Yale Suing Former Students Shows Crisis in Loans to Poor

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http://www.bloomberg.com/news/2013-02-05/yale-suing-former-students-shows-crisis-in-loans-to-poor.html


Christopher Capozziello/Getty Images
Yale University is among colleges suing former students for defaulted Perkins loans, which are earmarked for students with extraordinary financial hardship, court records show.

Needy U.S. borrowers are defaulting on almost $1 billion in federal student loans earmarked for the poor, leaving schools such as Yale University and the University of Pennsylvania, with little choice except to sue their graduates.

The record defaults on federal Perkins loans may jeopardize the prospects of current students since they are part of a revolving fund that colleges give to students who show extraordinary financial hardship.

Yale, Penn and George Washington University have all sued former students over nonpayment, court records show. While no one tracks the number of lawsuits, students defaulted on $964 million in Perkins loans in the year ended June 2011, 20 percent more than five years earlier, government data show. Unlike most student loans -- distributed and collected by the federal government -- Perkins loans are administered by colleges, which use repayment money to lend to other poor students.

“If you borrow to go to school, it may not be just the government that ends up coming after you if you can’t pay,” said Deanne Loonin, an attorney with the National Consumer Law Center, a nonprofit advocacy group in Boston. “We offer credit very easily.” If the student doesn’t benefit financially from the education, “the government or the school comes after them very aggressively.”

[JPZenger]

1. Program is set to expire in a couple years; Obama wants to replace it

The entire Perkins program is scheduled to expire in a couple years, and all of the remaining funds are supposed to be returned at that time to the US Govt.

Pres. Obama has proposed re-constituting it with an emphasis on providing funding to colleges that meet certain performance measures, such as graduation rates, moderate tuition rates, etc.

If people have the ability to repay their Perkins loans, but do not, they are screwing over younger students with need.

[KamaAina]

2. Appalled member of the Yale College Class of 1985 here

[liberalhistorian]

3. Perhaps you and other similarly-minded

Yalies could somehow get together and formally express your sentiments to the Yale mucky-mucks, with implied threats to withold future donations? Perhaps you could form an alliance to do something about this? Colleges listen to alums, and that might have an impact on stopping this bullshit.

Whenever my alma mater calls begging for donations (which seems to be every damned week, never mind that it's been over two decades since I earned my BA) I advise them that I don't like a lot of their current policies and I will not be donating for that reason.

[bigapple1963]

4. um..

isn't it federal law which requires the colleges to recover these Perkin loans?

[KamaAina]

5. I could

except that, in my case, the threat of withholding donations would ring hollow, as I have not made any owing to the fact that I have never made as much as 40,000 American dollars in any given year.

[aikoaiko]

6. I'm really surprised they don't sell the debt.

Why would a school risk the bad PR?