11 Years After Default, I Am Now Free Of Private Educational Debt

Default is not the end of the world, it just really badly burns.

As of this morning, I no longer have private educational debt from college or law school. Oh, I still owe the federal government a ton of money. But my private loans — loans which I defaulted on back in the day — are now off my ledger.

I offer myself as a “teachable moment.”

In 2007, having left my Biglaw job for over a year, I defaulted on my private loans. I had massive public educational debt (mainly from college) and private educational debt (mainly from law school). Without the Biglaw salary or, really, any salary, I just couldn’t make all the numbers work. I know now that I had some other options besides default, but at the time, young and still functionally financially illiterate, default seemed like the only option as my creditors were asking me for money I simply didn’t have. I knew that I needed to keep paying the federal loans, because… the government. Private loans, I determined, would be the ones I could skate with.

I turned 30 in May 2008. By that point, I was working as essentially an intern with a per diem at a newspaper, and picking up some extra money teaching LSAT prep for Kaplan. My loans were in litigation that would eventually result in a judgment against me.

I was at a pretty low point. I had basically been treated like a gifted person with unlimited potential from the time I had memories, right through my graduation from law school where Alan Dershowitz actually sat with my family and told them nice things about me. Now, two years removed from a job I was fine at but didn’t really like, I was basically being treated like a washed-out drug addict who refused rehab. I had been a “credit to my race” and “one of the good ones.” Now, I was a “lazy,” “shiftless” Negro who could be a data point in a Richard Sander piece about how black people are too stupid to benefit from higher education.

Everybody I knew was aghast when I told them about my loan situation. “Don’t you ever want to have a house?” “Do they still put people in prison for that?” “How can you be so lazy/irresponsible/unethical?” Apparently, my obligations to the banking behemoth Citibank made in my early 20s weren’t a mere financial transaction, they went directly to my moral character.

After my birthday party, I spent the rest of the night in tears.

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A month after that, I put in an application for a writing contest for a website I checked in with to keep up on how much money my peers were still making at the law firm.

I got the job at Above the Law a month before the bottom fell out of the American economy. The job paid less than a third of what I was making when I started at the law firm, just five years earlier. But, it was a job I thought I could be good at and, most importantly, it was a job that I actually wanted.

After the judgment was entered against me, my wife realized that my financial illiteracy would be a millstone around her neck for the rest of her life. She decided to take full control of our financial situation. My job was to write and “sit still, look pretty.”

By 2010, three years after default, we were on a payment plan with the collections agency. The monthly fee did little more than cover the interest without making a dent in the principal, but it was a start.

With that and some low-limit, high-interest rate, patently predatory credit cards that we paid minimum balances on to build a credit history, our credit rebounded to the point where we could pass a credit check on an apartment. For the first time in years, we could move if we wanted to.

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In 2012, we had a child. We started a college fund for him immediately.

In 2014, seven years after my first missed private loan payment, we bought a house.

In 2015, I had drinks with Felix Salmon. He helpfully reminded me that the collection agency had likely written off my debt, and that every dollar I paid them was essentially “found money” to them.

This morning, 11 years after I missed a payment, 10 years after I was judged, 8 years after I started trying to pay the interest, I reached a settlement with, I believe, the third collection agency to own my debt. I will leave the terms undisclosed as to the final payments necessary to close out my private debt, but I’m sure the collection agency is as thrilled to be rid of me as I am.

I’m sharing this because I want people to take two lessons from my experiences:

  • Do Not Be An Indentured Servant To Your Educational Debts. I know so many people who are in jobs they hate because they have debts they can’t pay. THAT IS SERFDOM. You went to school and got the degree to expand your life’s options, not to hamstring them in service to a bank. You have few opportunities in this life to do what you feel you were sent here to do. You have many, many opportunities to make things right with your creditors. Some people might say it’s immoral to skip out on your debt obligations. I say it’s lunacy to wake up every day and go to a job you hate because of a bad financial decision you made in your early 20s or late-teens! Your life as a “deadbeat” will not be easy… but at least it’ll be YOUR life, not the bank’s. I’m Haitian, and in my saddest moments I liked to think: “My ancestors didn’t stab their way out of bondage just so I can pay Citibank their vig.”
  • Marry Well. Having a spouse that can complement your skills, and figure things out that you can’t, is REALLY QUITE HELPFUL, ACTUALLY. While we’re here, marrying a person who means it when he or she says “OR FOR WORSE,” is also key. When you find yourself in dire financial straits, it’s okay to need help, even if those dire straits are of your own making. Hell, especially if those dire straits are of your own making. If somebody in your life or family knows how to financially plan better than you, LISTEN TO THEM. Ain’t no shame in it.

My story is not… advisable. It’s barely replicable. And if it sounds like I’m touting “success,” don’t get it twisted. I still owe the federal government so much money that if Betsy DeVos said she’d cancel out the rest of my federal student debts if I gave a Klansman my kidney, I’D DO IT TODAY. I’m not even joking. I WISH my kidneys were that valuable to anybody.

I turn 40 this year and, unless something very impressive happens, I’ll be making less money at 40 than I did at 27. Which is an inversion of the traditional wealth accumulation trajectory from which I’ll likely never recover. If I had it to do over again, OF COURSE I would do some things differently — because what kind of stubborn fool wouldn’t do things differently if they had the benefit of an additional DECADE OF LIFE to re-examine some choices?

But I don’t think I’ll end my 40th birthday in a puddle of tears and regret. If I had done everything “right” from a pure financial standpoint, I might not have even made it to 40.


Elie Mystal is the Executive Editor of Above the Law and the Legal Editor for More Perfect. He can be reached @ElieNYC on Twitter, or at elie@abovethelaw.com. He will resist.