Since I started covering student loan debt in 2004, one fact has been abundantly clear: Giving away taxpayer money to banks so they can make student loans is bad policy.
Not only does it cost billions of dollars, not only is it unnecessary, but I argue in my new book that the Federal Family Education Loan Program has had some severe unintended consequences, driving up the cost of college and leading to policies that victimized thousands of students.
In the mortgage crisis, the availability of easy money to pay for houses was a huge factor in driving up prices. It hasn't been much talked about, but there's been a credit bubble in education too. Student loans were repackaged & securitized, which drove lenders to market them ever-more aggressively to students and to create new products like the private student loan. Families were not as sensitive as they should have been to price increases, because they had loans to make up the difference. State universities practiced cost-shifting, a major factor in the staggering tuition increases of the past few decades. When state governments cut funding for higher education, colleges raised tuition, and student loans, again, made up the difference.
This reform will also help tame the financial industry's influence in Washington. Student lenders in the past decade grew into a powerful lobby. They forced changes to bankruptcy law in 1998 and 2005 that made it almost impossible for a borrower to escape from federal student-loan debt and private student-loan debt, respectively. Thousands of borrowers are living nightmare lives because of this inflexible law.
Now, thanks to Obama, the student lenders have been broken. Student loans will come directly from the government. Colleges have been preparing for this move for the past year. But there are still important changes to be made before student borrowers can really heave a sigh of relief: bankruptcy protection for student loans is one. Expansion of the Income-Based Repayment program, so all graduates have the right to an affordable repayment plan is another. Reining in the excesses of the private student loan market is a third. And underlying it all: changes to make college more affordable, whether students are paying with loans or not.
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Pres. Obama was handed a giant Mess, from two dragged out wars to Wall St., housing, auto's, education, and climate change.
I disagree with some of his actions, but give him strong marks for pulling the US out of another Republican Depression. If you think this serious recession is bad you should read about the 1930's, when about 25% had no jobs for years.
With unfair trade from China and others, massive debt from Iraq and other blunders, we are facing a decade of difficult challenges. If we pull together, push for innovations like wind or solar power, a smart grid, use natural gas for trucks, etc., we can become stronger and create jobs for millions.
Removing government subsidies from the private market is a good start.....
And, yes, you ARE an ex SM or the like employee. You wreak of it.
"when people don't repay loans,it really hurts students attempting to borrow"
"And don't worry about non payment. They'll find you eventually"
Who says things like that except someone in the business..
Even though private lenders have been subject to many lawsuits (and settled) for sneaky-Pete accounting that affected borrowers, the borrowers have not been relieved or made whole from these illegal acts. Student loan lenders should have all of the FFELP and Private loans audited by a regulatory body to locate all loans that were place in deferment or forbearance without knowledge of the borrower or co-borrower. These loans should be rolled back to non-delinquent status and have all penalties and interest removed.
But I think you have a good idea here.. this is what the Dept. of Education should be doing. Trouble is they don't. They do what Sallie Mae tells them to do. I have told the Ombudsman's office about my claims the records are forged in my case and they have NEVER once looked at them. And this is the Dept of Ed. Ombudsman office.
In your case, your loan has been migrating between at least four or more different computer systems that do not interface very well, and with each upload there is loan integrity risk. This gets pretty tricky when servicing a loan with multiple deferments and forbearances: one compounds interest and the other capitalizes interest to the principle.
To make matters worse.. when an account is outsourced to a collection agency they often do not load the data correctly, may have the wrong interest rate tables, mislabel the type of loan, origination fees, creditor interest, loan status, grad and grace dates, or misapply payments and tax-offsets. Actions like these affect the balance. It's a mess!!
Add insult to injury many of the servicers have no idea what they are actually servicing!! Which is why you will get 15 answers to the same question.
Paperwork does get lost, but you have the right to receive, and the creditor has the obligation, to provide proof of debt and validate the balance.
Now I find out that they don't have any original records as Sallie Mae lost them when they purchased USA Group, who made the error. Soooooo, someone, probably at USA Funds has generated falsified records saying that I was told. However, these records don't even say that I was told anything specific about the form or what I needed to do to correct the problem. There is not record that they sent me a NEW form and what the mistake was or that he discussed it with me at all. Which he didn't. I suspect it was one of those switch-a-roos where that try to put you in forbearance rather than deferment so they came capitalize your interest and run up your balance even more.
Anyway, after taking tax refunds for ten years, to the tune of another $10k, and the balance staying the same, of course, the want me to pay them $13k MORE financed over 30 years..
I have reported them to the FTC etc.. they haven't done a thing. It seems they have to have several complaints about an identical issue to pursue it. I filled a complaint with BB too, Sallie Mae didn't respond. Later I got a letter form them saying that I have to send the complaint to USA funds C/O Sallie Mae. Apparently they don't know where to find USA Funds.
I saw this lawyer's web site in the past. It looked like he was focused on Racism.. but in looking further I see he does other Student Loan issues too. I will definitely call him. . I have a conference call with a DoE supervisor next week. If nothing comes of that and not that I think there will, I will call this guy. If he cant help maybe he can point me in the right direction. Ya know, enough is enough.
I have to tell you that I slept better last night than I have in years..Honestly. You have given me a light at the end of the tunnel.. you've given me hope. I thank you again for taking time to help.
I have a business proposition for you in this matter let me set up a second email account to post ,if you would reply..
donaleigh2@gmail.com
donaleigh2
at
gmail.
com
I'd also like to point out how we are on the verge of a MASSIVE private student loan FIASCO in this country. Right now interest rates are at all time lows and only 40% of these private loans are being actively repaid according to a source I read over on finaid.org. Many of these loans have rates as high as 10% over prime and they are not fixed but variable! How on God's green earth are student loan borrowers going to pay these back when interest rates rise in the future??? As impossible as it is to pay back private student loans now, can you even imagine how painful it is going to be to pay them back when the interest rates rocket up to over 20% !?!? When these rates go into effect, YOUR BALANCE WILL DOUBLE EVERY 3-4 YEARS! This insanity needs to come to an end now. Congress needs to wake up now!!! Restore bankruptcy rights to private student loans now!!!
I paid back double what I originally borrowed because I took a 'hardship deferment' after my child had brain surgery and took a year to recover while I, a single parent, cared for her. They were very nice about it--"Look, just pay the interest until you get back on your feet" but when even that was too much they said "don't worry, we will just CAPITALIZE the interest!". I never quit paying, I kept them informed, and all was on the up and up, never went into default. This was a Citibank loan through the college, 1980's.
My original was for $4k Graduated in 1991
1992:Unplanned surgery and no income at all for the following 8 weeks.No one told me I could take a medical deferment and loan ended up in default. They eventually called me, too late for a deferment of course, and threatened to take my car from me if I didn't consolidate. Being a single mother, I had no choice but to do it. Balance then became $8k
1999 Filed for unemployment deferment as Balanced Budget Act of 1997 was about to kick in on 01/01/2000 and people in medical field were being laid off by millions.I filed for an unemployment extension. I faxed the from to them, followed up with a phone call to be sure they received it, they did. I called again after no response from them after 3 weeks. They told me the deferment was denied. Refused to tell me why and said I was defaulted now and had to make double/triple payments to catch-up. This was an unemployment issue, I was behind in car payments ,rent, electric...I certainly couldnt' pay what they demanded. They have taken my tax refunds for10 years now.
Continued..........
Now I find out that they don't have any original records as Sallie Mae lost them when they purchased USA Group, who made the error. Soooooo, someone, probably at USA Funds has generated falsified records saying that I was told. However, these records don't even say that I was told anything specific about the form or what I needed to do to correct the problem. There is not record that they sent me a NEW form and what the mistake was or that he discussed it with me at all. Which he didn't. I suspect it was one of those switch-a-roos where that try to put you in forbearance rather than deferment so they came capitalize your interest and run up your balance even more.
Anyway, after taking tax refunds for ten years, to the tune of another $10k, and the balance staying the same, of course, the want me to pay them $13k MORE financed over 30 years..