2001: A Student Debt Odyssey. My Debts, Part Three.
In this edition, we’re building a bridge to the twenty-first century! How did I send payments on my student debt while I was living in Japan? Why did I move to Japan? And is default really that scary?
I’m back with Part Three of an ongoing series on my personal journey with student loans. In this edition, we’re building a bridge to the twenty-first century! I’ll describe how I made my first payment on my student debt, via international mail, before the internet made the process slightly less paper-intensive. What I learned from this experience is that the internet does not make life easier; instead, the internet transfers work from the powerful back onto the less powerful.
Once again, I want to tell you why I’m doing this long(-winded) series of essays. My purpose here is to tell the story of my student loans. My hope is that this story will show you a glimpse into how much time, energy, and pain the student loan industrial complex has cost the American people over the past several generations. Let me preface this by saying, once again, as clearly as I can: I'm one of the lucky ones. This story is, in a lot of ways, a “best case scenario” for how student loans should work. For more on why I’m writing this, please check out Part One if you missed it, and here’s Part Two. Most importantly, even if you’re about to hit the big red X in the corner to get outta here, before you do that, please listen to this conversation between two of America’s leading scholars studying the student debt crisis: Tressie McMillan Cottom and Louise Seamster.
Big In Japan
I graduated from Albion College in May 2001. By August, I had packed my bags and moved to Japan. Thanks to the generosity of the Japanese people, I joined the staff of Ritto Prefectural High School in Shiga Prefecture as an Assistant Language Teacher. This happened despite the fact that I had no knowledge of the Japanese language, I didn’t know anyone who lived in Japan, and at the time I admittedly had only a casual interest in Japanese culture and history. Why, then, did I uproot myself from Michigan to go all the way across the globe?
Well, to this day, I’m not entirely sure about all the many reasons why I made this drastic move. But a significant part of the reason why was because I was scared about defaulting on my student debt.
You see, when I graduated from college in 2001, I became responsible for repaying over $17,000 in loans that I had accrued during my four years at Albion. (Adjusted for inflation, in 2021 dollars, I had about $26,000 in loans upon graduation.) This included over $1,000 of capitalized interest that had accrued while I was in school on my “unsubsidized” loans. (See Part Two of this little newsletter series for a discussion of “subsidized” loans.)
Many people, of course, have debt burdens much higher than mine. But $26,000 (in today’s dollars) felt like an awful lot to me in 2001. I was terrified enough to get on a plane and fly from Detroit to Tokyo if it meant that I could be sure I’d make that first student loan payment on time.
The Shiny Folder of Fear
I first grappled with the extent of my debt just as I prepared to celebrate my college graduation in 2001. As part of my graduation year, in April 2001, I was required to meet with a representative of the Michigan Guaranty Agency to sign paperwork related to my loans. I have a dim recollection of going into a large room on campus, where I met with a man in a business suit. I was presented with a shiny folder that contained a stack of papers. On the back of the folder, my name was handwritten in cursive on a label: “Love, Erik.” I still have this folder, today, more than twenty years later.
I took this folder with me to Japan, and I kept it safe as I moved from there to California, and then again as I’ve moved from place to place time and again to pursue my career. This folder became the center of my loan management process—I kept adding papers, correspondence, receipts, statements. It became a totem of my struggles to keep on top of the student loan maelstrom.
But on the day that I met the folder, in 2001, its primary role was as a prop to signify the tremendous moral imperative that required me to repay my student debts.
“I understand my student loan(s) must be repaid”
The central purpose of my pre-graduation meeting in April 2001 was what the formal “exit interview” for my student debt. I recall the polite man in the business suit presenting me with one of those paper forms with a white copy on top, a yellow copy in the middle, and a pink copy at the bottom. The pink copy remains tucked inside the shiny folder, still today.
In order to get through graduation at Albion, I was obliged to fill out this “exit interview” form. I had to provide the student debt industrial complex with the name, address, and telephone number of my nearest relative not living with me, in addition to the name and contact information of two personal references (my parents).
Then, the “exit interview” form had a list of statements that I had to check off, one by one. In about a dozen different ways, the numbered statements reaffirm my binding, eternal, and permanent obligation to repay my student debt. Even after checking all of those statements off, as a final reminder, the very last sentence on the form just above my signature, in bold letters, restates the purpose of the “exit interview” as simply as possible: “I understand my student loan(s) must be repaid.” I signed my name, just beneath that statement, on April 24, 2001.
Making Student Debt As Confusing And Difficult As Possible
The shiny folder presents itself as an “organizer,” and it contains a thirty-page-long guidebook. The guidebook, from the Michigan Guaranty Agency, is neatly organized and almost completely unintelligible. Even today with my 40-year-old, Ph.D. eyes, I struggle to understand the sections in this book on “Managing Your Student Loans,” and “Budgeting.” I mean, just look at this first page.
“As of July 1, 2000, the Federal Stafford loan Master Promissory Note (MPN) replaces the common Federal Stafford application and promissory note, which you might have completed previously to receive a student loan…. You do not have to sign a MPN if your school or guarantor changes….”
What? Is this? As a 21-year-old-soon-to-be-college graduate, how would this possibly help me understand the loan repayment process? (It didn’t.) Worry not, though, because the contact information for the Student Loan Ombudsman’s Office appeared right there, just in case I had any “disputes.”
In all seriousness, this first page of the useless “guidebook” for student loans should have signaled to me a key trick in the student debt industry’s playbook. They constantly change the rules, and it is the responsibility of the borrower to stay on top of everything and just keep repaying. Otherwise, it’s a quick trip to default city.
At the time, I did not understand how quickly and how often the rules for student debt would change. If I had studied this “organizer” more closely, I might have noticed that whatever the deal was when I took my first loan out in 1997—that deal had changed when I graduated in 2001. The first words in the folder (“As of July 1, 2000…”) talk about how the rules had just changed. Looking at back of the pink “exit interview” form, it shows how the rules for deferment (taking a break from payments) had changed in 1987, a different set of rules existed for 1987 until 1983, and then yet a new set of rules existed for 1993 (until 2000?). I should have known that I was in for quite an odyssey in the years ahead.
Over and over again in the twenty-plus years that I spent repaying these loans, I received notices of significant changes that required me to spend time and/or money to figure out. Just after I thought I’d gotten a handle on how to make my payments, the student debt industry would throw some new rules and procedures at me. I’ll talk more about this in the next issue of this newsletter. I couldn’t process any of this in 2001, though, I was having enough trouble just figuring out where to send my first payment.
So, for now, let’s get back to Japan.
Moving to Japan
Why did I uproot my life and move to Japan in August 2001? At the moment I graduated, I started living with fear: fear of defaulting on my loans. Moving to Japan seemed less risky, incredibly, than starting graduate school.
I’m really only showing you a few small snippets of all the fun and exciting papers tucked into the 2001 scary folder of debt. Everything in here emphasized my responsibility to repay—and it impressed upon me how it would be a moral failure if I did not make every payment on my student debt. This made me ravenous for a job with a good income.
When the opportunity to move to Japan to teach English came through for me, in early 2001, my eyes locked in on the salary offer: over three MILLION yen per year. Yes: the job paid something like ¥3,500,000 per year. Imagine yourself at 21: wouldn’t you be excited to make ¥3,500,000 per year? In U.S. dollars, my salary was about $33,000 (adjusted for inflation: about $44,000 in 2021 money). That felt like a lot of money for this freshly minted college graduate!
Despite my best efforts to ignore the scary shiny folder, I remember feeling tremendous pressure to have a high enough income to pay that looming student loan bill. The opportunity in Japan meant guaranteed good money, for at least a year (and maybe more).
I also applied to graduate schools in sociology in 2001, and I was fortunate enough to be accepted. I spoke with my mentor and my parents, and I did seriously consider going straight to graduate school, which would have meant turning down the offer to teach in Japan. If I’m being honest, I didn’t only think about the money and the loans. My mentor said something to me I’ll never forget: “Go to Japan. You’ll be a more interesting person if you do.” I hope he was right about that, but the brutal truth is that the student debt pushed me toward the millions of yen that awaited me if I went to Japan.
I accepted the very generous job offer from Japan, and made preparations to take off. It would be two (amazing and fulfilling) years before I came back to live in the states.
My First Student Debt Payment
After graduation, I had six months to get my job started, to sort out my bank account, and to learn how to send payments to my new loan servicing company, your friend and mine, the one and only Sallie Mae. Remember, this is 2001—and internet banking did not really exist yet. I had to use envelopes, checks, and stamps to make payments. From Japan.
Helpfully, the scary shiny folder contained a booklet of payment coupons with the mailing address for where I could send my first repayment check. All I had to do was: 1) deposit my first paycheck in my local Japanese bank, 2) figure out how to wire some of those yen (how much? I guess enough for one loan payment) to my U.S. bank account, 3) fill out the student loan paperwork, 4) write the correct mailing address for Sallie Mae on an envelope, 5) fill the envelope with a check drawn from my U.S. bank account, and finally, 6) get the correct air mail postage at my local Japan Post office (even though I did not speak Japanese) with enough time to ensure the check arrived before the deadline. Simple!
Incredibly, I pulled this off. And I have the official records to prove it, still available to download from my account at Sallie Mae (which is now called Navient, for the moment—they’re changing their name again in 2022 after they were forced into bankruptcy by an organized group of student debtholders).
My first payment posted to my account in November 2001 for $200 (or about $300 in 2021 dollars). I did not default on my student debt.
I made every payment from November 2001 until I started graduate school in September 2003, converting yen to dollars, via airmail at first, and eventually through the Sallie Mae website. This continued until I was eligible for deferment while I was back in school. And that takes us to the financial crisis of 2008, which is right about the time I finished grad school with my Ph.D.
Next Time on the Student Debt Saga
Next time on the newsletter: for me and many others with student debt, “the 2008 financial crisis” has more than one meaning. My student debt payments were about to start up again, just as the global economy started to “crater,” thanks to our friends on Wall Street (who live right next door to Sallie Mae, right?).
Thanks for going on this 2001 student loan odyssey with me. I’ll be back with Part Four: The 2008 Financial Crisis in Student Debt, shortly after the new year. Stay safe and enjoy the end of this crazy, amazing, ridiculous, and terrifying year: 2021.