There are more than 4,000 four-letter words in the English language and the one that brings me — and others, I am sure — the most dread is: debt.
I think like most Americans, I have no problems paying bills. I grew up understanding that not paying your bills meant you were a leech who was pretty much worthless to society and yourself.
But I also grew up understanding that to pay those bills, there must be a means to pay them that is as consistent as those bills coming in. Yet, as many of us know, debt is elastic; you can try to run, you can pull away from it, but it always snaps you back.
So, debt has always been a mixed-bag for me, as it had to be paid even as outside forces beyond my control interfered and brought about, to me, the most dreaded eight-letter word in the dictionary: interest.
And that is what this column is all about. It stems from watching people over the decades wrestle with debt incurred by things they had no control over, such as layoffs, hospitalization and other life-altering challenges; myself included.
And since I tend to look at things a little differently than a lot of people do, I pose a very simple question that is outside the norm: Why isn’t the interest on debt put on pause when people are facing financial hardships due to no fault of their own?
I know that sounds like a ridiculous question when the obvious answer is the person incurred the debt and is responsible for it. But I ask because the interest on loans is the Grim Reaper of debt.
I don’t write columns as a piece to slide comfortably into society’s predetermined puzzle; I write columns about real people and real situations, and sometimes you have to throw out the “X’s” and “O’s” because they don’t include the human cost.
Outside of mortgages, people being held accountable for what amounts to relatively small debts that are 20, 30 and 40 years old and have ballooned out of control because of interest makes no sense to me.
And while creditors will certainly work out arrangements, the bottom line is the interest continues to pile up. I just don’t see how it helps the economy, but I do see how punitive it is as it shreds people’s lives and stagnates growth.
Of course, mulling on a question such as this is as old as the system that created it — and I got a few chuckles from a professor I talked to on Thursday when I posed my simple question to him.
But I got the impression the chuckles came because it is a question that Fred McKinney, a professor of entrepreneurship and strategy and the Carlton Highsmith chairman for innovation and entrepreneurship at Quinnipiac University, had been asked or heard before.
“I understand what you are getting at but that is completely against what capitalism is about,” he said. “It is all about the risk.”
McKinney said the risk works both ways and stated the obvious: the question I pose as a solution, while well meaning, would create a catastrophe as business would push that cost onto those who are paying.
Of course he is right, but it is something I have wondered about since I first heard the stress and despair of “How am I going to pay my bills?” from people crushing pink slips or hospital invoices in their hands.
But while McKinney is steadfast on interest accumulated on debt as fair play, he does not share that philosophy when it comes to the $1.6 trillion student loan debt crisis he says was brought on by for-profit schools, and he sees worker’s pay as the root of the problem that is not being corrected.
“We need solutions,” he said, noting this is a problem around the world, not just in the United States. “We are not getting paid right. That is the real issue we face. We need businesses, politicians and regulators on the same page.”
And maybe a common sense solution is coming, as canceling student loan debt has become a hot debate in the presidential race and also is drawing attention from philanthropists and corporate brands.
Progressive think tanks, such as The Aspen Institute, Demos and the Center for American Progress, each have released papers examining the potential impact of debt forgiveness, according to a report on CNBC.
Even publications such as The American Conservative are calling for market discipline and say “hopelessness is festering into radicalism” due to student loans, while commentary in Forbes takes an opposite view, noting in part that “total” student loan forgiveness plans are mostly a bad idea.”
Tell that to the 45 million borrowers who owe student debt.
According to a survey conducted by TD Bank and reported by CNBC, “... the average student debt total was $26,495. The average debt payment was $579 a month and the average monthly take-home pay was $2,689.”
So, with low pay and the high cost of living, something’s gotta give.
As one study noted, the student-loan crisis is an “experiment in debt-financed higher education that has benefited some, been harmless for others, but has left a trail of financial wreckage for many.”
And it is not kidding. I am one of those standing on a trail with nowhere to run, nowhere to hide and a situation that has no hope of ever being resolved.
My student loan was taken out during the late 1970s for $1,200 and I won’t go into the reasons why I could not satisfy the debt at that time — but my longtime readers should be able to figure it out.
Since it went into default in the early 1980s, I have never received an income tax check return, as all of them went to pay for that $1,200 debt.
And I will go to my grave never receiving a tax return as the last time I inquired, I still owe more than $11,000 on that $1,200 debt — and the interest continues to pile up.
After all these decades, in the United States of America’s capitalist system, that is considered fair play.
Or is it?
Interest? It’s the engine that compounds life.