Najib we have a Proben Here: The Student Loan Debt Suicides

This story was produced by the independent Economic Hardship Reporting Project, co-edited by Barbara Ehrenreich and Gary Rivlin.

One evening in 2007, Jan Yoder of Normal, Illinois noticed that her son Jason seemed more despondent than usual. Yoder had been a graduate student in organic chemistry at Illinois State University but after incurring $100,000 in student loan debt, he struggled to find a job in his field. Later that night, Jason, 35, left the family's mobile home. Concerned about her son's mood, Jan Yoder decided in the early morning hours to go look for him on campus, where a professor she ran into joined her in the search. The two of them discovered his body in one of the labs on campus and called campus police at 8:30AM. 32 minutes later, Jason was declared dead due to nitrogen asphyxiation.

When the story was posted on several different sites in 2007 and 2008, the Internet chatter was not always kind to the dead man. While many expressed great sympathy for Yoder and ranted against the student lending system, others were quick to invoke the "personal responsibility" argument -- "it was his fault;" "why did he take out that amount of loans?;" "Mr. Yoder took out those loans . . . he had an obligation to pay them back." -- and denigrate him.

His mother, of course, saw it differently. While she was preparing for Jason's funeral, student debt collectors were still phoning her about the money her son owed. As reporter David Newbart wrote in a 2007 article for Chicago Sun Times, she was gruff when confronted by these calls. "You are part of the reason he took his own life," she told them and then hung up the phone.

Suicide is the dark side of the student lending crisis and, despite all the media attention to the issue of student loans, it's been severely under-reported. I can't ignore it though, because I'm an advocate for people who are struggling to pay their student loans, and I've been receiving suicidal comments for over two years and occasionally hearing reports of actual suicides. More people are being forced into untenable financial circumstances as outstanding student loan debt has surpassed $1 trillion. And people simply aren't able to pay all the money they owe. In the past few years, the rate of defaults for federal loans has increased at an alarming rate. According to the Department of Education, those recent graduates who began repayments in 2009, 8.8 percent had already defaulted on their federal loans. That compares to 7 percent in 2008. Currently, 36 million Americans have outstanding federal loans. I can't help but wonder how many of those millions are feeling distressed or suicidal, or how many have attempted suicide because of all that debt hanging over their heads.

I first started appreciating the depth of the problem of suicidal debtors a few years ago, with a post on my blog, All Education Matters, entitled, "Suicide Among Student Debtors: Who's Thought About It?" I was stunned by the responses. In comment after comment, people confessed to feeling suicidal. One person wrote, "I was very actively looking into suicide until I got on anti-depressants. Now I have to take happy pills every day to keep the suicidal urges at a minimum level. You are correct to ask the question. Many of the folks who are incredibly deep in law school debt will end up killing themselves. I think, in the next 1-3 years, we are going to see absolutely massive numbers of law school graduate suicides." Said another: "Yes, I thought about suicide a lot over the past few years. I take anti-depressants and I had been smoking cigarettes for months but I did end up quitting. The big issue with that is I want to be an opera singer so [smoking] was my way of giving up. I'm trying to do what I can to get through this... and praying for an answer."

Some of the people who write to me are quite specific about how they plan to kill themselves. One person said, "I think about jumping from the 27th floor window of my office every day." For suicide prevention experts, this is a dangerous sign, as it means that the person has actually devised a plan to carry out the act. In recent months, the notes have increased, and if anything they are even more desperate. One individual admitted that he thought about killing himself all the time. Another even claimed -- which was beyond disturbing -- that prior to writing his comment, he had been sitting in his car, with the garage door shut.

There have been no epidemiological studies attempting to find a correlation between student loan indebtedness and suicide or suicide attempts, but experts would not be surprised if one exists. A statement published on the website by the American Association of Suicidology (APS) notes, "There is a clear and direct relationship between rates of unemployment and suicide. The peak rate of suicide in 1933 occurred one year after the total US unemployment rate reached 25% of the labor force. Similar findings have been documented internationally. At the individual level, unemployed individuals have between two and four times the suicide rate of those employed." The document adds, "Economic strain and personal financial crises have been well documented as precipitating events in individual deaths by suicide."

I spoke to Dr. Peter Kinderman, a clinical psychologist at the University of Liverpool, who has written about the disastrous mental health effects of recent austerity measures in Greece. When I told him about the suicidal notes that I'd been receiving from desperate debtors, he said this is to be expected. Kinderman had served on the Department of Health's Ministerial Advisory Group in Great Britain, from 2010 to 2011, which issued areport predicting that the European economic crisis would have a significant impact on mental health. Suicides and suicide attempts have increased dramatically in several European countries. Not surprisingly, the problem seems particularly acute in Greece and Italy, two countries that have been hit hardest by austerity measures, and have seen a jump in suicides. In 2011, Andreas Loverdos, the Minister of Health in Greece, announced that suicides had likely increased by 40% in the first five months of that year when compared to 2010. The numbers are equally as grim in Italy. A taxpayer rights group in Rome called Federcontribuenti insists that suicides have become an increasing problem in the country. In April of 2012, the group asked prosecutors in Rome to investigate 18 suicides in Northern Italy. The president of the organization, Carmelo Finocchiaro, calledfor an investigation to see whether those who should be preventing this "social massacre" are doing their part.

Suicide, Kinderman insists, is not the result of "a brain malfunction." He added, "There are psychological consequences when economies fall into decay." Under circumstances of severe economic stress, he told me, "Feeling suicidal is understandable. It is not a disease, it's a problem."

It turns out I'm not the only one who receives suicidal notes from student loan debtors. There is a loosely connected group of bloggers who call themselves the scambloggers to underscore their perception that U.S. legal education system is a scam, churning out many more graduates than the economy can possibly employ. The "scamblogs" receive heavy traffic and each post elicits hundreds of responses from morose, depressed, and increasingly hopeless law grads.

The majority of law grads now wind up deeply in debt and jobless. As Brian Tamanaha, a law professor at Washington University Law in St. Louis, says, "My book vindicates the basic view of the scambloggers that attending law school is a highly risky proposition that turns out badly for many students, who end up with a huge debt and no law job" -- or any job, for that matter, that generates enough income to manage the debt." A surprising number of law grads post suicidal remarks publicly on scambloggers' sites each month. One example: in August of 2011, a man who identified himself as Jordan posted his plan to light himself on fire outside of the Capitol:

I plan to douse myself and light myself aflame on the

Capitol steps, to draw attention to the dire situation of the millions

of indentured educated citizens who, like me, have no options, plus a

predatory banking system coming after us.

There is no political solution to this problem . . . I will be

setting myself on fire, and the student debt debacle will hopefully

come to the forefront of public consciousness.

The Pakatan Rakyat-led Selangor state government was the winner following the short-lived freeze of study loans imposed by the Federal government on students of Universiti Selangor (Unisel) and Selangor International Islamic University College (KUIS), said PAS's Research Centre director Dzulkefly Ahmad.

Rubbishing the claim by Higher Education minister Khaled Nordin that the episode proved BN had been right in insisting that the controversial loan scheme under the National Higher Education Fund Corporation (PTPTN) should remain, Dzulkefly said it was BN that had "fizzled out in the play" which was supposedly to 'test' PR’s policy to offer free tertiary education at federal level if the coalition wins the coming polls.

“But, before the time fizzled out, BN withdrew its decision (to freeze). They know we are capable, that was why they had to pull the brakes. I believe if BN had continued the freeze, we (PR Selangor) will be able to help those students and give maximum impact to PR,” he added.

The decision to freeze the study loans was quickly called off one day after Selangor Menteri Besar Khalid Ibrahim announced that the state would dispose Unisel's assets and use part of the RM30 million it could raise to help students who had been denied financial help by the Federal government.

The minister, Khaled, however, quickly claimed victory in the fiasco by citing an ‘appeal’ by Unisel to prove that PTPTN was necessary.

“(Unisel) appealed to me and stated PTPTN was in fact necessary, so there is no reason not to agree how important PTPTN is.

"PTPTN’s press statement said the temporary postponement is to study the matter, not for a permanent freeze. (The) opposition acknowledge the importance of PTPTN, free education is just a mere promise,” he wrote on his Twitter account.

But Dzulkefly pointed out that it was obvious that BN was now on a 'panic mode' due to people's confidence in PR’s policies, especially when they hit right on target group, the youth.

“It had distinguished us from BN at the time the people were moving to new politics, they (BN) are still stuck in the old politics of vengeance. When we offered free education, we offered it together with the revamping of budget as a whole. We strategize the budget inline with the development of human resources,” stressed the Kuala Selangor member of parliament.

The abrupt end to the freeze appeared to be yet another policy about-turn by the BN this year, following its decision not to pursue civil servants’ new salary scheme (SBPA).

Fortunately, there have been no reports of self-immolation outside the Capitol building.

Like me, individual scambloggers must deal with private emails from suicidal people. Nando, a scamblogger popular for his sharp tongue and scatological contempt for law schools, tells me he has also received numerous suicidal notes. He talked about how hard it is to receive these notes, especially if you're not a trained therapist or counselor. "I've talked to a couple of guys on the phone, and you try to deal with the positive, and I say, 'You don't want to do anything rash." He recalls one particular conversation with a suicidal man, and sighed, "I mean, I am not a drinker, but one guy made me want to go out and drink a beer." In some cases, Nando has suggested leaving the country in search of work.

It isn't hard to find student debtors who feel like they've been crushed by the system. At 47, John Koch is still living with his elderly parents in Oyster Bay, Long Island. Although he has a law degree, Koch has earned a living as a house painter for many years. When I ask about his living arrangement, Koch explains that he has in own space, "I'm downstairs. They are upstairs." He pauses, however, adding wearily, "But I mean, I am 47-years-old. I suppose in one sense, in your parents' eyes, you're always going to be a child." John laughs, and continues after clearing his throat, "Of course, I can come and go and do whatever I please. But you're still there, it's um... it's little things, you know... you have something, like, I have my hobbies and I leave some things in my apartment, and my mother comes down and says," he imitates her in a high-pitched tone, "'Oh, you can't do that. You're makin' a mess.'"

John breathes heavily, "I mean, I am there for my parents. My father will be 80, and my mother is 73, and they are having health problems, and I am there if there is a trip to the ER. So that's good for them." There's silence on the phone. John breathes in deeply and laughs again when I ask, "So, it's good for them, but what about you?"

With a strong Long Island accent he exclaims, "It's... you know... it's your independence you're talkin' about! And from where I came from -- " His voice trails off and after a pause, he adds, "I was married, living in a home, with my wife, and living... I guess that's the American dream -- to have your own home, a family, children possibly."

Koch originally borrowed $69,000 in 1997. The majority of that money was loans for law school, seemingly, he says, to "better myself." After he graduated from Touro Law School, Koch struggled to find steady employment and eventually he defaulted on his loans. He was immediately slapped with $50,000 in penalties. For years, he had been filling out deferment forms every six months to buy himself more time but in 2009, Sallie Mae declared him in default. At the time of this writing, Koch owes over $320,000. That sounds staggering but it's hardly unusual. Once a person defaults on a student loan, the balance grows exponentially, with interest compounding on interest, penalties and fees. By the time he "retires," in 23 years, Koch figures he will owe close to $1.9 million. He can't get even subprime credit, he tells me, and it's not like there's any way out of his trap: student loan debt cannot be absolved through bankruptcy.

Koch struggles with suicidal thoughts and admits to self-destructive behavior, such as heavy drinking and cigarettes. Eventually he channeled those feelings into a blog that draws more readers each month. In January of 2012, though, the Suffolk County police paid his parents an unpleasant visit to inquire about their son's suicidal comments and posts

I spoke to Koch a day or two after the police showed up at his home. He was still rattled. "My parents discovered my blog, and so did my sister," he said after the police visited his home. Koch surmises that the police were former Touro law students who were tipped off about the suicidal posts. The log that upset his sister the most, Koch told me, included a "series of 5 poems about 5 fanciful kids that go to law school and all end up killing themselves 5 years later."

Koch launched a new site (Esqpainting) after the police visit but disbanded his online writing projects in early June. He decided that blogging is no longer a good outlet for him. Yet for Koch the agony continues. Parroting the voices of the people who have created this situation for millions of student loan debtors, Koch snarled, "'You know, you have this debt, and we're gonna make it bigger, and we're never gonna let you out, and... and... the rest of society is going to cover it for you. And we're never going to let them out either.'"

I spoke to Koch a few months ago while he walked his dog and smoked a cigarette. He described his life as pretty much over, and he echoed that sentiment a few weeks ago. "So much for achieving the American Dream." These days, Koch watches as the interest piles up. He sighs when we hang up, and says, "I mean, why punish the debtor with greater debt?"

The rise in household debts – which now stand at around RM667 billion – can lead to more bankruptcy cases as consumers are unable to repay loans, especially during times of economic stress.

Insolvency Department deputy director-general Haini Hassan said the top reasons for household debts, namely housing, personal and hire purchase loans, correlated with the top three reasons for consumer bankruptcy.

"The order is slightly different but the top three reasons are exactly the same; it shows a correlation between household debts and bankruptcy.

"For household debts, according to Bank Negara, housing loans make up the top cause, followed by car and personal loans, whereas in bankruptcies, car loans top the list, followed by personal and housing loans," she said in an interview with theSun.

A total of 19,167 bankruptcy cases were registered by the department last year, up from 13,855 cases in 2008.

Bank Negara in its annual report for 2011 stated that household debts to gross domestic product (GDP) ratio was 75.8%, up from 69% in 2006. Based on the revised GDP figure of RM881 billion, this roughly amounts to RM667 billion.

Of that figure, 45% of all household debts, or around RM300 billion, were in residential property loans alone.

While acknowledging that high household debt level is a cause for concern, Malaysian Rating Corporation Bhd chief economist Nor Zahidi Alias told theSun that it will only really start to affect economic growth if the ratio reached a level of 85% of GDP.

"It is not surprising to see that household debts correlate directly with consumer bankruptcy cases.

"The higher the debt level, the more likelihood of the debtor not being able to repay the debt," he said.

Nor Zahidi warned that Malaysia is at the level where it should be more cautious about the household debt problem.

"As we have seen from past experience, high household debt level can lead to a collapse in consumer sector as happened in South Korea in 2003.

"For that reason, Bank Negara has been cautious and introduced prudent guidelines for lending in January this year to ensure that the problem can be contained in the next few years," he said.

Among the measures put in place included tighter lending guidelines for banks, including using net income calculation method instead of gross income when computing the debt-service ratio for potential borrowers.

The number of bankruptcy cases in Malaysia has shown an increasing trend for the past few years.

Minister in the Prime Minister's Department Datuk Seri Mohd Nazri Abdul Aziz told Parliament on June 14 that between 2005 and April this year, the Insolvency Department saw 116,379 people being declared bankrupt.

Besides the three reasons for bankruptcy, social and corporate guarantors as well as business loans and credit card debts made up the other major causes of bankruptcy.

Haini said the reasons for the increase in bankruptcy cases were varied.

"Sometimes there is mismanagement of funds, but with the recession, there has been loss of employment or the effects of recession that weren't foreseen.

"The effects of recession only start to show after a year or so," she said, adding that it was the lower income group who would be most vulnerable.

Haini advised people to always spend within their means, and set aside savings before thinking about spending or taking out loans.

"The important thing is to work with your disposable income figure in mind, not your gross income, as that can be misleading because there are financial obligations," she said.

Haini also urged people who genuinely cannot service their loans to come forward as there is better protection for registered bankrupts under the law.

Once a bankrupt under the law, the Insolvency Department becomes the bankrupt's trustee and facilitates payment to the creditors, meaning the debtor cannot be harassed, she said.

What will be the consequence of a Euro Collapse? One picture says it all. According to the forecast, the immediate effect of the collapse of the euro will be ((scroll below for blown-up pic):

> Decline in economic output

> Increase in Unemployment rate

> Increase in consumer prices

Actually how likely will be the collapse of the Euro?

According to officials from Deutsche Bank, the ‘scenario is very likely’ and German companies are already preparing for the possibility of doing business in pesetas and drachmas again.

Whatever pacts and deals will be torn apart when the Euro disintegrates. Business contracts and deals will have to be reassessed and many companies are expected to go into bankruptcies.

All of Europe will not be spared, Germany will also be much affected and is estimated to lose at least 500 billion euros and can be shown in the following chart.

Source : Spiegel

Effects will spread like Wildfire

The effects will spread like a Tsunami Wave and according to Economists from ING Bank that “ in the first two years following a collapse, the countries in the euro zone would lose 12 percent of their economic output.

This corresponds to the loss of more than €1 trillion. It would make the recession that followed the bankruptcy of investment bank Lehman Brothers seem like a minor industrial accident by comparison. Even after five years, say the ING experts, economic output in the euro zone would still be significantly lower than normal. ”

And according to the German Finance Ministry “in the first year following a euro collapse, the German economy would shrink by up to 10 percent and the ranks of the unemployed would swell to more than 5 million people“.

How does it affect the Companies and Malaysia?

One of the effect when Southern Europe countries break off from the eurozone will be the implementation of the so called trade barriers. Every country will have to protect its industries and hence tariff on imported goods will be hike tremendously. Moreover, there will be an incentive to devalue their currencies so as to make their exports more attractive.

Another blow to Germany will be the reduced demand of German products due to the price hike caused by the devaluation of their currencies. Germany will be hardest hit if the Euro collapse because it is the largest exporter to Spain and Italy and in fact most Southern Europe countries. Its exports to Italy and Spain accounted to more than 100 billion euros.

Even BMW’s CEO Norbert Reithofer warns that a collapse of the euro "would be a catastrophe," and says that he "doesn't even want to imagine it"

Anyway as of this writing (12.30 am), the Greek's Stock Index Athex Composite has lost more than 7% after Greek Finance Minister resigned and Spain's IBEX dropped more than 3.8%.

Talk about the 'Band Aid' effects of last week's bailout, which failed to calm markets after all.

Malaysia will not be spared either because a lot of Emerging Markets like Indonesia,Thailand,Singapore and Philippines have large borrowings from European Banks.

When they start to repatriate their funds back to Europe, there will be a big hole in our financial market and the effects will be similar to the 'Hot Money' leaving our country not too long ago in 1998!