Debt Slavery 101

The Truth About The American Educational System.

First I’d like to say that I’m not a conspiracy theorist. Probably because I don’t have the time to be one.  All I ask is that you consider the possibility of what I’m proposing.

According to Proverbs 22:7, “The rich rule over the poor, and the borrower is slave of the lender” (NRSV). I was confronted with this scripture and had to make a conscious decision of who was right – my broke finance professor, who taught that debt is a tool, or God, who showed the obvious disdain for debt. Beverly Sills had it right when she said, “There is no shortcut to any place worth going.” – Dave Ramsey

Debt slavery. What does it mean?  But before I answer that,  lets define slavery.

Slavery defined: Wikipedia defines slavery as a system under which people are treated as property to be bought and sold, and are forced to work.

Now lets defined Debt Slavery:

Debt Slavery defined:  Debt slavery is the repaying of a debt through servitude.  Meaning working for that person or institution until your debt have been paid.  Wikipedia describes it as Debt bondage (or bonded labor) is a person’s pledge of their labor or services as repayment for a loan or other debt. The services required to repay the debt may be undefined, and the services’ duration may be undefined. Debt bondage can be passed on from generation to generation.

What’s wrong with that?  I’m glad you ask!

Lets examine one scenario of a college bound student: You go to school with the hopes of becoming a viable member of society, meaning landing a great job, making good money, getting married and buying a nice house for the many children you’re planning to have – the America dream.

But in order to go to school, you need money for tuition, room and board, books, etc, unless of course you find enough scholarships and grants to cover your education or  choose to go to a free school.

Most college bound students, statically about 50% of students cannot meet the school’s financial requirements with only scholarships and grants. So they borrow  to pay the rest.

By the time you graduate you owe $20,000, $40,000, or even $60,000  thousand dollars to the government or worse private Loan companies like Sallie Mae.

You finally graduate and find soon after graduation a bill from your student loan company saying you owe $50,000 and your monthly minimum payment is due –  $800 per month.  If you decide not to pay,  your loan will go into default and they’ll report you to the top 3 credit bureau.  Now we all know credit is what makes the world turn.  Without good credit, you are instantly a second hand citizen.

So where do you think your priorities are now?  On finding the perfect job and saving up to buy your first house? Probably not! To protect your credit, you’re likely take any job that will help payoff your debt (pushing to the back burner your dream job or that internship that will get to access to your dream job)

So let’s examine the paying off your student loan idea:

Let’s say you land a job paying $50,000 a year.

The US Government will want their cut at 25% –  leaving you with $37,000 to work with.

Lets take out another 5% to cover your 401K, medical benefits and company sponsor commuter program which leaves you with  $35,625.

Breaking this down by month – diving by 12 gives you $2968.75 per month.  Ok, now lets look at your monthly expenses.

Monthly income : $2968.75


Rent:  $1200.00 per month,

car:  $200.00 per month,

Food: 250.00 per month

Entertainment:  $200.00 per month

Cable and internet:  $120.00 per month

Total income left after living expenses:  $998.75

Not bad right?  but wait, what about your loan payment of $800.00 per month.

Subtracting that from you total leaves you with $198.75 per month for saving for your new house, saving for vacation, buying gas for your new car, etc, etc….

I hope my point is clear here.  You can’t quite manage your future when you’re always trying to manage your past.  It will be very difficult  to take control of your financial future because you are constantly trying to keep up with your bills.

There is something else you need to be aware of.  That $800.00  that you’re paying on your loans every month is probably the minimum payment.   Minimum payments are designed to sustain the loan, not necessarily to pay it off.  So you can be paying the minimum payment on your student loan  30 to 40 years later.    At which time you’re close to retirement and still haven’t gotten that dream house  you wanted before you accumulated all that debt.

I’m telling you this because I want you know understand the cost of your education and the price you will pay if you’re not smart.  Please do not be a victim, take control of your financial future now and do not be a slave to your debt.  It will ruin your life.

Don’t take my word for it: New York Times Debt Portraits

Thank you for reading.

4 thoughts on “Debt Slavery 101

  1. I am 40 years old and graduated from Kaplan University 2 years ago. I am in the situation of trying to pay all my bills while working a full time job that is not in the field of my degree. Every place I apply for turns me down because of the lack of expierence. The best thing that I can tell anyone is to make sure you consolidate your student loans as soon as possible, this saved me about $300.00 a month.

  2. My advise – concerning to obtain an additional education…

    I suggest you obtain a TRADE for EMPLOYMENT; before obtaining further education. One may obtain training and/or certification, which is affordable and usually can be accomplished as you are working in the TRADE. This will ensure that one will have employment and security when ALL else fails.

    Then obtain your additional education, perhaps your MASTERS or Ph.D. accomplishments.

    Good Luck… God Bless…
    K @}-;–

  3. I couldn’t agree with you more. I’m a high school teacher and our school just recently had “College Day”; a day where we are supposed to encourage ALL students to go to college. However, no one ever tells these poor unsuspecting students about the pitfalls of a student loan. Well… needless to say, I gave a presentation on student loan alternatives, and I am hoping that I opened up a few eyes and minds to why they should not take out a student loan. I’m all about helping students make educated choices in their lives. Hey, I’m a teacher. This is what I do. I’m also the founder of Financial Aid Foundation, and my hope is to get enough mentors on board to help educate all of the students out there that may be considering falling into the “student loan trap”. Thanks for listening!

  4. Having had student loans, I decided being a Business Student, that loans is not in my future. I started to pay as I go. I used my American Express Card to pay for classes and pay the bill at the end of the class. The interest rate was lower by 1/2 over the loan company. That was a smart move.
    I had Student Loans and paid them off. My wife did the same thing and we didn’t allow the debt to get out of control. She paid her’s off as well.
    Never let your student loan payment be more than 1/4th your income for the month. Ask yourself, can I pay this loan payment even on unemployment? Over ten years, your odds of being unemployed is great.
    My Daughter on the other hand didn’t listen to Mom and Dad. She amassed a loan debt of over $103,000. I cried when she told me. Her husband amassed a loan debt of over $200,000. Now he’s going for a PHD. He’s unemployed and has been for 10 years. He keeps going to school after school to avoid paying the payments. Pretty dumb huh ?
    Well, I hope his debt doesn’t become my daughters debt.
    What ever you do, pay the student loan payment before anything. This loan isn’t going away.

    I want to know all the Senators names that made the unforgivable part happen? We must vote these shitheads out.

    My advise is to get a trade over going to college. Skill’s go alone way.

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