Author Topic: Ethical Dimensions of Student Loan Income Based Repayment Plans  (Read 48541 times)

dragoncar

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #100 on: October 14, 2013, 06:24:42 PM »
It's always been "dilemma"

RootofGood

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #101 on: October 15, 2013, 01:14:22 PM »
Is your back broken?  Are your fingers worn to nubs?  Are you physically able to work without undue physical stress?  If so, then you're extending the argument to a ridiculous point. 

If you owe money and cannot pay it without bringing in a paycheck, you're not at the point you should stop working voluntarily.

My fingers are somewhat nub-like, but they have always been this way.

As for my back, I do stretching exercises and calisthenics, but I have been treated for severe back pain in the past.  Probably caused by sitting in my cubicle for extended periods of time.  The back is fine right now though, thanks for asking!

While working, I suffered from a moderate case of stress related hypertension.  That miraculously went away within a few days of when I quit working.  The htn wasn't to the point of making me at extreme risk of stroke, but there was an "elevated risk".  The job also involved workplace exposures that could lead to serious injury or death, although I was the one usually in charge of ensuring safe working conditions. 

Does it make any difference what my job was?  Some would say my job was unethical.  And at least one Federal Court of Appeals agreed. 

What if I was a lobbyist for the Baby Seal Clubbers of America, Inc. or the Mountaintoppers Coal Stripminers Association?  What if I was a waste disposal engineer in charge of calculating the exact flow rate of toxic sludge our company could discharge into the pristine waters of a river near you? 

Just sayin', with my unfettered powers of destruction, you might be best served having me at home slinging words on the computer screen instead of stacks of bens to hardworking members of Congress or right-sized toxic sludge into the inland waters of America. 

Mr.Macinstache

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #102 on: October 15, 2013, 02:06:24 PM »
You are still paying your taxes, correct?

Nords

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #103 on: October 15, 2013, 02:08:33 PM »
You are still paying your taxes, correct?
The ultimate and perpetual income-based repayment plan...

Mr.Macinstache

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #104 on: October 15, 2013, 02:19:27 PM »
What are the ethical dimensions of GE paying no tax? GE has an extreme case of Mustachian badassity I suppose.
« Last Edit: October 15, 2013, 02:23:06 PM by Mr.Macinstache »

brewer12345

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #105 on: October 15, 2013, 02:23:27 PM »
Is your back broken?  Are your fingers worn to nubs?  Are you physically able to work without undue physical stress?  If so, then you're extending the argument to a ridiculous point. 

If you owe money and cannot pay it without bringing in a paycheck, you're not at the point you should stop working voluntarily.

My fingers are somewhat nub-like, but they have always been this way.

As for my back, I do stretching exercises and calisthenics, but I have been treated for severe back pain in the past.  Probably caused by sitting in my cubicle for extended periods of time.  The back is fine right now though, thanks for asking!

While working, I suffered from a moderate case of stress related hypertension.  That miraculously went away within a few days of when I quit working.  The htn wasn't to the point of making me at extreme risk of stroke, but there was an "elevated risk".  The job also involved workplace exposures that could lead to serious injury or death, although I was the one usually in charge of ensuring safe working conditions. 

Does it make any difference what my job was?  Some would say my job was unethical.  And at least one Federal Court of Appeals agreed. 

What if I was a lobbyist for the Baby Seal Clubbers of America, Inc. or the Mountaintoppers Coal Stripminers Association?  What if I was a waste disposal engineer in charge of calculating the exact flow rate of toxic sludge our company could discharge into the pristine waters of a river near you? 

Just sayin', with my unfettered powers of destruction, you might be best served having me at home slinging words on the computer screen instead of stacks of bens to hardworking members of Congress or right-sized toxic sludge into the inland waters of America.

I think someone may simply be jealous of you.

dragoncar

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #106 on: October 15, 2013, 03:04:09 PM »
You are still paying your taxes, correct?
The ultimate and perpetual income-based repayment plan...

Quote of the day

Mr.Macinstache

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #107 on: October 15, 2013, 03:17:43 PM »
You are still paying your taxes, correct?
The ultimate and perpetual income-based repayment plan...

Quote of the day

He is still paying the overlords, albeit to a lesser degree.

RootofGood

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #108 on: October 15, 2013, 07:58:23 PM »
You are still paying your taxes, correct?

If the comment was directed at me, then yes, we pay our federal taxes.  What little we owe.  State taxes are usually much higher for us. 

Yes, Nords, the perpetual income based repayment plan! 

 


MrsPete

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #109 on: October 16, 2013, 05:42:21 AM »
Is your back broken?  Are your fingers worn to nubs?  Are you physically able to work without undue physical stress?  If so, then you're extending the argument to a ridiculous point. 

If you owe money and cannot pay it without bringing in a paycheck, you're not at the point you should stop working voluntarily.

My fingers are somewhat nub-like, but they have always been this way.

As for my back, I do stretching exercises and calisthenics, but I have been treated for severe back pain in the past.  Probably caused by sitting in my cubicle for extended periods of time.  The back is fine right now though, thanks for asking!

While working, I suffered from a moderate case of stress related hypertension.  That miraculously went away within a few days of when I quit working.  The htn wasn't to the point of making me at extreme risk of stroke, but there was an "elevated risk".  The job also involved workplace exposures that could lead to serious injury or death, although I was the one usually in charge of ensuring safe working conditions. 

Does it make any difference what my job was?  Some would say my job was unethical.  And at least one Federal Court of Appeals agreed. 

What if I was a lobbyist for the Baby Seal Clubbers of America, Inc. or the Mountaintoppers Coal Stripminers Association?  What if I was a waste disposal engineer in charge of calculating the exact flow rate of toxic sludge our company could discharge into the pristine waters of a river near you? 

Just sayin', with my unfettered powers of destruction, you might be best served having me at home slinging words on the computer screen instead of stacks of bens to hardworking members of Congress or right-sized toxic sludge into the inland waters of America.
An "elevated risk" is enough reason to walk away from your obligations?  Would you take an unethical job?  Why?  Sorry for your nub-like fingers, but I'm not buying that you're unable to work. 
Is your back broken?  Are your fingers worn to nubs?  Are you physically able to work without undue physical stress?  If so, then you're extending the argument to a ridiculous point. 

If you owe money and cannot pay it without bringing in a paycheck, you're not at the point you should stop working voluntarily.

My fingers are somewhat nub-like, but they have always been this way.

As for my back, I do stretching exercises and calisthenics, but I have been treated for severe back pain in the past.  Probably caused by sitting in my cubicle for extended periods of time.  The back is fine right now though, thanks for asking!

While working, I suffered from a moderate case of stress related hypertension.  That miraculously went away within a few days of when I quit working.  The htn wasn't to the point of making me at extreme risk of stroke, but there was an "elevated risk".  The job also involved workplace exposures that could lead to serious injury or death, although I was the one usually in charge of ensuring safe working conditions. 

Does it make any difference what my job was?  Some would say my job was unethical.  And at least one Federal Court of Appeals agreed. 

What if I was a lobbyist for the Baby Seal Clubbers of America, Inc. or the Mountaintoppers Coal Stripminers Association?  What if I was a waste disposal engineer in charge of calculating the exact flow rate of toxic sludge our company could discharge into the pristine waters of a river near you? 

Just sayin', with my unfettered powers of destruction, you might be best served having me at home slinging words on the computer screen instead of stacks of bens to hardworking members of Congress or right-sized toxic sludge into the inland waters of America.

I think someone may simply be jealous of you.
Darling, if you knew me, you'd know that jealousy is not part of my life.  Today I am more than I ever expected I could be, and I'm happy with who I am.

Now, if you want to say that I'm a bit contemptuous of people who take on obligations and walk away from them, yes, I'll plead guilty to that.  If you want to say I'm judgemental of people who don't pay their debts, yeah, that's true.  If you want to say that I'm distainful of people who make promises and don't live up to them, I'll agree. 

But then, this board is more about "get mine" than moral fiber.  I'm not sorry not to fit into that mold.

RootofGood

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #110 on: October 16, 2013, 07:06:47 AM »
An "elevated risk" is enough reason to walk away from your obligations?  Would you take an unethical job?  Why?  Sorry for your nub-like fingers, but I'm not buying that you're unable to work. 

I'm not saying I am totally unable to work.  There are detriments to working (including health impacts), and the cost of working exceeded the benefits of working under the current constraints. 


Darling, if you knew me, you'd know that jealousy is not part of my life.  Today I am more than I ever expected I could be, and I'm happy with who I am.

Now, if you want to say that I'm a bit contemptuous of people who take on obligations and walk away from them, yes, I'll plead guilty to that.  If you want to say I'm judgemental of people who don't pay their debts, yeah, that's true.  If you want to say that I'm distainful of people who make promises and don't live up to them, I'll agree. 

But then, this board is more about "get mine" than moral fiber.  I'm not sorry not to fit into that mold.

You sound pretty jealous to me too. 

Hey, if you want to get a BS in Engineering, a BA in Spanish Literature, and a Juris Doctor from a top 25 law school (if you can get in), and an incomplete MS in Engineering, and get a chance at partially free money after 25 years of making partial or full payments, I can email you an application to any of my alma maters. 

The offer is on the table.  Why don't you work harder to fund the Federal Treasury, as you so strongly urge others to do.  Surely you could give just a little bit more effort?  I bet dual degrees in engineering and law would help your earnings potential.  Or you can't?  Or don't want to?  Why?

MrsPete

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #111 on: October 16, 2013, 07:54:23 AM »
An "elevated risk" is enough reason to walk away from your obligations?  Would you take an unethical job?  Why?  Sorry for your nub-like fingers, but I'm not buying that you're unable to work. 

I'm not saying I am totally unable to work.  There are detriments to working (including health impacts), and the cost of working exceeded the benefits of working under the current constraints. 


Darling, if you knew me, you'd know that jealousy is not part of my life.  Today I am more than I ever expected I could be, and I'm happy with who I am.

Now, if you want to say that I'm a bit contemptuous of people who take on obligations and walk away from them, yes, I'll plead guilty to that.  If you want to say I'm judgemental of people who don't pay their debts, yeah, that's true.  If you want to say that I'm distainful of people who make promises and don't live up to them, I'll agree. 

But then, this board is more about "get mine" than moral fiber.  I'm not sorry not to fit into that mold.

You sound pretty jealous to me too. 

Hey, if you want to get a BS in Engineering, a BA in Spanish Literature, and a Juris Doctor from a top 25 law school (if you can get in), and an incomplete MS in Engineering, and get a chance at partially free money after 25 years of making partial or full payments, I can email you an application to any of my alma maters. 

The offer is on the table.  Why don't you work harder to fund the Federal Treasury, as you so strongly urge others to do.  Surely you could give just a little bit more effort?  I bet dual degrees in engineering and law would help your earnings potential.  Or you can't?  Or don't want to?  Why?
I understand that you're saying you prefer not to work, but the question is whether it's ethical -- given that you can work -- to purposefully avoid a you entered into voluntarily.  I say no. 

Why don't I go work more to fund the treasury to a larger degree?  You're missing a big point here:  I don't have any debts.  I have not promised to pay back anything.  I have no obligations.  You do, and that's a world of difference.  Having no debts, I have more freedom to choose what I do.

You're free to go right on thinking I'm jealous of you, but it'll be poor reading comprehension on your part.  I have the degrees that I want and need, and I have already reached Financial Independence, I have a great little "side job" that pays well and takes little effort on my part, and I am in the process of building my retirement house on a 40 acre chunk of land.  I'm working a couple more years at a job I like  1) To complete my pension so that I have an extra hedge against inflation -- with my genes, I will likely live to be 100, and I don't want to cut things too close financially.  2) To complete the years required to get my no-cost health insurance for life.  3) So I can put my children through college without dipping into savings.  It's important to me that they begin their professional lives debt-free.  And I have accomplished these things while paying all my bills and without behaving in any way that's morally questionable. 

« Last Edit: October 16, 2013, 11:39:49 AM by MrsPete »

brewer12345

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #112 on: October 16, 2013, 08:05:33 AM »
An "elevated risk" is enough reason to walk away from your obligations?  Would you take an unethical job?  Why?  Sorry for your nub-like fingers, but I'm not buying that you're unable to work. 

I'm not saying I am totally unable to work.  There are detriments to working (including health impacts), and the cost of working exceeded the benefits of working under the current constraints. 


Darling, if you knew me, you'd know that jealousy is not part of my life.  Today I am more than I ever expected I could be, and I'm happy with who I am.

Now, if you want to say that I'm a bit contemptuous of people who take on obligations and walk away from them, yes, I'll plead guilty to that.  If you want to say I'm judgemental of people who don't pay their debts, yeah, that's true.  If you want to say that I'm distainful of people who make promises and don't live up to them, I'll agree. 

But then, this board is more about "get mine" than moral fiber.  I'm not sorry not to fit into that mold.

You sound pretty jealous to me too. 

Hey, if you want to get a BS in Engineering, a BA in Spanish Literature, and a Juris Doctor from a top 25 law school (if you can get in), and an incomplete MS in Engineering, and get a chance at partially free money after 25 years of making partial or full payments, I can email you an application to any of my alma maters. 

The offer is on the table.  Why don't you work harder to fund the Federal Treasury, as you so strongly urge others to do.  Surely you could give just a little bit more effort?  I bet dual degrees in engineering and law would help your earnings potential.  Or you can't?  Or don't want to?  Why?
I understand that you're saying you prefer not to work, but the question is whether it's ethical -- given that you can work -- to purposefully avoid a you entered into voluntarily.  I say no. 

You're free to go right on thinking I'm jealous of you, but it'll be poor reading comprehension on your part.  I have the degrees that I want and need, and I have already reached Financial Independence, I have a great little "side job" that pays well and takes little effort on my part, and I am in the process of building my retirement house on a 40 acre chunk of land.  I'm working a couple more years at a job I like  1) To complete my pension so that I have an extra hedge against inflation -- with my genes, I will likely live to be 100, and I don't want to cut things too close financially.  2) To complete the years required to get my no-cost health insurance for life.  3) So I can put my children through college without dipping into savings.  It's important to me that they begin their professional lives debt-free.  And I have accomplished these things while paying all my bills and without behaving in any way that's morally questionable.

Just out of curiosity, what is your view of the strategic defaulters in the housing crash and why?

RootofGood

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #113 on: October 16, 2013, 09:33:24 AM »
You're free to go right on thinking I'm jealous of you, but it'll be poor reading comprehension on your part.  I have the degrees that I want and need, and I have already reached Financial Independence, I have a great little "side job" that pays well and takes little effort on my part, and I am in the process of building my retirement house on a 40 acre chunk of land.  I'm working a couple more years at a job I like  1) To complete my pension so that I have an extra hedge against inflation -- with my genes, I will likely live to be 100, and I don't want to cut things too close financially.  2) To complete the years required to get my no-cost health insurance for life.  3) So I can put my children through college without dipping into savings.  It's important to me that they begin their professional lives debt-free.  And I have accomplished these things while paying all my bills and without behaving in any way that's morally questionable.

Sounds like you are working longer than you need to.  What's your thought on depriving someone else of a job that they could use?  Ethical?  How about milking a pension and retiree healthcare system that you don't really need (you're FI, right?)? 

 

Tyler

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #114 on: October 16, 2013, 09:50:17 AM »
Personally, I think all the talk about the ethics of IBR plans is distracting from the bigger issue -- why is college so damn expensive to begin with?  And how is it that colleges can charge so much for an education in a field that they know will never grant a high enough salary to justify the expense?

What if, instead of taxpayers bailing out schools when their graduates can't pay their student loans, the schools were on the hook for the lost money?  I suspect that would solve the problem pretty quickly.
« Last Edit: October 16, 2013, 09:52:48 AM by Tyler »

MrsPete

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #115 on: October 16, 2013, 11:46:40 AM »
You're free to go right on thinking I'm jealous of you, but it'll be poor reading comprehension on your part.  I have the degrees that I want and need, and I have already reached Financial Independence, I have a great little "side job" that pays well and takes little effort on my part, and I am in the process of building my retirement house on a 40 acre chunk of land.  I'm working a couple more years at a job I like  1) To complete my pension so that I have an extra hedge against inflation -- with my genes, I will likely live to be 100, and I don't want to cut things too close financially.  2) To complete the years required to get my no-cost health insurance for life.  3) So I can put my children through college without dipping into savings.  It's important to me that they begin their professional lives debt-free.  And I have accomplished these things while paying all my bills and without behaving in any way that's morally questionable.

Sounds like you are working longer than you need to.  What's your thought on depriving someone else of a job that they could use?  Ethical?  How about milking a pension and retiree healthcare system that you don't really need (you're FI, right?)? 

 
Some people choose to stop working the very minute they have enough to cover their anticipated expenses.  I've chosen to work a little longer so that I'll know my kids are through college and so I'll have a good cushion via the pension.  I'm not "milking" any system -- these are benefits for which I've worked, benefits I've earned.  I've had a payroll deduction every month that pays for my pension.  Will I need the health care?  Absolutely!  "Milking a system" means you're taking advantage of a loophole.  I have no intention of doing that. 

No one's standing in line for my job, and I'm mentoring younger teachers as they enter the profession.  MOD EDIT: Personal attack removed.
« Last Edit: October 16, 2013, 12:02:04 PM by arebelspy »

Hamster

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #116 on: October 18, 2013, 02:48:24 AM »
Quote
One thing I am very confident about is my ability to spend and manage money more efficiently than 535 individuals in Washington D.C.
But it's not those 535 individuals who will be paying back your loan. It's me. And all those others who paid for what they got.

I pay taxes into the general fund just like you.  I'm sure I "pay" for things for you that I don't want to.
That's a pretty difficult argument to make when you yourself state that you pay only $150 in income tax on $150k in earnings.

Nords

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #117 on: October 18, 2013, 04:49:27 AM »
Personally, I think all the talk about the ethics of IBR plans is distracting from the bigger issue -- why is college so damn expensive to begin with?  And how is it that colleges can charge so much for an education in a field that they know will never grant a high enough salary to justify the expense?

What if, instead of taxpayers bailing out schools when their graduates can't pay their student loans, the schools were on the hook for the lost money?  I suspect that would solve the problem pretty quickly.
College is "so damn expensive" because people keep paying for it with money that they get from the federal government, and then these highly educated individuals are able to read their loan agreements and do exactly what the government requires them to do.

You're right:  college would be a lot cheaper if the schools were on the hook.  However there would be fewer graduates, too.  These smaller numbers would generate less taxable revenue, and the govt would collect fewer taxes. 

The govt is subsidizing college for its taxpayers.  The govt can change the rules and close the repayment loopholes whenever it musters the political will to do so.  Until then, it's perfectly right to repay only those parts of the loan that the govt insists on being repaid. 

It's ethical to use IBR.  It's also ethical to take tax credits for photovoltaic and solar water heating systems.  It's ethical to take any loopholes that the govt leaves you in its policies, and the govt seems to feel pretty comfortable with its citizens doing so.

However anyone who can't sleep at night after using the IBR program would be perfectly within their rights to pay off the full loan amount.  In my opinion, that would be volunteering to pay more taxes than you're required to.

Mr.Macinstache

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #118 on: October 18, 2013, 07:10:50 AM »
Students loans are cheap and easy from the federal govt. Knowing that, of course colleges are going to charge the most they can get away with. That is what drives the cost up in any market. Cheap and easy credit.

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #119 on: October 18, 2013, 07:24:11 AM »
That's a pretty difficult argument to make when you yourself state that you pay only $150 in income tax on $150k in earnings.

I have paid much more in the past, and will likely pay much more in the future. 

That $150 is my fair share of taxes, per the tax code.  Some people "pay" negative thousands of dollars in taxes (refundable tax credits like EIC and Additional Child Tax Credits).   

RootofGood

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #120 on: October 18, 2013, 07:27:56 AM »
College is "so damn expensive" because people keep paying for it with money that they get from the federal government, and then these highly educated individuals are able to read their loan agreements and do exactly what the government requires them to do.

Yeah, I don't get it.  The government gives me these loans to pay for my law school.  I take a class on personal income tax, like it, learn a lot, get an A+ in the class, then apply what I learn to my personal finances and incorporate that learning into my advice and recommendations to others.  Who coulda thunk it? 


randymarsh

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #121 on: October 18, 2013, 07:38:34 AM »
College is "so damn expensive" because people keep paying for it with money that they get from the federal government, and then these highly educated individuals are able to read their loan agreements and do exactly what the government requires them to do.

Agreed. While designed with good intentions, the student loan program has surely caused the cost of education to rise much more than it otherwise would have. Plus states have no problem cutting education while spending on prisons. https://www.aclu.org/blog/racial-justice/states-brilliant-budget-solution-sacrifice-public-education-spend-more

IBR may not have been designed for early retirees (and personally I'd rather just get my loans paid off ASAP), but they're clearly allowed to use it. I don't really see an ethical issue. Many countries subsidize higher education. This is one way the US does it, just on the backend instead of up-front.

NinetyFour

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #122 on: October 18, 2013, 07:41:46 AM »
If I read it correctly, from your journal, RootofGood, you socked away $11,000 this year to an IRA.  Wow.  That you can do that, while ignoring your student loan debt, just amazes me.  I think it's wrong.  I wouldn't be able to rationalize it.

dragoncar

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #123 on: October 18, 2013, 08:10:13 AM »
That's a pretty difficult argument to make when you yourself state that you pay only $150 in income tax on $150k in earnings.

I have paid much more in the past, and will likely pay much more in the future. 

That $150 is my fair share of taxes, per the tax code.  Some people "pay" negative thousands of dollars in taxes (refundable tax credits like EIC and Additional Child Tax Credits).

This brings up a relevant question.  Do the haters plan to FIRE?  If so, do they plan to take advantage of low tax rates for mustachian level incomes, or will they be making extra payments to the IRS?

If I read it correctly, from your journal, RootofGood, you socked away $11,000 this year to an IRA.  Wow.  That you can do that, while ignoring your student loan debt, just amazes me.  I think it's wrong.  I wouldn't be able to rationalize it.
If I read it correctly, from your journal, RootofGood, you socked away $11,000 this year to an IRA.  Wow.  That you can do that, while ignoring your student loan debt, just amazes me.  I think it's wrong.  I wouldn't be able to rationalize it.
If I read it correctly, from your journal, RootofGood, you socked away $11,000 this year to an IRA.  Wow.  That you can do that, while ignoring your student loan debt, just amazes me.  I think it's wrong.  I wouldn't be able to rationalize it.

Do you think its wrong for early retires on this forum to sit on $500k or more of assets (in taxable and non taxable accounts) and not pay any income tax?

ZiziPB

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #124 on: October 18, 2013, 08:48:30 AM »
Quote
This brings up a relevant question.  Do the haters plan to FIRE?  If so, do they plan to take advantage of low tax rates for mustachian level incomes, or will they be making extra payments to the IRS?

I think there is a significant difference between incurring an obligation (student loans) and walking away from it and paying a low tax rate on low income...  I will be paying whatever taxes are due on the income I have in retirement, just like the OP is doing.  But I will not have borrowed money in order to achieve FIRE and avoided repaying my loans by utilizing a loophole in the IBR program.  I appreciate that what he is doing technically fits within the IBR guidelines and therefore is legal, but that doesn't mean it's ethical.

Think about it this way: I borrow a million dollars and put it in my savings account.  That allows me to retire early and live off the interest.  Because I live on the interest only (and, BTW, I am still saving a portion of that interest because I really don't have high expenses so I don't spend it all), I am "poor" and based on the fact that I am "poor" which I prove by showing that I bearly make enough in interest to cover my living expenses, I refuse to repay the money I borrowed, until my creditors finally write it off.  Does it strike you as ethical?

Hamster

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #125 on: October 18, 2013, 09:44:26 AM »
Aaargh... my reply got 404'd... trying again (remember to Ctrl-C before trying to post, everyone...).
This brings up a relevant question.  Do the haters plan to FIRE?  If so, do they plan to take advantage of low tax rates for mustachian level incomes, or will they be making extra payments to the IRS?

First of all, "haters" is an ad hominem. Let's leave the name calling out of it.

Second, my comment was in response to the OP's statement - which was omitted in the above quotes:
Quote from: RootOfGood
I pay taxes into the general fund just like you.  I'm sure I "pay" for things for you that I don't want to.

I am calling bullshit on the claim that OP "pays" anything for anyone in taxes when he only paid $150 on $150k in income. I don't have a problem with taking full legal advantage of the tax code. BUT after paying essentially nothing in income tax, you can't defend the claim that you are paying taxes to support anything on my behalf.

Back to the general scenario: I think the reason this discussion is getting so much traction is that many of us believe that the word "Independent" in FIRE is not satisfied when you depend on the government to cover your debt obligations under a program that is based on financial hardship. Do we need a new term FDRE?.

If you drop out of high school, have 3 babies, and get by on gov't assistance with no intention of working although you are capable, are you FIRE?

prof61820

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #126 on: October 18, 2013, 09:55:49 AM »
Moral/ethical issues aside, I commend you for finding an interesting legal loophole that I'm sure any investment banker/hedge fund manager/corporate exec (or tuition jacking University President) would lose zero sleep over utilizing.  Have you thought about these two issues?

1.  Can you earn "income" if it's paid solely as a benefit or you apply the dollars to an individual 401(k)?  In other words, can you do contract legal work and instead of your client paying you wages that you pocket, can they pay you by making a direct retirement account contribution or a health savings account contribution or pay you and you deposit the cash in a benefit account? 

2.  And I know it won't happen to you, but what happens to someone else if they follow your plan and their wife departs either via divorce or death?  What's the game plan at that point?

Tetsuya Hondo

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #127 on: October 18, 2013, 11:17:50 AM »
If deep down you knew that this was ok, you wouldn't have felt the need to bring it up to seek validation.

The way I see it, you took out student loans and have simply decided not to even though you easily could. You've found a legal loophole to crawl through but you're violating the spirit of the program.

So, you're choosing to retire early and let the rest of us pick up the tab. In the MMM spirit, a face punch is in order.

dragoncar

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #128 on: October 18, 2013, 11:35:11 AM »
Quote
This brings up a relevant question.  Do the haters plan to FIRE?  If so, do they plan to take advantage of low tax rates for mustachian level incomes, or will they be making extra payments to the IRS?

I think there is a significant difference between incurring an obligation (student loans) and walking away from it and paying a low tax rate on low income...  I will be paying whatever taxes are due on the income I have in retirement, just like the OP is doing.  But I will not have borrowed money in order to achieve FIRE and avoided repaying my loans by utilizing a loophole in the IBR program.  I appreciate that what he is doing technically fits within the IBR guidelines and therefore is legal, but that doesn't mean it's ethical.

Think about it this way: I borrow a million dollars and put it in my savings account.  That allows me to retire early and live off the interest.  Because I live on the interest only (and, BTW, I am still saving a portion of that interest because I really don't have high expenses so I don't spend it all), I am "poor" and based on the fact that I am "poor" which I prove by showing that I bearly make enough in interest to cover my living expenses, I refuse to repay the money I borrowed, until my creditors finally write it off.  Does it strike you as ethical?

Well low income tax rates are meant to help the poor make ends meet.  The 47% who don't pay income tax are definitely being subsidized by those who do (I personally am ok with this, but it is analogous).  Don't try to tell me that you won't be getting  anything from those tax dollars paid by other people, despite the fact that you may very well have more money than they do.  Taxes are an obligation as much as debt is.

Aaargh... my reply got 404'd... trying again (remember to Ctrl-C before trying to post, everyone...).
This brings up a relevant question.  Do the haters plan to FIRE?  If so, do they plan to take advantage of low tax rates for mustachian level incomes, or will they be making extra payments to the IRS?

First of all, "haters" is an ad hominem. Let's leave the name calling out of it.

Second, my comment was in response to the OP's statement - which was omitted in the above quotes:
Quote from: RootOfGood
I pay taxes into the general fund just like you.  I'm sure I "pay" for things for you that I don't want to.

I am calling bullshit on the claim that OP "pays" anything for anyone in taxes when he only paid $150 on $150k in income. I don't have a problem with taking full legal advantage of the tax code. BUT after paying essentially nothing in income tax, you can't defend the claim that you are paying taxes to support anything on my behalf.

Back to the general scenario: I think the reason this discussion is getting so much traction is that many of us believe that the word "Independent" in FIRE is not satisfied when you depend on the government to cover your debt obligations under a program that is based on financial hardship. Do we need a new term FDRE?.

If you drop out of high school, have 3 babies, and get by on gov't assistance with no intention of working although you are capable, are you FIRE?

It's only ad hominem if you consider yourself the man.

Mr.Macinstache

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #129 on: October 18, 2013, 11:38:15 AM »
You can't compare avoiding taxes to avoiding repayment of a student loan. The govt takes taxes by force, a student loan is a voluntary contract someone entered into.

Nords

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #130 on: October 18, 2013, 11:44:33 AM »
If deep down you knew that this was ok, you wouldn't have felt the need to bring it up to seek validation.

The way I see it, you took out student loans and have simply decided not to even though you easily could. You've found a legal loophole to crawl through but you're violating the spirit of the program.

So, you're choosing to retire early and let the rest of us pick up the tab. In the MMM spirit, a face punch is in order.
Just to clarify, I asked RoG to comment on this situation because it came up on another forum where he was asking for advice on just this loophole.

I believe that those of you accusing him of behaving unethically are judging him as if there's a universal standard of ethics to cover these situations.  I do not agree with "universal standard".  I think that you may have a higher ethical standard than him, and that you're unfairly applying it to him.  That's your own self-imposed problem, and for your sakes I hope you're willing to live up to that standard. 

His decision to use IBR takes care of him and his family while following the rules.  If there's any "harm", it's all in your perception of being required to pay back a govt subsidy.  That requirement does not exist-- it's a subsidy.  The only standard here is the legislative code, and we've shown that it's fairly straightforward in its definition.  He qualifies under that definition, and he is satisfying its terms. 

If you did not want people following the rules as they're written, then you need to make new rules.  Of course it's much easier to shame someone for not elevating their behavior to a more stratospheric level, at least from your perspective.

Tetsuya Hondo

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #131 on: October 18, 2013, 12:42:48 PM »
I believe that those of you accusing him of behaving unethically are judging him as if there's a universal standard of ethics to cover these situations.  I do not agree with "universal standard".  I think that you may have a higher ethical standard than him, and that you're unfairly applying it to him.  That's your own self-imposed problem, and for your sakes I hope you're willing to live up to that standard. 

His decision to use IBR takes care of him and his family while following the rules.  If there's any "harm", it's all in your perception of being required to pay back a govt subsidy.  That requirement does not exist-- it's a subsidy.  The only standard here is the legislative code, and we've shown that it's fairly straightforward in its definition.  He qualifies under that definition, and he is satisfying its terms. 

If you did not want people following the rules as they're written, then you need to make new rules.  Of course it's much easier to shame someone for not elevating their behavior to a more stratospheric level, at least from your perspective.

Paying back your loans is an exceedingly low bar for moral behavior.

As for making new rules, people complain about the bureaucratic nature of government and the litigiousness of society, yet this is a perfect example of how this comes about. You cannot legislate away every possible shady behavior that people do and might engage in. We wouldn't need so much bureaucracy and so much fricking legislation if people could uphold at least the lower bars of ethical behavior and societal norms. That approach is great for lawyers, bad for the rest of us.

dragoncar

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #132 on: October 18, 2013, 01:07:05 PM »
You can't compare avoiding taxes to avoiding repayment of a student loan. The govt takes taxes by force, a student loan is a voluntary contract someone entered into.

Sure I can!  Both are maximizing your wealth within the confines of the "contract."  If I have enter a contract with bob to paint his house for $100, then I tell him hey I only need $50 now, is bob acting unethically to take me up on my offer? 

brewer12345

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #133 on: October 18, 2013, 01:08:00 PM »

Paying back your loans is an exceedingly low bar for moral behavior.


Do you have much experience with the world of corporate finance, most especiallly in the junk world?

Tetsuya Hondo

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #134 on: October 18, 2013, 01:28:35 PM »

Paying back your loans is an exceedingly low bar for moral behavior.


Do you have much experience with the world of corporate finance, most especiallly in the junk world?

So, what you're saying is: two wrongs make a right?

dragoncar

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #135 on: October 18, 2013, 01:35:27 PM »
I believe that those of you accusing him of behaving unethically are judging him as if there's a universal standard of ethics to cover these situations.  I do not agree with "universal standard".  I think that you may have a higher ethical standard than him, and that you're unfairly applying it to him.  That's your own self-imposed problem, and for your sakes I hope you're willing to live up to that standard. 

His decision to use IBR takes care of him and his family while following the rules.  If there's any "harm", it's all in your perception of being required to pay back a govt subsidy.  That requirement does not exist-- it's a subsidy.  The only standard here is the legislative code, and we've shown that it's fairly straightforward in its definition.  He qualifies under that definition, and he is satisfying its terms. 

If you did not want people following the rules as they're written, then you need to make new rules.  Of course it's much easier to shame someone for not elevating their behavior to a more stratospheric level, at least from your perspective.

Paying back your loans is an exceedingly low bar for moral behavior.

As for making new rules, people complain about the bureaucratic nature of government and the litigiousness of society, yet this is a perfect example of how this comes about. You cannot legislate away every possible shady behavior that people do and might engage in. We wouldn't need so much bureaucracy and so much fricking legislation if people could uphold at least the lower bars of ethical behavior and societal norms. That approach is great for lawyers, bad for the rest of us.

They put means testing in legislation ALL THE TIME.  In fact many states supplement federal means tested programs in order to remove or limit the means testing.  It's very hard to believe this was unintentional.

Paying back loans you are not required to repay is charity pure and simple.

brewer12345

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #136 on: October 18, 2013, 01:37:39 PM »

Paying back your loans is an exceedingly low bar for moral behavior.


Do you have much experience with the world of corporate finance, most especiallly in the junk world?

So, what you're saying is: two wrongs make a right?

No, I am asking:

Do you have much experience with the world of corporate finance, most especiallly in the junk world?

Tetsuya Hondo

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #137 on: October 18, 2013, 01:53:04 PM »
No, I am asking:

Do you have much experience with the world of corporate finance, most especiallly in the junk world?

So, what you're saying is: everyone else is doing it?

I really can't believe so many of you will go through the ethical acrobatics to try and explain this away as anything other than it is.

So, rather than going around in circles through increasing planes of moral relevancy, I need to get back to my work. These flesh-eating drugs aren't going to sell themselves.

[By the way, what's up with all the 404 errors? Did MMM miss a bill?]

brewer12345

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #138 on: October 18, 2013, 02:08:29 PM »
No, I am asking:

Do you have much experience with the world of corporate finance, most especiallly in the junk world?

So, what you're saying is: everyone else is doing it?

I really can't believe so many of you will go through the ethical acrobatics to try and explain this away as anything other than it is.

So, rather than going around in circles through increasing planes of moral relevancy, I need to get back to my work. These flesh-eating drugs aren't going to sell themselves.

[By the way, what's up with all the 404 errors? Did MMM miss a bill?]

Nope.  I am asking:

Do you have much experience with the world of corporate finance, most especiallly in the junk world?

beltim

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #139 on: October 18, 2013, 02:41:27 PM »
Instead of asking questions, why don't you just make your point?

brewer12345

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #140 on: October 18, 2013, 02:50:06 PM »
Instead of asking questions, why don't you just make your point?

I don't have a point.  Its clear by now after 100+ posts that nobody posting will change their opinion on this subject.  I was merely curious as to whether Hondo had any experience in corporate finance/junk where default/not paying back loans is a business decision.

beltim

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #141 on: October 18, 2013, 02:51:47 PM »
Instead of asking questions, why don't you just make your point?

I don't have a point.  Its clear by now after 100+ posts that nobody posting will change their opinion on this subject.  I was merely curious as to whether Hondo had any experience in corporate finance/junk where default/not paying back loans is a business decision.

Are you talking about companies that stay in business?

brewer12345

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #142 on: October 18, 2013, 03:03:23 PM »
Instead of asking questions, why don't you just make your point?

I don't have a point.  Its clear by now after 100+ posts that nobody posting will change their opinion on this subject.  I was merely curious as to whether Hondo had any experience in corporate finance/junk where default/not paying back loans is a business decision.

Are you talking about companies that stay in business?

Usually in one fashion or another.

beltim

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #143 on: October 18, 2013, 03:09:44 PM »

Are you talking about companies that stay in business?

Usually in one fashion or another.

Can you give some examples?  The companies that I know of that default on their loans end of going through bankruptcy.

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #144 on: October 18, 2013, 03:11:01 PM »
This thread has gotten so long and so crazy I just couldn't take reading everything through so sorry if I'm repeating something.  It does seem like Root and others on this thread have a version of ethics that says "if enough people agree something is okay then it is okay".  I don't agree with that system and I don't agree with his choice in this instance.

Ceding the decision of what is ethically right or wrong to any government is not morally sound.  Let's try and make decisions based on some system of ethics outside of "if it is legal it is ethical".  Some people can choose Kant, some people can choose Jesus, some can choose Felix Adler, but all are better choices than letting politicians define your morality for you.

brewer12345

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #145 on: October 18, 2013, 03:18:14 PM »

Are you talking about companies that stay in business?

Usually in one fashion or another.

Can you give some examples?  The companies that I know of that default on their loans end of going through bankruptcy.

When a corporation defaults on its borrowings (loans or bonds) there are a variety of possible outcomes:

- bankruptcy (which can result in liquidation of the business or they can come out anew a la GM, American Airlines, etc.)
- prepack, a form of bankruptcy in which a reorganization is agreed to before the default and then blessed by a bankruptcy court after which the company resules operations
- recapitalization, whereby new investors inject fresh capital into the business
- debt for equity swap, where the lenders become the owners without the benefit of bankruptcy court
- sale of the business

In all of these cases, choosing to default/not pay back the debt is a business decision, with no moral implications.

beltim

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #146 on: October 18, 2013, 03:25:05 PM »

Are you talking about companies that stay in business?

Usually in one fashion or another.

Can you give some examples?  The companies that I know of that default on their loans end of going through bankruptcy.

When a corporation defaults on its borrowings (loans or bonds) there are a variety of possible outcomes:

- bankruptcy (which can result in liquidation of the business or they can come out anew a la GM, American Airlines, etc.)
- prepack, a form of bankruptcy in which a reorganization is agreed to before the default and then blessed by a bankruptcy court after which the company resules operations
- recapitalization, whereby new investors inject fresh capital into the business
- debt for equity swap, where the lenders become the owners without the benefit of bankruptcy court
- sale of the business

In all of these cases, choosing to default/not pay back the debt is a business decision, with no moral implications.

Yes, I'm aware of what can happen in default.  I intended to ask for examples of specific companies, but I can see how one could misread my question.  Anyway, we'd be having a very different discussion if RootofGood were going in bankruptcy instead of early retirement.

Also, you can't simply assert that choosing to default has no moral implications.  Most people, including me, strongly disagree with that assumption. 

brewer12345

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #147 on: October 18, 2013, 03:29:04 PM »

Are you talking about companies that stay in business?

Usually in one fashion or another.

Can you give some examples?  The companies that I know of that default on their loans end of going through bankruptcy.

When a corporation defaults on its borrowings (loans or bonds) there are a variety of possible outcomes:

- bankruptcy (which can result in liquidation of the business or they can come out anew a la GM, American Airlines, etc.)
- prepack, a form of bankruptcy in which a reorganization is agreed to before the default and then blessed by a bankruptcy court after which the company resules operations
- recapitalization, whereby new investors inject fresh capital into the business
- debt for equity swap, where the lenders become the owners without the benefit of bankruptcy court
- sale of the business

In all of these cases, choosing to default/not pay back the debt is a business decision, with no moral implications.

Yes, I'm aware of what can happen in default.  I intended to ask for examples of specific companies, but I can see how one could misread my question.  Anyway, we'd be having a very different discussion if RootofGood were going in bankruptcy instead of early retirement.

Also, you can't simply assert that choosing to default has no moral implications.  Most people, including me, strongly disagree with that assumption.

You are entitled to your opinions, certainly.

Ask any lender or bond investor (especially those who traffic in junk) if they assume that noone they lend to would ever default.  They all know that there is risk of default, plan for it going into the deal (if they have an ounce of sense) and price the loan accordingly.  The borrowers never make any promises that things will always go well, and there is explicit discussion of what happens if the obligor default spelled out in the loan docs.  You really think they see any of this in moral terms?  If they do, they are in the wrong business.

Lans Holman

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #148 on: October 18, 2013, 03:40:11 PM »
I don't think bankruptcy makes a good analogy for all those reasons Brewer just mentioned.  This would be more like running up a big credit card bill for a bunch of fancy dinners when you know you're about to file for bankruptcy.  (Not sure if that even works, but hopefully you'll get my point.)  Yes it's legal, yes it might be the rational decision for that individual.  If I ever found myself in that situation I can't say that I wouldn't be tempted, and if a friend of mine did it I wouldn't hold it against them.  This isn't about me trying to hold myself up as some kind of paragon of moral virtue, as Nords was suggesting.  There's just no way it's not a total jerk move to borrow a bunch of money, promise to pay it back, have the ability to pay it back, and not pay it back.  Doesn't matter who you borrowed it from.

beltim

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #149 on: October 18, 2013, 03:44:49 PM »

Yes, I'm aware of what can happen in default.  I intended to ask for examples of specific companies, but I can see how one could misread my question.  Anyway, we'd be having a very different discussion if RootofGood were going in bankruptcy instead of early retirement.

Also, you can't simply assert that choosing to default has no moral implications.  Most people, including me, strongly disagree with that assumption.

You are entitled to your opinions, certainly.

Ask any lender or bond investor (especially those who traffic in junk) if they assume that noone they lend to would ever default.  They all know that there is risk of default, plan for it going into the deal (if they have an ounce of sense) and price the loan accordingly.  The borrowers never make any promises that things will always go well, and there is explicit discussion of what happens if the obligor default spelled out in the loan docs.  You really think they see any of this in moral terms?  If they do, they are in the wrong business.

"Assuming that no one would ever default" is a strawman in no way equivalent to whether it is moral to default on a loan when one has the ability to pay it back.