Student loans turn into crushing burden for unwary borrowers

[Liberal_in_LA]

http://www.latimes.com/business/la-fi-collegedebt27-2008dec27,0,3267790,full.column

Student loans turn into crushing burden for unwary borrowers

Kathy M. Kristof:

Some who think they are getting a federal loan find out later that they hold a private loan. The difference can be costly.

Kathy M. Kristof, Personal Finance
December 27, 2008

[Orrex]

1. Cue DU's 'You Should Have Known Better' squad in three... two...

:popcorn:

[Lorien]

48. Yep. DU turns into Freeperland when anyone makes over 24k a year

in ANY news story. There seem to be a lot of kids on this board who still live with their parents.

[AtomicKitten]

2. Congress needs to fix this version of predatory lending ASAP.

[Dreamer Tatum]

25. Lending to a future lawyer at 8.8% isn't predatory nt

[AtomicKitten]

39. The private loans at an interest rate of 11-12% is predatory particularly

when it is tied in with iffy schools that work in concert with steering students away from lower interest rate federal loans, which happened to my son.

[Statistical]

41. That is predatory and illegal I believe. Schools are suppose to tap federal loans FIRST (n/t)

[onethatcares]

3. are there any countries where a university education is

paid for by the state?

[maseman]

30. If you are from Canada and go to school there

it is VERY affordable.

[LostinVA]

32. Australia -- I THINK Japan

[elehhhhna]

36. yes, but they require you have the intelligencel to attend -- versus the cash

[FirstLight]

4. It happened to me...

And I was "sold" on the loans as a single mom on welfare trying to get my AA degree....the Loans were tax free, and wouldn't affect my income, so it was a supplement so I could survive while trying to get through so I could transfer. Well, the BA satelite program was scrapped and I am here in rural mountain town, tried to go to to the other college to finish my BA, but couldn't swing motherhood, job and school with a hour commute each way...there were just not enough hours in the day.

so here I am 10 years later, with a consolidated loan of $20+K, in default (mostly due to being in an abusive mariage for 4 years so I was unable to keep it in deferrment..), and no career opportunity to make enough to survive, much less pay off debt - and no degree either

no breaks - no way to work it out - Dept of Education won't negotiate until I make a year's worth of payments...and how can I do that? can't even keep food on the table!

the worst part of it was the financial aid folks at the community college told me on several occasions
- "don't worry, by the time you graduate, you will be making so much that this will be an easy payment"

yea, right


and no, I DIDN'T know better

[knitter4democracy]

6. I believe it.

It's the worst debt out there, to be honest. If we could get those off of people's backs, that would make a huge, huge difference for a whole lot of people.

[Orrex]

10. I feel your pain, believe me

When I went into default, my lender was surprisingly flexible and gave me two options:

"You can pay us 15% of your gross each month, or we'll take 15% of your gross each month."

I protested. "Does it matter that I'm providing for a family of four?"

"I see," said the lender. "In that case you can pay us 15% of your gross each month, or we'll take 15% of your gross each month."

I've head well-meaning assholes give me very helpful post hoc advice like "you could have taken smaller loans" or "you could have gone to school part-time." Neither of these options was presented as viable during my time at Penn State. From day one we had it drummed into us that we had to carry at least 12 credits (i.e., be full-time) or else we'd lose access to all kinds of aid. Additionally, my loans went toward rent, utilities, and food, in addition to my meager income from the job I was working. If I'd taken smaller loans, I'd have been even more completely screwed from the get-go.

Student loans are an abominable racket every bit as corrupt and predatory as credit cards and mortgage lending. And the fact that they prey--almost by definition--on 18-year-olds who are already facing massive changes in their lives makes them all the more disgusting.

I've read a figure stating that the total amount of corporate bail-outs comes out to about $60,000 per household. Can you imagine the effect on the economy if, instead, Congress had given that sum to each household, earmarked for the paying-off of debts? It would have transformed the economy overnight.

Instead, we have another blank-check for corporations with a guarantee of no oversight or accountability.

[SoCalDem]

28. Supposedly there are 117 million households

and of that number, probably most of them are middle to lower class.. If that "stimulus" had been given to those families, in "coupon" form, the banks would still have ended up with the "money" when the coupons were redeemed.. The coupons could have been set up for THREE purposes..

1) debt reduction...
.....a. mortgage..for people with "affordable" homes
.....b. auto loan...cars under $20K
.....c. college loan..using family income as the basis

2) to buy an American Made (Big3) car

3) credit card repayment
.....a. Account would have to be CLOSED after repayment
.....b. New application based on creditworthiness (if they wanted another card)

This type of plan should have been on the table for any household making $200K or less...on a sliding scale, with those making LESS, getting MORE help.

The additonal money injected into these households would have really stimulated the economy, and would have helped the auto industry & banks at the same time..

[LostinVA]

33. I defaulted in 1990 because I was laid off -- they wouldn't give me ONE MONTH'S reprieve

So, I graduated in 1997, and finally paid off the loan last year. Ten years turned into 20 because they wouldn't give me ONE MONTH off. I paid back FOUR TIMES what I borrowed, and it stayed on my credit report as an upaid loan for 10+ years, even though I paid it every month, until I got my Senator involved. It fucked up my credit rating even though I paid it religiously. It was like a millstone around my neck.

The company who did my loan -- backed by the Federal Government, has had thousands of lawsuits against them. But, since they have the backing of the Feds, too fucking bad.

I didn't mind repaying the loan -- I did mind being an indentured servant to the loan company.

[knitter4democracy]

5. Those private loans really suck, too.

High interest rate and you can't consolidate them unless you do it through the private holder of the loans (who only offers crappy terms for that).

STBX and I paid for his sister's summer intership tuition her junior year of college. She'd maxed out her loans, and when she needed a cosigner, she turned to us. When I read through the terms of the loan, I was so sickened and disgusted by it that we figured out how much we'd save if we just got the money ourselves (tons). So, we just paid for it ourselves instead.

The interest on that loan for $5K would've had her paying at least $15K by the end of the loan, if she made all of her payments on time and such. Awful. Just plain awful.

[riverdeep]

7. I think a lot of peole will say that taking on certain kinds of debt

is good, as long as it's not too overwhelming. Student loans generally fall into this kind of debt. It's not like she was buying expensive furniture.

I'm not sure, but maybe she could've gone part time and worked part time, or transferred to a less expensive school. And students, who generally have little experience with financial matters, need someone on their side. Whether that someone is a parent, or the school's financial aid dept., or greater disclosure laws, or a combo, I don't know.

The lenders are taking advantage of the relative naivety of the clients:

After initially resisting, agents for Sallie Mae and Chase both agreed to provide summaries of the loan costs in writing. But the one-page letters they mailed did not include the total cost of the loan over time.

The Times then called all three lenders to discuss their practices. MyRichUncle co-founder Raza Khan said that the failure to state the amount of the origination fee in the online application was a mistake and that the information was now included.

Sallie Mae spokeswoman Martha Holler maintained that the company's disclosures were adequate.

JPMorgan Chase spokeswoman Mary Kay Bean said the loan terms would be sent after the loan had been approved, pointing out that the company was not required to do so beforehand.

"We send borrowers a letter with the rate," Bean said. "We comply with the law. That's it."

That's in addition to financial aid offices working more for the lenders than the students. Perhaps a student-led movement could bring some resolution to these issues more quickly than legislation, since many legislators will benefit in contributions from seeing these practices continue.

[Systematic Chaos]

8. Just don't let C#9 see this one.

:rofl:

[Brooklyns_Finest]

9. No Sympathy

I have no sympathy for her. How do you accumalate $200k in student loans? She lives in Burbank, I am assuming she went to private colleges, because the California school systems are very affordable. I see no way anyone can defend her. The fact that she has private loans is unfortunate, but do we really want the government giving out $200k in loans to college students who may or may not be able to repay it?

[Orrex]

12. You're missing the point entirely

The dollar-amount of her story is hardly the issue. Millions of people in this country are permanently enslaved to student loans for far less than $200K.

[Brooklyns_Finest]

19. It doesn't have to be that way

I have an undergraduate and graduate degree, both from state schools and only acquired $19k in debt. Throughout my time in school I served as an RA, to save on room cost. I worked to pay for my books and meals, and I doubled up in classes to graduate on time. State and City schools are the great equalizer in this country. Personally, I think school is what you make of it. You don't need to go to Harvard to get a good education. Unfortunately, too many people get themselves in a bind trying to finance an education at one of these prestigious schools.

If you want to argue about making state schools cheaper or free, then we can come to an agreement. However, that would not prevent these kids from overextending themselves so they can go to their "dream school".

[tammywammy]

20. I agree

I go to a private school and it is expensive. The unfortunate part is that this is the only university that offers my degree. I could get just a basic business management degree from a state school (at a cheaper cost), but I decided to get this one to propel me in my career. I understand exactly what I'm doing, and my loans only are covering my tuition. I'm still working full time.

I'm lucky that I qualify for a grant from my university and they have an excellent scholarship program that I should get something out of for next year (since I have a 4.0 GPA).

[Brooklyns_Finest]

21. I hope it works out for you

From what I read on the job boards, education matters less than experience. While your private school education might propel you to the career of your dream. I think going to a state school and interning/volunteering in your field of interest would be just as helpful.

[tammywammy]

22. .

[Dreamer Tatum]

26. In her case, the dollar amount is ENTIRELY the issue

$200K in student loans, a sophisticated education, and she never sat down to figure out
what the monthly bill would be?

[Orrex]

40. She's one example out of millions of debtors

If you want to quibble about her bill, then fine--she's a bad person and deserves whatever crap her irresponsible and carefree tuition spree has snared for her. Happy?

What about the other millions who are just plain fucked because the were roped in by predatory lending practices and will now be paying off their loans for the next four or five decades?


I would love to live the faultless, debt-free existence preached by so many unsympathetic DUers. So would those other millions.

[LostinVA]

34. That's what law school costs, which is why I didn't go

It's why many law school graduates who would LOVE to do civil rights law, etc., can't -- or at least can't for a long time.

I have much sympathy for her.

And yes, I do think then government should mpay for at least part of EVERYONE'S education.

[stranger81]

35. California public law schools -- UC Berkeley, UC Davis & UCLA -- are quite expensive

and one could easily accumulate a six-figure student loan total in the three years it takes to complete law school. I know I did, at a California public law school.

[Liberal_in_LA]

49. yes, UCLA Campus housing starts at about $1000 / sharing a unit

[gblady]

11. me. too.....

just completed a Master's Degree with help of student loans...

now, unemployed...and getting freaked out...

I remember Barack talking about student loans during his campaign...
Do you think anything will/can be done by Obama to help us who now have the debt???

[Orrex]

14. In a word, no

At least, not if we base our answer on any precedent to date.

At most, we can hope that Congress will enact some new rule that prevents lenders from victimizing borrowers in some specific way, with the law slated to take effect ten years from the date of signing.

People suffering under the indentured servitude of student loan debt can find few advocates in DC. And not too many here on DU, either; in my experience, these threads are quickly overrun by people positively gleeful in their zeal to condemn the borrowers for getting in over their heads, regardless of circumstance.


Borrowers are on their own in this.

[FirstLight]

16. I surely HOPE & PRAY the PE Obama will figure out a way to ease this

Though it really sounds like he was talking about people taking loans out Now or in the Near Future.

My credit is Nil because of this, and I can't even go BACK to school to finish my degree because I am on the blacklist for Pell Grants and aid...so I am screwed both ways

It is predatory, plain & simple

can it be fixed? I don't know

[Liberal_in_LA]

53. You can always go back to finish your AA, taking evening classes

at a community college and paying the low per unit fee out of pocket. And more and more community colleges are offering online classes. It may not seem do-able now but don't let your loan problem rule out college for the future.

[FirstLight]

61. Oh i'v GOT my AA...it's the BA that's the problem

can't get a job that will support me and the kids with just an AA...need a BA to have a career for real. It just sucks. I could try to finish school , but the overhead is what is un-do-able...can't afford the roof over our heads and food on the table, much less everything else. I work multiple jobs as it is and can't make ends meet... and sometimes there are just not enough hours in the day. (I constantly feel like "I am just ONE woman!, I can only do 1000 things at once!")

I may end up waiting until the little ones are old enough to stay home alone, and have to deal with the ramifications of that...

[Liberal_in_LA]

62. I see... Yes, BA is much more expensive.

[bluestateguy]

13. Bankruptcy laws should be changed to discharge student loan debt

As the law stands now, I believe that even Chapter 7 does not discharge student loan debt.

At the same time, students from low-grade universities (I won't name names), whose degrees are not likely to result in lucrative careers, should only be allowed to borrow so much money.

[Orrex]

17. You're right on both counts

There are very few ways to discharge student loan debt. As far as I know, the only certain way to do it is to pay it off.

Other than that...


And your second point makes a lot of sense. And if students aren't outright prevented from borrowing too much, they should be counseled so that they truly understand the impact of the loans. This offering of counseling should, in fact, be made a requirement of any school receiving state funding.

[tammywammy]

18. No, they explicitly tell you when you sign up for the loans that it cannot be written off in a BK

I'm currently taking out loans for my tuition and had to go through a "loan counseling" program before I could get them. The only way for them to be discharged is if you die.

[GReedDiamond]

31. There is no statute of limitations on student loans...

...and you cannot escape via any bankruptcy moves that I know of.

Back in 1989, I had a $6000 total student loan ($4000 loan/$2000 Pell grant, which supposedly does not need to be paid back) to attend a nine month technical school program for "certification" in audio/visual recording engineering. (At this point in time, I was running my own studio and had accumulated a number of indie label engineering and production credits, but felt that a more state of the art upgrade to my engineering abilities might open some higher level doors for me.)

Turned out that the owner/operator of the school, an Indian national, was stealing the loan money and taking it to India. Needless to say, the school fell into chaos, with non-functioning recording equipment and staff salaries going unpaid, with the result being, after close to two years of this (yes, it went on that long!), the closure of the school. About a year prior to the closure, I had been booted out of the "school" because, even though it had received full payment from the federal guaranteed student loan program, I was told my funding had been "terminated."

Long story short, after protesting the debt for over 15 years, and having over $4000.00 of tax refunds and etc., taken from me over those years (I never voluntarily paid anything on the "loan"), and with late fees and a default penalty interest rate of 23% (which I believe was imposed on defaulted accounts during the first Bushler/Cheney term), they still wanted over $17,000 from me. While acknowledging fraud by the school owner, the California Student Aid Commission still insisted that I pay up. At 23% default interest rate, I calculated that the debt would balloon into the hundred-thousand dollar and above range within a decade or so.

I finally tracked down an EdFund bureaucrat on the Federal level, who found the loophole that allowed me to apply for a full discharge of the loan, which was granted, as well as a refund of the over 4 grand they had already stolen from me. Unfortunately, the interest I may have received over the years in a simple savings account from that money was, of course, not added on to my refund, and the years of psychological abuse I got from the California Student Aid Commission and numerous collection agency scum was not accounted for either.

I would NEVER AGAIN consider a student loan program for myself or anyone I know, given the way this system has been corrupted by the financial services industry working hand-in-glove with crooked money-hungry politicians (campaign finance reform and publicly funded elections, anybody?), not to mention a certain percentage of "trade schools" that operate under fraudulent circumstances in order to suck up these guaranteed student loans.

And, to answer the question from someone upthread, yes, there are quite a few nations that pay for the education of their citizens, all the way through the level of Phd.

Education and healthcare for ALL should be U.S. national priorities, these are NATIONAL SECURITY ISSUES!

[Statistical]

45. Agreed it is horrible.

The colleciton agencies know this.

SL debt is EXTREMELY valuable. They often sell it to each other at MORE than face value.

Just for a point of reference credit card debt is usually sold on the secondary market at $0.10 on the $. Defaulted Mortgages are sold for $0.40 - $0.60 on the $. Defaulted Car loans for as low as $0.20 on the $.

Federal SL debt is often sold for $1.20+ on the $.
Why? All the colleciton agency has to do is find you.
1) You can never escape it. They can keep it on your credit report till you die.
2) You can't discharge it. Federal law makes it one of the few non judicial debts that can't be discharged under ANY cirmcumstances
3) You can't outrun it. No statute of limitations.

So the collection agencies can wait it out. Taking on fees. $40/hr for research trying to find students. Often times will add up to thousands of extra $$$$. High interest. Penalties each month. They treat loan as active and add a $50 per month penalty for "late payment".

So too often students finally end up paying 3x, 5x, 10x, even 20x the original debt to get out from underneath it.

It is immoral.

[GReedDiamond]

52. In my case, I beat them...

...but I was on the verge of paying off the last collection agency that had come after me (which had been the first one of many to follow, more than a decade earlier). The total they demanded was $17,000+, but they told me they would accept "only" $12,800.48 (keeping in mind that the Fed. Govt. had already absconded with over $4000 in tax refunds prior to this point in time), but if they got the $12,800 (and 48 cents), they would call it even.

I insisted that they put in writing that they would not come after me for the remaining $4200+ they were "forgiving," and that that would be the end of it. I had the cash ready to send to them as soon as I had iron clad assurances they'd settle for that amount...they said, "sure, we'll agree to that in writing," but the "in writing" settlement offer never came, so I never sent the check out.

About a month later, I found the EdFund bureaucrat who helped me to get the loan fully discharged, plus my $4000+ refund. The default was also removed from my (almost otherwise non-existent) credit record. If those greedy fucks at the collection agency had sent me that agreement, I'd be almost $13,000 poorer than I am now, and they would most assuredly be pursuing me for the balance they lied to me about forgiving, because I now know that they had zero intention of forgiving anything.

Be very careful when dealing with the bloodsuckers at the collection agencies, they are Professional Liars, Cheats and Thieves, with a license to do all of those things.

The only debt I owe now is one of gratitude to the EdFund lady that finally helped me out.

On edit: I knew that there was a whole industry of buying and selling, revolving around collection agencies and student loan accounts in default, but had no idea of the inflated values of the loans involved. I figured the collection scum were fighting over scraps...but, you're correct, the fact that the loan can never be forgiven, under normal circumstances (and abnormal, as well, i.e, fraud, if you cannot document that, as I did), coupled with the outrageous usurious annual interest rates on defaulted loans, makes for some kinda pot o' gold, if it can be extracted from the person who took out the loan, using, if necessary, decades of harassment and psychological abuse from the Fed. Govt. and private collection agencies, working in tandem. Also, I assume, if one were to die while still in default on a student loan, the Govt/CollAgencies will suck up whatever estate monies can be sucked up, before the heirs get a penny...anyone know about this?

[Statistical]

57. Glad you got "out" most never do.

What makes it worse of all is that the debt has a long potential repayment lifetime.

Most student loans are accrued early in life meaning that the debtor has many potential years until death.

This gives collection agencies are very long timeframe to work their magic and extract the maximum $ from people who default on student loans.

The whole system needs to be investigated by Congress.

To answer your question:
Yes. If you died the student loan would be applied against your estate. Only potential way to escape would be if the debt owner couldn't locate your estate while in probate. Back taxes are routinely paid from estates so student loan debt held by govt would be no different.

Student Loans Collections are govt sponsored "payday loans". They are just as bad. They work under similar principle. The goal is to avoid enabling the debtor from EVERY paying the debt off. Instead bleed them a little at a time. Rack up fees to cover the amount they paid and sell debt to next collector. They can keep the game going for 20, 30, 40 years.

[GReedDiamond]

60. RE: "the debt has a long potential repayment lifetime"

That is exactly what I realized within a year or two, after disputing the loan to the CA Student Aid Commission, starting Year 1 of my over 15 years nightmare-like experience. After the first couple of years' notice in the mail that I would be "sued," I literally BEGGED them to sue me, so I would at least be able to get my defense against the fraudulent school on some sort of legal record. All of my appeals to the CA Student Aid Commission were turned down, year after year, without comment, discussion, or judicial review, while telling me that "the State does not guarantee the quality of education received." They did, however, admit, after an investigation to which I contributed concrete evidence, that the school owner/operator HAD committed fraud and stolen at least a quarter million dollars of guaranteed student loan monies within a less than 2 year period of time. Nonetheless, they would not relent on their demands for repayment.

Yeah, this kinda shit needs heavy duty investigatoratizin'...

[Lyric]

15. All of my loans are Federal government ones right now, but

I'm still scared to death--and I'm only halfway through my sophomore year as an undergrad, three semesters total. My last two semesters, I earned a 4.0 GPA, and god knows I'm financially needy enough to qualify, but my university has offered me NOTHING in the way of scholarships or university grants yet. I just keep telling myself, wait, wait, wait. *sigh*

I intend to go to Financial Aid when the semester starts and see if there's some scholarship I can qualify for at this point. I do NOT want to keep racking up loan debt--not even government loans, ugh.

[MissB]

23. I hope you can get some financial aid

If not, then maybe you can work part time. It takes a bit longer to graduate, but you might find a part-time job that aligns with your chosen field.

[aikoaiko]

24. I empathize, but Marja is still grossing 42k/yr after loan payments doing a job she wants to do.

These loans will end and he earning potential is very good.

She might have to live frugally, but she's ok.

I too took out student loans to supplement income for 6 years in grad school to get the career I wanted. I rather be spending the money on things other than paying off loans, but it is choice I made. And it was the choice of Marja Lopees.

[Statistical]

43. Agreed.

Looking at it that way she is making $42,000 a year (after student loans).

Nobody can call that "poor". It is actually better than most people for 4 reasons
1) $42,000 is above the median. So she is better off than 50% of Americans. Not only that her tax burden will be very low. Student Loan interest is dedctible. So her after tax is more than the average $42,000 earner.

2) She is just starting out. He "usable salary" is only $42K but any raises would be based off the $70K. Assumming she gets a 4% raise for next 3 years (not impossible for a good lawyer) she would be making $82K but her student loans would remain fixed. Her salary after student loans would rise $12 to $54 almost a 25% gain.

3) Eventually she can pay off the loans. Her salary is comparable to most Americans now. If she pays the loan off and gets pay raises over say the next decade she will move into the top 5% of income earners.

4) If she is "smart" she doesn't play the consumer gain. If she picks up $10K in salary increase she uses that to pay down the principle. Once she is use to living @ $42K a year the extra $$$ put towards her loans. Paying the loans off earlier would allow her to start building wealth faster.

Likely the situation is more than SL. She is a lawyer and has lawyer friends with BMW, eating at $100 a plate restaurants, going to clubs where drinks are $18ea. It is easy to get tapped in the consumer life style. Then the student loan seems like a millstone. I played that game for a while (never was a lawyer though). Racked up tens of thousands in credit card debt. Always needed the best. Always trying to have the coolest toys, the nicest clothes, drive the most expensive car. IT IS STUPID. 10 years ago I started listening to Dave Ramsey (not sure if he is hated here on DU). Changed my life. I am now a cash or wait guy. Less stress, more money. I keep it all the banks get nuthin!

It is suppose to be hard starting out. College isn't a "win button". Graduate and you win. Collect max salary and no hardships!

[Lorien]

47. Um, have you ever looked into the cost of living in the Burbank area?

42k will get you a studio apartment, at best. I have loads of friends that live in Burbank and Glendale. The average ELECTRIC BILL for an apartment dweller is $500.00 a month. My friends who own moderate sized homes pay $900.00 a month for electricity-WITHOUT air conditioning or heat! Groceries are twice the cost, gas is a buck extra, taxes are sky high. I was offered an 80k job there once and when I did the cost analysis (Orlando vs. Burbank) I found out that 80k there would buy a 45k lifestyle in Orlando, so I stayed put. Ms. Lopees is not "OK", she's getting royally fucked by corrupt banks while barely scraping by all because she wanted to "pull herself up by her bootstraps" to begin with!

[aikoaiko]

58. I get it -- she's not living large, but she can pay her well deserved bills and room/board.

So she's ok.

[Liberal_in_LA]

59. Yes, she can pay her bills but little else. many 1st gen students attend college 2 help family

Poor and lower middle class students are often the first in family to go to college. They think
they are going help propel their family out of poverty but often the student loans make it impossible.

[alarimer]

27. I've said it before: higher education should be FREE.

At least for a bachelor's degree. Failing that, I recommend everyone go to community/junior college first and get the basics out of the way. It is a hell of a lot cheaper. If I were going to school now that is what I would do. I incurred my student loans in graduate school though. I did have some private loans but paid them off a few years ago. I am not sure how exactly. At times I was making barely past minimum wage. I can see how easily people can default.

What really sucked the most was that the payments were highest at the beginning of the payback period, when I made the least amount of money. That seems backwards to me. It would have been the most likely time for me to default.

[elehhhhna]

38. ...or at leat 100% tax-deductable: tuition, room board & BOOKS (a big racket).

[Thothmes]

50. It is never "FREE" every red cent is paid for by our taxes.

[Creideiki]

55. Now, now,

soon you'll be confusing this country for the industrialized world.

[riverdeep]

29. Seems like rising school costs are also part of it.

About $15 billion in private student loans are expected to be funded this year, a 900% increase from a decade ago, according to the nonprofit College Board. Private loans are growing faster than federally guaranteed loans, which rose 59% over the same period, in part because of limits on how much students can borrow with the government's backing.

Four years at a public university, including room and board, costs an average of $57,332, according to the College Board. The average tab for a private university is $136,528. Yet the maximum that can be borrowed under the federal loan program is $31,000.

High-cost private loans fill that gap. One result is that students now average nearly $20,000 in debt by the time they graduate, twice as much as a decade ago.

Either college is going to have become more affordable, the public loans and grants are going to have to become more generous, kids are going to have knock off liquor stores (giving them a great first lesson in the real business world), or the rates on these private loans is going to have to decrease.

Or we could just have a nation of high school graduates only.

[elehhhhna]

37. we also need legitimate trade schools.

[Statistical]

44. God YES

I am a programmer. Anyone aware that we bring in about 10,000 programmer on 11B visa because there simply are not enough programmers to fill demand right now (well in general I am not sure about 09- Bush' Economy of Doom and all that).

The problem is that the industry requires (for the most part) a 4 year degree. I don't. I wish I could hire someone to do entry level work without a degree BUT they need to be skilled.

A 18 mo program that was JUST technical skills. For a programmer it would be stuff like
* technical writing
* object oriented design
* programming classes in multiple languages
* real-life project management (working in teams, code management, etc)
* one large scale (maybe 2 semesters) project as a capstone.

If there was such a program literally it would help US companies so much and provide thousands of well paying jobs ($50K-$60K).

Now I am not talking about college lite, a diploma mill, or "easy college" for people without the aptitude for college. I am talking about a fast track program that is difficult, challenging, and develops critical skills needed. In 18mo vs 5 years (average for a BS) and at half the cost.

This wouldn't replace college. Most employers would still look for people to have a BS and some theory for higher level positions, software architects, projects leads, etc.

The colleges would hate it and they have the ear of Dept Of Education so likely this is only my dream scenario and it will never happen. If similar programs were made in other technical fields it could litterally be 100,000 - 200,000 more jobs and lots of students with 40%-60% less debt.

[Greyhound]

42. Typical "centrist" scheme, student loans turned into corporate welfare

at the expense of the students.
:kick:

[QC]

56. BINGO!

[bluestateguy]

63. Clinton's Direct Loan program was a good program

Fixed interest rates, and no corporate bullshit. But Bush has drastically cut the appropriations for the program, forcing more of them into private borrowers.

[Greyhound]

67. Never heard of it, and apparently neither did the financial office of my school.

My loans were directly sent to BofA for the maximum amount and would not reduce it once made. In essence, the banks are given the power of the government to avoid standard practices and responsibilities.

Oh, and they were also excluded from my BK under the indenture status imposed on students. No accountability for the banks or the school, only draconian penalties for the students.

[bluestateguy]

68. Here

http://www.ed.gov/offices/OSFAP/DirectLoan/index.html

The program is a but a shell of what it used to be, and will have to be nursed back to health by the Obama Administration.

[Lorien]

46. Geez, and having done some cost of living analysis in Burbank myself

$70,000 a year in Glendale/ Burbank covers about what $40,000 a year does in most mid sized cities in the US. The cost of living is absurd there. I'd be totally stressed out too if I were in her shoes. But what can you do? A good education is excessively expensive (and shouldn't be) and those giving out loans are as corrupt as can be these days. With all these bailouts can't we start seeing some REGULATION to protect students and home owners?

[roamer65]

51. All of this crap started under Raygun.

I started college in the first term of that old twit and it was mostly grants for me. By the time he left office it was mostly loans. It only gotten worse since then.

[SOS]

66. People our age seem to have escaped the worst of it

My college years were half under Carter and half under Reagan. Graduated in 1982.
Loans then were kind of a pain, but manageable. I think I paid it off around 1988.

Today's youth is being robbed by the Wall Street predators.
What a shame that every single corner of our lives has been invaded by these vicious parasites.

[northernlights]

54. I'm a nervous wreck too

By spring I'll be halfway through the med lab tech program at my state university/community college program. And by spring I'll be flat broke or close to it.

I've been paying for school out of the last remnants of my retirement savings and stafford loans. The loans are enough for tuition, used books and a little left over for living money.

I had applied for work study and was turned down. I don't qualify for Pell Grants because I already have a liberal arts BS from 35 years ago.

I've been turned down for part time work repeated by the local grocery store, Home Depot, Lowes and most recently for a minimum wage job scrubbing the toilets and working register at the local gas station convenience store.

So barring an unexpected inheritance or lottery win, I'll be forced into private loans to finish school.

Are there *any* private lenders that aren't too bad? The financial aid office at my university does not make any recommendations. They only told me to let me know when I did borrow. chase sends me letters at the start of every semester. Their eagerness to lend to me tells me to stay away. Citibank has started a new "write yourself a loan" program off my credit card that claims a low interest rate. I haven't bothered to read the fine print because I don't believe it. But based on the post above, it might be worth looking at after all.

My plan is to sell my home and pay off the loans once I graduate. I'll be moving to where I get work anyway, and can go pretty much anywhere. But now I'm wondering how much will be left over after I sell my home, given how the r.e. market is tanking.

I've pretty much given up any hope of retirement. I'll be working til I drop and expect to die in debt, after a lifetime of slaving and saving. Hard to believe I entered the Bush/Cheney years as one of the 33% of people who was on track for a decent retirement.

[ProudDad]

64. When I was young and in college

kids got Scholarships and Grants.

But that didn't line the pockets of the rich so...

Beginning with saint ronny ray-gun (may the devil fry his soul for eternity) they were converted into interest bearing loans to line the pockets of the already rich with more "money".

Just as the easy money in the real estate mortgage business fueled the housing bubble and helped trigger the latest example of the collapse of the evil Corporate Capitalist system, making kids take out crippling loans in order to go to school allowed colleges and universities to piss away money (and salt it away in "endowments") and contributed to what can only be called a "schooling" bubble that must eventually burst when not enough can afford it.

You know, in the Civilized World a college education is subsidized by the government (that is, they the People) because they know an educated population is an economic and social good.

------------------------------------

PS: Marja should go Chapter 7...

[ProudDad]

65. WHO THE F*CK

Or what the F*CK software comes up with the ads in these threads!!!

It's f*cking disgusting!!!!

Here we're in a thread about the evils of student loans and on the bottom...ads for student loans!