Posted on 08/10/2013 9:30:26 AM PDT by reaganaut1
The Consumer Financial Protection Bureau performed a genuine public service this week by alerting taxpayers to the tidal wave of student loan defaults coming their way. Too bad the intention was also to alert student borrowers to ways they can avoid repaying those loans.
A new analysis by the bureau shows federal-backed student loan debt surpassing $1 trillion, which is nearly double what it was at the start of the Obama Presidency. As college costs have continued to balloon in tandem with federal loan and grant subsidies, students have assumed more debt. Many jobless Americans have also sought asylum from the Obama economy by returning to school.
A lot of these student borrowers upon entering the real world find themselves unable to make payments on their gargantuan loans, notwithstanding low interest rates. The bureau reports that nearly seven million borrowers or 13% of outstanding loans are in default, defined as not making a required payment for 270 days (nine months).
That headline default rate doesn't include the 8.9 million borrowers who have postponed or temporarily reduced their payments. The Department of Education allows borrowers to defer payments for up to three years if they're experiencing economic hardship or can't find full-time work.
All told, about 40% of out-of-school borrowers have defaulted or delayed their payments, which is a de facto default. The government's reported default rate will likely climb when borrowers whose temporary amnesty expires have to resume payments on their loans, which in the meantime are accruing interest.
But deadbeats need not fear. According to the bureau, "there are ways to avoid default on a federal student loan even when you think you can't afford your payment."
(Excerpt) Read more at online.wsj.com ...
It can't be because they aren't paid enough, or the benefits aren't good enough.
But I would still like to know the details.
I understand -- and my son is in the same predicament -- but you can bet the devil knows something about those details ;-)
No pun intended :-)
And their children...and grandchildren...
Even if a very mentally disabled (unemployable) person attempts to discharge a student loan under the current bankruptcy code, Sallie Mae will spend multiple times the value of the loan in attorneys’ fees to fight it.
Maybe the optimal solution to this developing crisis would be to means-test the ability of borrowers to repay their loans. Those loans that cannot be fully repaid then become fraud claims against the schools, which would be compelled to disgorge the tuition and fees they accepted after pushing worthless degrees on naive students. A lot of state-funded schools would then have to be privatized or closed, because the fraud claims would accrue to the state taxpayers.
They have a means testing provision by which the student can ‘reduce’ the amount of the repayment for a period, but it is difficult to prove up and the outstanding balance keeps growing.
The whole system was gamed by the schools who basically counseled students to take out loans without regard to the probability of repayment based on the utility of the degree.
After all, how many PHD degree majors in English Romantic Poets are going to pay off with jobs that will sustain these loans? They think they are going to find successful well-paying jobs in academia so they can stay in the cocoon.
However the schools are now narrowing the track toward full-time professorships by exploiting the hordes of English and Literature majors with BA, Ma, and PHD degrees as part-time adjunct professors at $10 per hour. I know the system because I was one.
The east way is to get as many credit cards as you can, take out as much money in cash advances as you can, purchase high ticket electronics and resell for half price at swapmeet,craigslist,... then pay your student loans off with the money. Turn around and file Bankruptcy on all the credit card debt. That’s the american way.
loanconsolidation dot ed dot gov
(Federal consolidation)
There are different repayment plans. But I did it b/c our income dropped a lot.
You can fill out some basic info and there is a calculator on there that will tell you estimated payments under each plan, the years to pay off, interest, etc. That way you can see that you’re not getting extra things tacked on there!
Good luck!
Thanks for the info!
“Maybe the optimal solution to this developing crisis would be to means-test the ability of borrowers to repay their loans. Those loans that cannot be fully repaid then become fraud claims against the schools, which would be compelled to disgorge the tuition and fees they accepted after pushing worthless degrees on naive students.”
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I think that is worth considering! I have become convinced that much if not most of the modern “education” system is little more than a scam. I have spoken to recent university graduates who AND I AM DEAD SERIOUS, could not pass the test to get INTO high school from my era. Forget about passing high school finals, most would flunk miserably. We have young university graduates in this area taking jobs that would have required AT MOST a public high school diploma fifty years ago, in many cases they are taking jobs that would have been done in the past by high school dropouts. I have seen ads for jobs requiring a degree and offering a starting pay that would, after adjusting for inflation, amount to less than the 1963 minimum wage. It is outrageous that young people spend four or more years and a ton of borrowed money and end up with less real education than their grandparents got for free in the public school system.
The way you say it it sounds terribly dishonest but in reality is no more so than the way our government is operating.
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