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Chris LoCurto

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October 28, 2011

Obama Is Forgiving Student Loans

October 28, 2011 | By | 52 Comments">52 Comments

That’s what I heard from a young lady at the car rental place yesterday. She was very sweet and took good care of us. And on the way out she asked what we do.

Like always, I answered that we teach people how to handle their finances. And before I could talk about leadership, she excitedly asked me what my most important bit of information was. I told her to stay out of debt — Surprise, surprise! That’s when she asked, “What do you think about what Obama’s doing? He’s forgiving student loans.”

Ugh!! How does this happen?!

I told her I don’t think it’s right for people to go into debt and then pass the consequences of their bad money choices on to the rest of the taxpayers.. That’s when she made a comment about Obama having money set aside to take care of the loans. I quickly informed her that Obama doesn’t have any money for these student loans. The money to pay for Obama’s “forgiveness” will come from those of us who actually pay taxes — unlike the 47% of Americans who don’t pay taxes but want big business to pay for all of their debt. (Sorry, had to throw that in there.)

She responded by saying, “So I’ll pay for it anyway? I don’t know that much about it. I haven’t really read up on it.” And since my car wasn’t ready, she walked away and hung out in the little booth outside. I guess our conversation was over. When my car finally came around, she came back out and did the walk around with me. I asked her if what I said made sense to her. She told me she really didn’t read up on it so she didn’t know that much about it.

So I put it to her this way: It would be like me buying this Suburban with debt and then making you pay for it because I made bad money choices and couldn’t make my payments any longer. The government doesn’t have money except what we as tax payers pay.

I watched and waited for the light bulb to go off. It did, but she still seemed confused.

I left thinking about how many millions of people think Obama has some magic vault of money that he must have brought with him from his personal account to D.C. And he’s going to save all the people in America who have made poor decisions with money so they can keep making bad decisions. Or wait…maybe the “forgiveness” will cause all of those folks to start making wise money choices. It could happen…right?

Question: What are your thoughts on how people view the Government’s “bank account”?

Feel free to share this with your friends and family…or those you don’t like who think this way.

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  • Amy

    This was such a great blog, and I’m so passionate about how WRONG this is, that I posted it on my facebook page. I got this response from my brother who is getting his doctorate on loans while travelling to Ireland and Italy a couple of times a year. And he’s studying to be the next Dr. Phil….

    The ignorance is astounding.

    “Unfortunately the fact that you hate this man blocks your view of the positive. Coming from a student with a lot of loan debt I appreciate the fact that he is doing something good for me and those in my position. If he gets some votes out of it, good for him…it’s politics and republicans employ the same tactics. And of course people can get smarter from going to school so there is nothing wrong with this policy change. Perhaps the positive aspects of politics toward our nation can be left just that…positive.”

    • Greg LeBre

      So while your brother is floating around the world on loans getting his doctorate, the rest of use are supposed to support this activity. When he gets his ‘Dr Phil’ salary, he can pay back the loans he signed his name to. They’re called loans, not grants. If his work is that special, he can get a grant that he doesn’t have responsibility to pay back.
      As to the anti-Obama undertones, it’s the whole *^&%$# Congress who is voting on this bill and they should all veto this one. I think Chris is against what is being done, not who’s doing it, although the history of this administration has been bailouts and handouts for screwing up. Both parties agreed to it.
      I paid back my loans in full. It wasn’t easy and it took a lot of years. sign the loan=pay the bill!! If you don’t want to pay it then don’t sign the dotted line!! It doesn’t take a doctorate to figure this out! I’m sure you would be upset if the payment for services you provide for your boss/clients was suddenly ‘forgiven’, you would be upon the great soapbox of indignity.
      So many people I went through my doctoral program with spent the money on extracurricular activities (ie, trips, parties, eating out etc). I worked my way through, lived ‘tight’, paid the tuition as I went and supported a family. I took loans when I lost my job the final year and threw pizzas on the weekends. You want my money? Guess again..

      • http://Chrislocurto.com Chris LoCurto

        I’m glad to hear you don’t feel that way Amy! Thank you so much for commenting!!

    • http://Chrislocurto.com Chris LoCurto

      Wow! Unfortunately, even family can be wrong. :-)

  • http://ginasmom.wordpress.com ginasmom

    It’s scary how little we understand about how money operates, yet we can recite all the celebrity happenings over the last couple months. The saddest thing is the idea that “the government” is like some godparent that will take care of all our financial needs regardless of how we behave with our money. The thought process then goes, the government will take care of my student loans, my hospital bills, my retirement, and i bet if i ask nicely maybe the same government will help me get married. I mean there is no way i can pay for my student loan, my morgage, my taxes as well as pay for my wedding! I’m not some rich trust fund girl….you get the idea.

    Her response (as pointed out by Loise)…”i really haven’t READ up on it” is dangerous, but again points out to one of the issues we are confronting today. We are either too busy or can’t be bothered to find out the truth about some of this issues, but since it’s what the experts and/or the politicians are talking about on the airwaves, we take that as the truth and ran away with it with some dangerous consequences.

    Unless we truly understand how the system works, the idea of the government’s bank account will stay with us for a long time. Time to get our young people educated on some of this basic issues. If we make a personal finance class a graduation requirement at every level of schooling, including preschool, we can change this mentality in a decade or two.

    • http://Chrislocurto.com Chris LoCurto

      BAM!!!

    • Anonymous

      …off to watch Snooki… :).

      • Anonymous

        J/K… off to work…

  • http://lgthaxton.wordpress.com Louise Thaxton

    The saddest part of this is her reply – which unfortunately is the reply of many people today on the issues which plague our country…..”I really haven’t READ up on it….”.

    Do you really think, Chris, that after you left, she began searching the web or the newspaper for something she could “read up” on the subject?

    The scariest part of this is that many people have no clue of what is really happening in government – it is APATHY – and that is how you end up in slavery …..

    And to answer your question – I think most people feel the same way about the government’s money as my children did when they were young. I would say we didn’t have the money for something they wanted to buy and their response was “just write a check”!!!

    • http://Chrislocurto.com Chris LoCurto

      Hahaha…exactly!

  • Chris

    I had a meeting with my financial adviser this morning. He normally makes Ronald Reagan look like a New Dealer. He said something interesting that about made me spray my coffee.

    He said, we should begin a process where nothing can become too big to fail. Because if they are allowed to fail, the consequences would hurt us even worse than the bailouts did. So from a regulatory perspective, simply don’t allow it.

    I’m not sure I agree. But it was an interesting comment. And I never expected to hear something like that from him.

    • http://Chrislocurto.com Chris LoCurto

      BAH!!!!!

  • http://ericspeir.com/ Eric Speir

    This is definitely a hot topic. I’m all for helping people who really “need” the help but I’m tired of businesses and people receiving bailouts for their lack of fiscal responsibility. The government and large banks seem to be the only ones that don’t have to abide by the same fiscal rules. It’s pretty simple actually….don’t spend more than you make. What’s even worse is that the middle class…small businesses that are having to finances everyone’s mess. The very people that can help the economy the most we are hurting. Too many people thinks money grows on trees.

    • http://Chrislocurto.com Chris LoCurto

      Preach it!!!

  • David Creel

    I think a lot of people in this country won’t everyone else to fix their problems. (and it’s always someone else’s fault). Look in the mirror people. Plus, people take what they hear on tv as gospel and don’t do their own research. On a side note, some people believe everything “their political party or politician” say, like when then speaker of the house Nancy Pelosi said,”Extended unemployment benefits to 100 weeks (or however long she said) is actually a motivator for people to go out and get a job,” I mean really?? C’mon people…use your brains!

    • http://Chrislocurto.com Chris LoCurto

      HAHAHA…did she really say that?!?!

  • jonstolpe

    Great post! It’s frustrating that so many Americans don’t get it though. The days when are grandparents frugally saved for everything – before making the purchase seems like such a distant memory and foreign to many today. We need to get back to the way things were – If you can’t afford it, you can’t buy it!

    • http://Chrislocurto.com Chris LoCurto

      Amen! That’s what we teach and do!

    • Anonymous

      I am not 100% sure, they did finance cars in the 50s and 60s :).

  • http://joelfortner.wordpress.com Joel Fortner

    I understand what the president is trying to do and I don’t believe it’s sinister, I actually believe it’s well intentioned. That said, it’s exemplary of the greater problem in our country from homes to D.C. The country doesn’t view debt like it did just a few short decades ago, when debtors were jailed in some cases. Now, debt is viewed as necessary and enormous systems, such as credit scores, are built around it, reinforcing the belief that debt is not a bad thing. It’s very sad but those of us who see it differently should continue to inject the truth into our families and communities to help turn the tide.

    • http://Chrislocurto.com Chris LoCurto

      Preach it! Except for the sinister part. I think it’s for votes. :-)

      • http://joelfortner.wordpress.com Joel Fortner

        I think he’d push for the program regardless of votes. However, I do believe the timing is linked to votes without a doubt. That’s not sinister though, it’s just planning well. The president of course wants to be re-elected because he wants to further his initiatives, which he believes are right for the country. I would time it that way, too. Although I would push different issues. =)

        • http://Chrislocurto.com Chris LoCurto

          Whatever, you would push for this and forgiveness for your half marathon entry fees!

          • http://joelfortner.wordpress.com Joel Fortner

            It’s true and it would put approximately $92 back in my pocket of which I wouldn’t share with anyone because I’m just sinister like that!

            • Anonymous

              You will just have to win the entry fees back next time… :)

      • http://lgthaxton.wordpress.com Louise Thaxton

        I agree with Chris – it IS sinister – there is a method to the madness….

        • http://Chrislocurto.com Chris LoCurto

          Take THAT Joel!

  • tedapittenger

    Oops! That last comment is from “tedapittenger” not Anonymous. I guess I didn’t sign in.

  • Anonymous

    “A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury. After that, the majority always votes for the candidate promising the most benefits with the result the democracy collapses because of the loose fiscal policy ensuing, always to be followed by a dictatorship, then a monarchy.” (quote attributed to Alexis de Tocqueville)
    If it is true that only 53% of us are paying taxes, then we are dangerously close to a tipping point that will put us on a slippery slope to disaster. Fortunately, some of the 47% are my friends with large families that have so many deductions that they pay no taxes (income tax that is – they still pay FICA) and they are very conservative politically. There may still be light at the end of the tunnel, I just hope it is not a locomotive headed this direction.

    • http://Chrislocurto.com Chris LoCurto

      haha…that would be bad.

  • Anonymous

    Can you correct the grammar?

    I left thinking about how many millions of people thing that Obama has some

    think vs thing

    • http://Chrislocurto.com Chris LoCurto

      Done. Thanks.

  • http://Seekoutwisdom.blogspot.com Joseph of Seek Out Wisdom

    You aren’t wrong when you say WE the taxpayers will pay for these forgiven loans, but in at least one way of looking at it, WE won’t. Since we already fund much of the government with debt, we are really obligating future taxpayers to pay those bills, not us in the here and now. It not surprising that those who would embrace student loans in the first place, spending the money now and paying it back way in the future, would repeat this attitude with forgiving the loans now, and burdening future taxpayers with the bills later.

    • http://Chrislocurto.com Chris LoCurto

      You are correct.

  • http://twitter.com/DrCabler Dr. Jason Cabler (@DrCabler)

    By the way, here is a link to a recent entry on my blog that shows a student who actually “gets it”. He worked hard and financed his own education and takes issue with the whiners now complaining about their student loans. You can find it here http://www.cfinancialfreedom.com/CFFwordpress/?p=572

    • http://Chrislocurto.com Chris LoCurto

      Thanks Doc!

  • http://tonylamb.wordpress.com James A. Lamb

    Hey, Chris.

    President Obama’s plan is a knee-jerk reaction band-aid that doesn’t fix the problem, not completely unlike bailing out the US auto industry or the banks. College tuition rose ~8% in the last month, and averages ~5% a year in increases. The average cost of tuition is ~$27,000/year. So people will have their debt forgiven after 20 years, but the costs are still rising. And the college might very well write off the unpaid tuition as bad debt, anyway. What we need is a major overhaul of the collegiate system.

    Tony
    http://tonylamb.wordpress.com

  • http://twitter.com/DrCabler Dr. Jason Cabler (@DrCabler)

    People have no clue that the President’s new program really does very little for the overall student loan problem. Most people are so woefully underinformed about how things like personal finance, government, and so many other things work.

    That’s very strange considering we have access to more information on any subject than we ever have in history.

    As you well know Chris, people have to start taking personal responsibility for their decisions, especially their debt problems. THEY were the ones that chose to get into debt and now THEY have to pay it back. Whining about Wall Street, Government, etc. doesn’t negate those decisions.

    That’s one of the many reasons I was inspired to start teaching people about personal finance and even developed my own course called Celebrating Financial Freedom. People, especially God’s people, have to get these good principles ingrained into their lives if they want to succeed.

    Dave Ramsey has been a huge inspiration to me in this area of my life and is never far from my thoughts. I know what I’m doing is changing the world for the better and I hope someday to change as many lives as he and his team do on a daily basis.

    Thanks for what you guys do!

    • http://Chrislocurto.com Chris LoCurto

      Our pleasure!!

  • Anonymous

    Give a man a fish and feed him for a day.Teach a man to fish and feed him for a lifetime…The problem in our country today is most of us know how to fish but we can not because of all the steps it now takes to get your “fishing” license…Welcome to big government…I enjoy your blog Chris keep it up!! BTW i am still catching my limit here in SC so there is work out there :)

  • John

    Let me first say that I am a simple man and I don’t have big insights on things but nothing fires me up more than this topic! In a country that has so many people looking for handouts and a so called easy button this just gives them more reason to be lazy and never leave the cave to kill something and bring it home. Go out and get a real education by sweating your butt off at a second or third job. Then you’ll have a paid for education that will teach you the real value of money!

  • Wid

    People that do not pay taxes don’t know where tax money comes from

    • http://Chrislocurto.com Chris LoCurto

      HAHAHA….simply put, yes!

  • http://twitter.com/mahez007 Uma Maheswaran S (@mahez007)

    It is the general view all over the world. People expect this sort of populism from the politicians. And, politicians too indulge in such nature of welfare measures to retain their vote banks.

    • http://Chrislocurto.com Chris LoCurto

      That’s exactly it Uma. Pass debt on to people without them realizing it, so you can get their vote.

  • http://jasorenx.wordpress.com jasorenx

    Entitlement vs. responsibility…a plague that is destroying our country and the only cure is to help people take action to do the right thing. I had a widow call me two weeks ago who has $500,000 worth of medical debt from her husband’s treatments and she wanted to know if she should file for bankruptcy. After 15 minutes she said “James, I want to be a woman of integrity even if it means paying $100 a month forever. I will pay this back because it is the right thing to do”. I will never forget her response. It is this attitude that gives me hope!

    • http://Chrislocurto.com Chris LoCurto

      Wow!!!! That is amazing!! I’m praying for her!!

  • Greg LeBre

    I think people’s opinions will be determined by which end of the giving and taking they are on.When will we make people responsible for their own actions? That should be the lesson. I guess now Obama thinks he”s not only a dictator but a priest, giving forgiveness where he thinks it’s appropriate. Okay I won’t go on. Good lesson today Chris.

    • http://Chrislocurto.com Chris LoCurto

      HAAAAA…that’s awesome Greg!

  • Anonymous

    I too am in the finance industry. I think it is so sad how little most people understand money.