New bubble only this could be worse than housing bubble

[lonestarnot]

http://www.latimes.com/news/opinion/commentary/la-oe-harkin-profit-colleges-20100713,0,1016400.story

For-profit colleges and the threat of a new bubble
Students are taking out loans that they may not be able to repay, and some fear massive defaults.

Haven't we heard this story before? It features a high-pressure sales force persuading consumers in search of the American dream to go deep into debt to purchase a product of often dubious value. Default rates are sky high. Taxpayer money is squandered. Top executives walk away with fortunes.

This sounds like a description of the subprime mortgage industry, which came crashing down two years ago. But what I just described is the reality at many for-profit colleges.

Their recruitment ads are ubiquitous, offering visions of a cap-and-gown graduation, followed by placement in a well-paying job. At their best, for-profit colleges deliver. Many provide top-quality, innovative options for students who want to pursue postsecondary education while managing work and family obligations.

http://www.latimes.com/news/opinion/commentary/la-oe-harkin-profit-colleges-20100713,0,1016400.story

[maryf]

1. any way to make a profit...

make sure the people get in debt as young as they can!! Oh, and give those kids credit cards too! Let's set them for life...

[lonestarnot]

2. A debt that cannot be escaped by BK. Bad news not just for the young, only for the stupid who are

pressured into such suck.

[maryf]

5. BK?

sorry I'm dense, what is BK, Burger King?

[Arctic Dave]

6. Bankruptcy.

[Hosnon]

20. Student loans can be discharged in bankruptcy. It's difficult, but possible. nt.

[bluestateguy]

3. I always urge people not to take out student loans

Or if you do, only a small amount, and only if you are already pretty much debt free.

[lonestarnot]

7. NEVER!

[Taitertots]

32. I always urge people to be born to rich parents

Student loans are the only way millions of people will have access to higher education.

[Orrex]

4. It won't be a problem

Why not? Because these loans can't be discharged, so the lenders will hound borrowers literally unto death, adding on as many fees and charges as they can until the final repayment amount is significantly more than double the amount borrowed. And, since the victim... I mean borrower can't escape the debt through bankruptcy, you can be sure that Sallie Mae et al will be there at every turn to hack off a big chunk of the victim's earnings to make sure that the student loan industry remains low-risk and hugely profitable.


Student loan providers are much, much worse than any predatory credit card company you've ever heard of.

[lonestarnot]

8. Hence the bubble deet te dee.

[Orrex]

10. How so?

The lenders will be able to gouge the life out of the borrowers, who will be permanently unable to escape their debt.

And, since the lenders can seize a percentage of the borrowers' wages, the lenders will get their money.

The only ones who will suffer are the borrowers, and of course they don't matter in the media's big picture, as long as the lenders are chugging along!

[lonestarnot]

12. Did you see how many were ready to default? Can squeeze blood from a turnip.

[Statistical]

17. Default for student loans simply means delayed repayment.

Unless you end up homeless for life they will get the money eventually.

The inability to discharge the debt via bankruptcy and no limit on statute of limitations means it really is a life debt.

So you can't pay, eventually you will get a job. 10 years from now, 20, 30, eventually you will have money. The fact that it never goes away means student loans are unlike any other form of debt on the planet.

No debt should be immune to discharge and statute of limitations.

[Orrex]

18. Student loan debt is exactly equivalent to indentured servitude

Unless you plan to spend the rest of your life totally disabled, homeless off the grid, or as an expatriate, they'll get the money from you.

Tell me another form of legal debt that's similarly inescapable.

[CoffeeCat]

9. I am living proof of what you say...

I went to college, but took time off to work. I then returned to college. Somewhere along the
line, something went terribly wrong with my student loans. They kept saying that they didn't
receive paper work which showed that I was a full-time student again. I kept sending it. Dozens
of times. My loans defaulted when I was a full-time student. I had to finish college. So, I
did so. I couldn't repay the loans immediately after graduating, but they wouldn't work with me
or listen to me regarding my "default" that was due to the face that these bozos claimed I
didn't send them forms that proved I was in school full time.

Bottom line--my penalties, interest and other fees ballooned my student loans to 100k. That
was ten years ago. I've been paying off $1,200 per month--an aggressive pay down--so I can
get this thing off my back within the next five years.

IT'S TORTURE!!!!! My kids have done without so much. We have all sacrificed to pay these
people $1,200 per month. I have five years to go.

Slowly, we plod along.

And by the way--when I was a full-time student--the Director of Financial Aid said that some
of these lenders (mine was the Loan Servicing Center our of Lawrence, KS) were notorious for
claiming that they didn't get forms, etc. Since the loans are guaranteed by the govt, if I
default (and they did default me), the government pays the Loan Servicing Center in full.

Nice little game they've got going, isn't it? The Director of Financial Aid went to a conference
and testified about these unfair, shady practices and she used my situation and my name as an example.

The entire system admitted that I was robbed. However, nothing was EVER done to help me or to get the
penalties and interest removed.

If I could give anyone any advice, it would be to NOT take out these loans. Work three jobs if you
have to--to pay for college. Not only does the debt saddle you--the abusive relationship these lenders
have with you can be life altering.

46k left to repay. I'm thinking about getting a second job to pay if off earlier. We have no credit
cards and we pay cash for our cars. Everything we have goes to these student loans.

People...THINK before you take out these loans. These loans are not as simple and carefree as they want
you to believe.

[lonestarnot]

13. Are you grandfathered into the 10 year repayment then closure?

[Orrex]

19. You seem fond of this repayment plan; can you describe how it works, for those less familar with it?

[lonestarnot]

27. Borrow fed money, work in social work for a period, pay on borrowed fed money

for 10 years, anything past that period is forgiven. Thank you President Obama!

[Orrex]

29. Is that effective retroactively, or only for new loans?

If the former, then that's terrific!

If the latter, then a great many victims of predatory college loans are still fucked.



But I thank you for the response in any case!

[lonestarnot]

33. I am not certain whether or not it grandfathered anyone's loans. Check it out though for sure.

[CoffeeCat]

22. I'm not familiar with...

...a "10-year repayment then closure."

But I'm interested in hearing more about it!

I'll do the Google. Thanks for mentioning it. I probably
don't qualify. No one has ever mentioned this to me. But
I'll check it out.

Thnx! :)

[EstimatedProphet]

30. I have the exact same story, with the exception that mine went to $50K

I know exactly where you're coming from.

Stupid fuckup repubs go on and on about defaulting student loans. Well, here's a thought: how much better would the economy be if I had an extra $700 per month to spend on a house? Or a car? Or any number of things? Thumbscrewing people with student loans the way the banks do takes money directly out of the economy.

[AtomicKitten]

11. My son was sucked in by the Art Institute here in SF.

Financial Aid hooked him with predatory private loans from Sally Mae without first exploring federal aid. He attended two years and then changed his major. None of his credits were transferable; they lied. He had to start over elsewhere.

The piece de resistance is that Goldman Sachs ended up buying the AI to cut out the middle man so to speak. A new venue to plunder.

[lonestarnot]

14. What about the 10 year program, can he do that?

[AtomicKitten]

16. Repayment program? He's going to school full time so his payment is deferred. nt

[EstimatedProphet]

31. I'm interested in this 10 year program myself

Got a source for more info?

[hunter]

15. Lots of college graduates will be dropping out of the conventional economy.

This will have interesting and unintended consequences.

[Festivito]

21. Let's not forget to add in charter schools. Lot's to borrow, later to pay. /nt

[EnviroBat]

23. I had to quit, drop out of college.

I was borrowing money for school from these fucking predators when I developed an anxiety disorder. I was so stressed about the money I was borrowing that I literally couldn't finish college. Now I'm saddled with about 46K in loans, and these bastards NEVER let up. They call your friends and family if they can't get reach you, and that's even after you provide them with a current number. I've got one loan that the payment amount is different every month. I've though about writing letters to senators and pleading with them to rein this crap in some how, but I know that most politicians don't give a shit about this issue which effect millions of Americans. I never agreed to a life of indentured servitude. They want 240 payments which means if I don't pay back much more than the minimum payment each month, I'll be looking at a 60,000 payoff. Bullshit, bad return on investment if you ask me. If I was a corporation, I could simply default and walk away. Something has got to be done about this.

[lonestarnot]

28. Keep your voice loud!

[XemaSab]

24. They're after me

I've only been employed half the time since I graduated.

Like, I don't HAVE your money, people. x(

[Liberal_in_LA]

25. amen! Thanks for posting this.

[SoCalDem]

26. Our son's friend got caught up in one of these scams

ended up with massive debt, and his "degree" did not help him land a "big job"..in fact he went to work for his uncle. It's the same job he had before & during his schooling, only now he cannot afford his own apartment or car because of the $40K repayment he owes:( I think he went to ITT Tech.