NY Times: That Student Loan, So Hard to Shake

[marmar]

That Student Loan, So Hard to Shake

By JONATHAN D. GLATER
Published: August 23, 2008


MOST people struggling to pay off their student loans keep quiet about it. They do not want to acknowledge that, perhaps in a fit of naïve, youthful optimism, they borrowed more than they could handle.

Then there is Alan Collinge, who for years has described his struggle with tens of thousands of dollars in student loan debt to anyone who will listen. He has appeared on “60 Minutes” criticizing Sallie Mae, the nation’s largest student lender, and has been quoted in the pages of this and other newspapers attacking loan companies.

“I’m sort of the complaint box for the industry,” says Mr. Collinge, who runs a Web site called StudentLoanJustice.org out of his spartan apartment here.

Student lending is a big business, one that has been the subject of many complaints over the past two years after revelations of questionable ties between lenders and colleges’ financial aid officers. More recently, tight credit markets raised the possibility that some students might not be able to borrow to go to college in the fall.

But much less attention has been paid to what happens to students after they borrow. Lenders who make loans guaranteed by the federal government can more easily take steps against borrowers — like garnishing wages and benefits — than they can with other kinds of unsecured consumer debts. And all student loans, federally guaranteed or not, are extremely hard to get rid of in bankruptcy proceedings, more so than credit card or other debt. .......(more)

The complete piece is at: http://www.nytimes.com/2008/08/24/business/24loans.html?src=linkedin

[sicksicksick_N_tired]

1. My education,....served me poorly. Why is a student load treated different from any other?

Unless you prove seven years of payment on a student loan, it's excluded from bankruptcy.

I know a lot of people who's ONLY credit blemish is that nagging student load which carries NO forgiveness.

*LOL* I was GOING to edit the subject line and replace "load" with "loan",...I decided to leave as IS,...a "load" :rofl:

[Freddie Stubbs]

5. It is treated differently to give an incentive to the bank to loan the money to you

Otherwise it would be a very risky proposition to loan money to an 18 year old who could drink a lot of beer and drop out of school after one year.

[SoCalDem]

2. Instead of starting grown up life with a degree in-hand

and ready to go, 20-somethings start out now with crushing debt...at the very time in their lives when they should be debt-free and able to kick up their heels a bit & enjoy life..

In MY day, many college grads backpacked across Europe for a year or did odd jobs locally, so they could take their time settling into a career that would hold them for the rest of their working lives.. they partied, they surfed in the summer & skiied in the winter...they enjoyed single life, free of encumbrances..

These days, they graduate and immediately take ownership of payments often exceeding rent & car payments. they MUST take a job...ANY job..or two or three shitty jobs..just to service that debt..

they start their adult lives as indentured servants, locked into a dismal future where they will NEVER outlive their debt (most of them).. It's little wonder then, why so many end up living on credit cards, amassing even more crushing debt.. If you owe $60K in student debt, and your big job only pays you $40k a year, and you want to have what other people have, what's 10K a year more debt?

I know of a person who maxxed out credit cards paying student loans.. In an odd way, that helped her, because when she ended up losing her job and her house and ended up bankrupt, at least the student loans had been paid off...

[GreenPartyVoter]

3. Too bad we don't do what some of those European nations do, which is

have the gov't pay for schooling like they do the healthcare. Imagine starting out right after college with zero or very low debt. Heck, those kids could maybe even think about buying a house someday, which would be a decent investment.

We lived through 15 years of paying of student loans (they did not go away with the bankruptcy) and our "house" is a trailer because we can't afford one at the crazy prices they go for around here. I would love for my kids not to wind up in th same situation as we did, but frankly I think they will be worse off than we are now.

[Occulus]

7. The question we should be asking is, "How did it get this way?"

I've no idea, but if you do (or anyone else), please take your time. I think this is a question that is worth more discussion.

[aikoaiko]

8. Move to Georgia -- tuition is free for high school grads with B grades.

Plus we need more Democrats down here.

[Liberal_in_LA]

9. Students go to college with the goal of getting an education to help their families.but.

the graduate with so much debt they can't help their families even if they get a relatively decent job.

[JDPriestly]

10. It's the main reason our country is not able to compete with other countries.

Higher education is pretty much free for the truly qualified in Europe and a number of other countries. Naturally, their graduates can work for less than Americans with the same qualifications.

The oppression of debt is unbearable. And some young women are having to choose between running up debts for undergraduate and a professional or graduate degree and having kids.

I often wonder what happens to people who start, say law school, complete a couple of years, and then drop out. They have enormous debt. How do they qualify for a job that pays enough to pay off the debt. That must be horrible pressure.

Also, you get out of school undergrad or grad, and you have to have a steady high income right away. You can't afford the risk of starting your own business. You can't do non-profit work or government work unless your family is wealthy and can pay your debts for you or paid for your education to begin with.

The class divide is perpetuated. Kids whose parents have money don't have debt and can choose their professional path without just having to take the highest paying job they can possibly find. Poor parents don't have the choices regardless of their grades (unless they are so gifted and lucky that they got great financial aid and avoid debt for that reason).

It's an awful, unfair system. It makes a joke of equal opportunity for all. It insures that many of the brightest and best never realize their potential.

Student loans are criminal. After all, our entire society benefits when kids with ability (and adults going back for second careers) can fulfill their potential.

[backscatter712]

12. There's an idea...

Student loans hard to get rid of in bankruptcy?

Simple solution. Get some credit cards, use them to pay down the student loans, then declare bankruptcy and have the credit card debts wiped out.

[SoCalDem]

13. She did not plan it that way, but it did end up being that

I'm pretty sure they wrote some "stuff' into the new law to prevent it now though.. This was many years ago, and her debt was only about $5k..

[marmar]

17. I know so many people who got college loans....then paid the rest of their tuition on credit cards.

It's a shameful system.

[Divine Discontent]

4. so many of us are suffering huge student loan debt.... :( eom

[aikoaiko]

6. A lot of students get told 'do what you want or makes you happy and the money will follow'.

Maybe, maybe not.

Student loans are an investment -- a nonguaranteed investment. There's nothing sinister about it. Some people take out too much to get a low paying job, some people are not talented enough to get a good paying job even if they graduate, and some people are just unlucky.

I am grateful for the opportunities my students loans gave me even though I'll be paying forever since I consolidated and stretched out the payments.

[JDPriestly]

11. If student loans are an investment, then people should be able

to deduct all the cost of that investment (not just a little of it) from their income taxes.

After all, if you run a business and you have to invest in equipment to run your business, you can deduct the cost of the paper or at least not pay tax on it.

[aikoaiko]

16. I don't really see education as a business, but it can stil be viewed as a investment.

I'm fine with raising the amount my interest is used as a deduction, but then again, I've never been unhappy with the amount my interest on college loans lowered my tax burden.

[FirstLight]

14. You know, the "financial aid officers" at schools are just as bad ...

Loan sharks, that's what comes to mind.

1993-96 I was a single mom working and going to school trying to get through my AA (ya, took 4 years instead of 2 because I constantly had to "drop out" to work and keep us afloat)
Meanwhile, every fall as I signed up for Pell Grants - I was pitched to apply for the MAXIMUM amount I cold get for a loan as well,
now, as a single mom in her 20's, on welfare trying to find a better life, I needed all the extra help I could get..

AND the pitch was, "By the time you graduate, your income will be soooo much better, you will easily afford the payments."

I managed to defer for years as I struggled to go from aa to BA... and I couldn't do it.
Too hard to move with a small child, too hard to commute and hold a job while trying to drive to school over 60 miles away on the mountain roads in the snow, and no additional support with childcare... not enough hours in the day to make it work. So all I could do was work as a secretaryreceptionist for $10-12 per hour PART TIME...

Got remarried, fell into an abusive relationship where HE controlled EVERYTHING...and the loan went into default.

fast forward 4 years, I finally get "free" from my prison, call the Dept of Ed back and ask of they can give me a special deferrment due to the extenuating circumstances, I can provide therapists reports, etc as proof...
nope. The only way I can get back into deferment is to make $350 per month payments (no less, no negotiations, and this is from more than one person, several calls over time) for one year without fail.
Hell, I can barely pay reduced rent with HUD's help...$350 a month may as well be a million

I have had EVERY Earned Income Credit taken by them since I have left my ex, even my ex's child support from taxes has been absorbed, Economic Stiumulus? nope, they took that too...

Question: If I am making low enough wages to warrant the MAXIMUM amoumt from the EIC...what makes them think I have the career I was told I would have "by the time I graduated" ...the Govt suffers from MAJOR DISCONNECT!!!!

still no BA
still earning less than $10,000 a year
and working my ASS off to do better!!! :cry: :angry:

[FirstLight]

15. K & R & bookmark too! ...n/t