@Anonymous wrote:
I highly suggest you also mail your congressmen/women about the scam of non-dischargeable private school loans. This subject has been getting more press attention lately in the NYT and WSJ.
Message Edited by Wesley23 on 06-15-2008 04:21 AM
Why should private loans be dischargbeable in BK? I am not a big fan of private loans but they do serve a purpose. bridging the gap between federal aid and cost of attendance. Without them, a lot of students wouldnt be able to finish or even go to school. With the high rate of BK's nowadays, private loans would disappear if they became discharageable again. Big lenders are already pulling out of the program as it is.
Education is the key to student loan management and borrowing. When I was working financial aid, I saw tons of students borrowing money to live in dorms, even though they only lived 12 miles from campus. The didnt want work study cause it would interfere with their social life. After 4 years of studying history, they would graduate and whine that they couldnt get a job. They had loans all over the place and would have no clue how to find them either. Yup, I got those calls too.
Maybe there should be a required two-day seminar on personal finance, employment, debt management, etcetera as a condition of getting any student loan (call it "Real World 101")). Such a seminar might be even more effective if each institution whose students were getting Federally subsidized loans were required to present detailed numbers on rates of graduation and employment for their own students , broken down by program or major, since it can make a big difference what they study and where they study it!
Message Edited by MattH on 06-21-2008 06:41 AM
TU 791 02/11/2013, EQ 800 1/29/2011 , EX Plus FAKO 812, EX Vantage Score 955 3/19/2010 wife's EQ 9/23/2009 803
EX always was my highest when we could pull all three
Always remember: big print giveth, small print taketh away
If you dunno what tanstaafl means you must Google it
@Anonymous wrote:
I highly suggest you also mail your congressmen/women about the scam of non-dischargeable private school loans. This subject has been getting more press attention lately in the NYT and WSJ.
Message Edited by Wesley23 on 06-15-2008 04:21 AM
Why should private loans be dischargbeable in BK? I am not a big fan of private loans but they do serve a purpose. bridging the gap between federal aid and cost of attendance. Without them, a lot of students wouldnt be able to finish or even go to school. With the high rate of BK's nowadays, private loans would disappear if they became discharageable again. Big lenders are already pulling out of the program as it is.
Education is the key to student loan management and borrowing. When I was working financial aid, I saw tons of students borrowing money to live in dorms, even though they only lived 12 miles from campus. The didnt want work study cause it would interfere with their social life. After 4 years of studying history, they would graduate and whine that they couldnt get a job. They had loans all over the place and would have no clue how to find them either. Yup, I got those calls too.
I have nothing against making federally backed Stafford/Plus loans non-dischargeable in BK. Those do serve a purpose; they are low interest loans that help people get through school. With careful planning, one should be able to get through college solely on federally backed loans. Besides, the tax payers are footing some of the bill on these loans, so it's only fair that we get our money back from the debtors.
Private loans, on the other hand, should be dischargeable in BK. Non-dischageable (private) school loans are very unique in the lending industry. In fact, it's the only example of the government making a private loan non-dischargeable that I can find. Every other private loan made is based solely on risk and is therefore dischargeable in BK. Some people make the argument that since there is no tangible asset to repossess in the event of default, the entire loan should be non-dischargeable in order to mitigate risk. This is a fallacious argument since lots of loans the lending industry makes are not based on tangible assets. A salient example of this is loans based on derivatives.
The only reason that private education loans have been made non-dischargeable is because there has been an intense lobbying effort by Sallie Mae and their ilk to keep these non-dischargeable. It is extremely profitable for these companies. These loans are quite literally risk free, and Sallie Mae is free to charge a relatively high interest rate on these loans.
The fact that these private non-dischargeable loans exist points to a much larger problem-- the government is not doing enough to help people through college. The solution isn't to make Sallie Mae richer by making their debtors indentured servants to the corporation via legislation. The solution is to make Staffords and PLUS loans easier to get.
