Student Loans in America (layoffs, economy, money, government)
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And the government is only encouraging loan taking to get that college degree.
Yet another money sucking industry born from "going into debt".
Get rid of student loans and go back to cash. Watch those credit hours come down in price once they have thousands of empty classes because kids can only afford one class a semester.
I really wish people would start doing it. Complain while standing in line to get "your loan" doesn't fix the problem.
I'll go a step further - Get rid of the Department of Education (DOE) altogether and the Department of Health and Human Services (DHHS) getting involved in federal loans for physicians and nurses.
Repeal all legislation that created the corruption in the first place. Whenever private industry gets involved in federal funding you end up with corruption. If private industry didn't want the risk of loaning to students, don't do it. Passing federal laws to simply guarantee a bank has no risk, does nothing to protect students. When you have a government that rubber stamps an exemption to the 6 percent interest rate cap rule under the Soldier and Sailors Relief Act, simply because it is a student loan, there is something terribly wrong with that picture. Get rid of the anti bankruptcy laws that put student loans in a separate category without the same rights and standards used to discharge any other unsecured debt.
The colleges, the government, the banks, all know the laws they have created that protect them. They care nothing about students.
If you take the time to look at the history of student loans, you will find when DOE allowed Student Loan Marketing Association (now Sallie Mae, Inc) to become a Government Sponsored Entity in 1972, it vastly contributed to increased tuition costs and out of control student loan balances. They compounded interest and applied it to the amounts borrowed by the student. It made it impossible to pay these loans back in a reasonable period of time or if ever, because of this interest compounding practice. A student's loan balance never went down, even after making monthly payments year after year. In most cases, the amount borrowed with added interest increased two, three times amount now owed by the student. Add in the government 100 percent guarantee for payment of loans to SLMA if students couldn't pay, (this included not only the original amount borrowed, but all added interest) it has become the most corrupt entity to both students and taxpayers alike in our
history.
No student should become an indentured servant to a bank or the federal government for 20-30 years of their adult working life, simply for wanting to educate themselves.
Students may not want to hear this, but the worst
thing you could do for yourself is get a student loan,
under the present terms that exist - and that includes
under the recent reauthorized Higher Education Act and
the new Student Loan Bill.
I agree with you, bring it back to cash only, GI Bill, Prepaid State College Plans, and if lucky you get a grant or scholarship. Stop the marriage between the government, Sallie Mae, and banks. I want them to get a divorce
Here's a thought, start saving now and pay off that mortgage
early. Maybe even retire in that house. The days of
selling your home upon reaching retirement age, at an over inflated price and using that as your "retirement money" are over. At least for the next 3-5 years anyways.
This notion that we need to be indebted to banks from
early adult hood to retirement has to end.
Student loan debt is becoming a rampant problem in this country. Student loan debt equals nearly $1 trillion and it is monopolized by 10 student loan corporations. There is more student loan debt than credit card debt and is rapidly approaching residential mortgage debt.
An analyst for the student loan industry even admitted that by 2020, they predict that the problem of student loan debt will have a very noticeable negative impact on the US economy.
People in their 20s and 30s cannot buy houses, save for retirement, or even start businesses without significant hardship due to student loans.
Part of the problem is the high cost of undergradate and graduate education. The other part of the problem is high interest rates, even for government loans.
Another problem is unfairness in the student loan system. It has been stripped of all consumer protections, even discharge in bankruptcy. The corporations that run the racket have no reason to change unfair business practices since they are fully protected.
It is not uncommon for people to owe $100,000 or even $200,000 at the age of 25 or 30 at 8.5% or 12% interest rates. Think undergrad, grad school, etc. Currently only 40% of student loans are in active repayment.
It is not uncommon for people to default on these loans. 20% of the loans made in 1995 are in default and student loan burdens then were much lower than 2005- 2010.
There are stories of people owing $500,000 due to defaulting, penalties, and interest fees. They cannot get rid of this debt in bankruptcy and they have had everything they owned seized, their bank accounts seized, and wages garnished. There is very little recourse one has because there are no consumer protections.
Most other countries make interest free or very low interest loans. The interest charges have made young Americans unable to spend money to jumpstart this economy. Normally the young jumpstart the economy. But today, this is no longer possible.
While ostensibly the money will be repaid eventually, forgiving a portion of this debt will give more people more money to spend they would not pay on interest (i.e. unborrowed or unrealized money).
What are possible solutions to this problem?
Great thread. Student loans and the culture of students-living-on-vast-credit is indeed a part of the problem of the pie right now. We have a vast, eligible, ready and willing working force in their mid 20's in the states but what do they find? Over saturation. High competition for very low paying jobs. What are the up and coming generations going to say/or do about this?
If students from a particular school have a high default rate, the fed should stop loaning money to students that attend that school.
The problem with that is the colleges and student loan lenders manipulate the default rate numbers by putting students in forbearance, extended forbearance, hardship deferment, unemployment deferments, military deferment, residency deferment, etc. while all along adding interest onto a student's debt. They hardly ever adhere to the 270 day in default rule. They want student to think they are doing them a favor, but in reality, it's just too profitable for them to put them in default right away.
This thread is a huge FAIL. Guess the OP missed where Obama's administration nationalized the student loan industry.
Next.
Want to lower the cost of college education? Cut tenure practice for any and all colleges and universities that accept federal funding; or, cut their federal funding.
Good Lord. The student loan industry is not nationalized. You can still get the same federal loans (albeit, more of them) that you could before. They may be administered by different people, but they were always considered federal loans.
And you can still get the same, high interest, entirely private loans if you're not getting enough out of your federal loans. Let's please stop laboring under the misconception that the federal government owns all the student loans.
Frankly, some of the recent legislation has been good for me. About a year ago I got two percentage points knocked off the interest rate of the smaller loan I took out for the last year of my undergraduate education for having always paid on time, because of some education bill or other. That was nice!
Student loan debt is becoming a rampant problem in this country.
...
What are possible solutions to this problem?
Pay the debt.
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