The REASON we have such great ivy league universities is BECAUSE they are businesses. If there were no profits, there would be no incentive to provide a quality educational product & service. The government is already providing us free education from grades K-12, but beyond that is unrealistic. Demanding free college education, to me seems like an unfair demand to get something for nothing - a demand to off-load the financial responsibility of taking on debt, which is exactly the opposite of what every other person has been saying in their comments. We are all responsible. And one may CHOOSE to go to Community Colleges or tech schools, rather than ivy league or other private universities, and still earn highly respectable degrees that will enable one to compete in the job market. There are also MANY scholarships and grants that are offered. If a student performs well in high school, their education will certainly be subsidized; not by the government, but by private scholarships. And I also would like to add the unbelievable fact that, every year, there are a plethora of scholarships that go unawarded because there are no applicants. Students need to study hard, earn good grades, search for all the scholarships they can, and apply, apply, apply! It's what I did, and 40% of my college education was funded as a result.

Written by Jennifer, June 07, 2010

@Patriot - you assume that some level of social assistance and, yes, socialism, is bad? While I do believe education should be provided free by a wealthy country who believes in equality, I know this is unrealistic. However, being subsidised for tertiary education - having your loan provided by the government, which would be paid back at small amounts once you can afford it, does not stop businesses running education and allows many more people to attend. All those scholarships you talk about must come from somewhere, why can't they be used to reduce the overall cost of the education for all?? And yes, I know about how taxes work, thing is, I also know that we pay them so we can get these things and I don't mind at all!!

Written by stevin, June 07, 2010

It is bank credit. It will deflate. When deflates wipes out debt, remaining dollars will gain in value. Here is the deflation problem.Too many Americans today are struggling to make minimum payments on their credit cards. It is a growing problem with the state of our economy.

Written by SaraLee, June 08, 2010

I had a terrible "financial counselor" back when I was married. He was far more like a financial salesman. Fortunately I was educated on financial matters, moreso than my husband. Our counselor sold us on whole life insurance, saying it was a better "investment" than term life insurance and educated us on how you could withdraw deposits for "emergencies" as needed. However, these withdrawals still needed to be replaced, otherwise you would owe the life insurance company if you ever needed to cash out your policy. You'd still end up in the red. He also told us how purchasing a home would be a great purchase and the best investment we would ever make in the long run. We weren't in the right place to make such a purchase financially. However, he convinced my husband that, after taxes, deductions, and all that jazz, that we would break even or even come out ahead(!). We were preapproved thanks to my excellent credit and began shopping. I knocked $20 grand off the preapproved loan that the bank had told us we could afford (to be prudent) and kept to that budget.

Not even three months after moving in, I lost two jobs, then my husband lost his four months later when the recession hit (as I predicted... there was no way, I said, that "everyone deserves a home and housing prices are waaaayyy too high"), my husband began skipping paying the mortgage in favor of paying other bills, I started working two jobs, he took a part time job, and we ended up selling the house as a short sale.

Are the banks to blame? Possibly. Are the mortgage companies? Possibly. Brokers? Sure. Individuals? They don't know any better either. I knew what I was getting into, but the other party didn't. Thanks to this ordeal, I'm no longer with him, I don't have a house, I've been looking for a job for two years, and my credit is shot. I hate these banks that have gotten bailouts and I have squat.

Written by HD, June 08, 2010

When I bought my first house, it was indicated in my contract if I did not receive a mortgage with an interest rate under a certain amount I could back of the contract. Well, given the house was a modular unit, I could not get the interest rate. My realtor wanted to pay 1% point for the first year. Well, after that first year my interest rate would have gone up. He thought I would jump at his offer to get into the house. Fortunately I was smart enough to run from that place. It is time for people to take responsibility for their own actions. I was approved for over $15,000 more than the house I ended up buying. Some circumstances do come up such as job loss. But we live in a society of instant gratification and living well beyond our means. I have student loans and a mortgage with one income and no credit card debt. It is possible to live within your means. It is all about choices.

Written by Emily Cangie, June 09, 2010

I have an undergraduate degree in finance and have worked in commercial banking and retail finance with lots of budgeting experience for years. Last week I signed my loans for a Top 10 Full-Time MBA program in New York City this fall. With one of the highest costs of attendance of any program out there, my loans may go up to $160K. Concurrently, I am refinancing my house to reduce my monthly outlay over the course of schooling. Both processes are confusing and full of legal jargon that get even the most informed tied in knots. I agree that there is a huge deficiency in financial education in this country and whole-heartedly believe that we will not see a reprise from the downward spiral until it is remedied. Furthermore, as I've gone through this process I am reminded of the lack of transparency there is around the credit score. No one, not even the banker making the loan, can seem to articulate just how a credit score is truly determined and furthermore, no where is there a clearly defined methodology for calculation for the public to access that is supported by any authority. I can absolutely see how someone could walk blindly in to a heap of uncollateralized and unmanageable debt but I will also say that I initiated both of these processes and it is still ultimately my choice to go back to school and be a home owner and I will be responsible for the outcome and so should everyone else. It comes down to the 3 C’s: Commitment, Character, and Cash.

Written by Barbara, June 12, 2010

If homeowners want the rest of society to cut them a break during times of market contraction, then so should they be prepared to share some of the windfalls that they realize during times of market expansion. It is only reasonable that we share both risks and rewards.

A similar student loan crisis in the near future does seem plausible, with the one big difference that student loan debt cannot be discharged in bankruptcy as can most other financial responsibilities. The cost of higher education has increased at a rate far exceeding that of inflation and, in my opinion, this would have never been possible without the expansion of the student loan program.

Written by Jaime B, June 14, 2010

@ Barbara ... I think that is very apropos of the debate for/against people who go into a voluntary foreclosure on their properties even though they can still afford the house payments. They bought property as an investment instead of (or maybe as well as) a home and now are unhappy with their losses. I don't think people should be tied to a sinking ship, but I also have little sympathy for someone who gambled and lost. They seem to have thought real estate was a sure bet instead of the gamble that it really is.

Written by Margaret, June 24, 2010

I haven't studied how student loans were designed or administered. But what many of the letters above show is a sad lack of understanding of what the home loan market has been about since 2000. Watch Bill Moyers last 6 episodes and you'll begin to understand. There is an unclear chain of title to most homes, meaning as people's mortgages were sold on the derivative market -- often before they were signed -- the mortgages began to be sliced and diced until 100 or more investors 'own' one mortgage. Then the 'loan servicers' had the mortgage insured, often with more than one insurance policy. After 90 days of the 'homeowner' not paying their mortgage, the 'servicer', not the investor, is paid off, often many times over. Who owns the home? No one knows. Title companies are becoming very nervous, since they signed off on mortgages with unclear title. Banks, the 'servicers', have no incentive to work with the homeowner; they make way more money if the mortgage goes into default, then foreclosure. The homeowner and the investor are both left holding the bag, but they don't talk to each other. If you're a homeowner (what a misnomer), try to find who really owns your loan. Good luck. That could cost $2000 in a loan audit. Then ask them to produce the Deed and Note as per real estate law. They most likely can't. Nor can the banks. In Florida the foreclosure courts are beginning to realize what at Ponzi scheme the mortgage mess is and award homes to the homeowners.
Lenders didn't just talk naive people into signing loans they didn't understand (try to find someone who can explain a derivative; I've talked to mortgage bankers, university professors of finance, business people who have no idea what it is), the lenders purposely designed the loans and the paper trail to obscure what they were really doing! The banks bilked everyone: homeowner, all tax payers, and investors, then asked us to bail them out. Yet the bankers still get their bonuses!
So where does personal responsibility come in? I still pay my mortgage and other debts. But it's almost impossible to do so. My husband and I are self-employed, successful for 27 years. We're frugal -- last car we bought when our old Honda blew up due to wax build up from Pennzoil blocking the oil uptake!!! -- we bought a 1993 Geo Metro (42 miles to the gallon)for $1000. We produce 75% of our food, buy everything used, get haircuts twice a year, have no TV or cell phone, etc. But in August 2008 our income dropped like a stone -- our clients were losing their jobs, their pensions, their investments, their homes. Talk to the self-employed people you know. Look at how many businesses have gone out business in your town. That month many lost their jobs/income/investments, etc. My mother-in-law taught school 45 years, saved and invested, had no debt except a small mortgage. By 2009 her savings/investments dropped in value 40%. She had done everything according to the book. Her pension is at risk due to Bernie Maddof and the banks. If Social Security and Medicare are cut, she will be in trouble.
Quite frankly, I find it hard to blame homeowners. Some borrowed beyond their means. But many lost jobs, were downsized in hours due to jobs shipped to India and China, had medical emergencies their insurance companies wouldn't cover, etc. The issues are more complex than personal responsibility. Besides, I don't see BP executives, investment bankers, or government regulators who 'looked the other way' taking 'personal responsibility'. Before we point the finger at those who have walked away from an untenable mortgage, we need to find out what is really going on behind the scenes. Watch Michael Moore's Capitalism: a Love Story. Watch Bill Moyer's last few episodes. You'll begin to get a whole different picture of what's going on and the role you did/didn't play in this mess. Good luck to all!

Written by jo, June 27, 2010

I think the blame goes towards this entitlement society. When I graduated from high school in 1983, I didn't have enough money to go to a 4-year college and instead went to a jr. college and worked full time while I went to school full time. Every penny I earned went towards tuition, books, and car insurance. At the time I was still living with my parents. I'm a registered nurse and learned early on that I was going to have to work very hard to get my degree, Many students know that they don't have enough money to pay for school on their own, and are not willing to work hard and instead want to have a "party" college experience. My parents were around during the great depression and instilled in me the value of money. I sometimes think that if we ever have another depression, the younger generation will not be able to handle it and will struggle even more than our parents and grandparents did.

Written by Kelly, July 19, 2010

I think its complicated as I am sure every one agrees. I went to an expensive private art college. Unfortunately, i couldn't afford to continue living on my income and produce a senior thesis that was up to par for the quality of work expected at my school, and i dropped out 3 months before achieving my BFA. For the first time it hit me when i dropped out that Degree or no Degree i had spent a whole lot of money on an education that guaranteed me nothing. I want to make a living making art, and no degree can make that happen for me. My goal would be best accomplished having spent the money for education in arts on making art instead. I always wondered after that point. . .where were the people who should have been helping me make accurate decisions for long term goals when i was graduating high school. I felt funneled in to a college system and signed off on loans I did not understand. Fortunately a lot of my tuition was paid for by scholarship and my payments are affordable. But once i saw things this way i refused to take out the loans i needed to finish up my degree. Instead I set out on my own to find my own way in the art world.

I was able to make it work for myself, but with a lot of hard work and several failed attempts. So I think Parents should take more responsibility for their role at this point in a child's life. Give them the information and let help make good choices. Alert children of the long term commitment they are signing up for, and if they aren't ready to handle it by forcing the issue you end up with debt and a half assed education.

The pay that college graduates are finding in the work field after earning their degree may be disappointing and not equivalent to the cost of their education. Their are more and more employers out their who care less and less about their employees and yet as Americans we continue to finance bullshit high priced educations so that we can bend over backwards for huge corporations who only care as much as they are required to care about the people who make their business function.

My Pap managed a bank in the 40's and 50's and he tells me about how he does not envy the people my age. .. he remembers when employees were like family and they were treated with the same care and respect. We don't have that anymore , or at least not enough. So whats the point in our fancy educations? I love school don't get me wrong, but i continue to teach myself new things everyday. And until our educations reflect more applicable knowledge, I say they aren't worth it.