7:45 p.m., June 29
- Community Blog
- Private Student Loan Crisis Growing
Private Student Loan Crisis Growing and students are struggling
Students are struggling during this economy. Private Student loans are becoming a burden to them.
Fourth, Congress should strongly consider passing HR 5043 – “Private Student Loan Bankruptcy Fairness Act of 2010 (D-Steve Cohen) and S.3219 – “Fairness for Struggling Students Act of 2010” (D-Richard Durbin) both of which will allow students presented with challenging circumstance with the option of discharging the debt in bankruptcy.
Private Student Loans are a growing crisis for many students. No one really hears about it, but many are struggling to make their payments. Private Student loans cannot be discharged in Bankruptcy. Yet, a loan on a Yacht and loans on expensive material items can be discharged.
Democrats: Protection for College Students Needed Before You Go
In 2005, language was slipped into the Bankruptcy Abuse Prevention and Consumer Protection Act which effectively removed bankruptcy protections from private student loans. The brazenness of this action shocked even the most jaded experts on the Hill (when it was discovered). After all, this amounts to the same thing as stripping bankruptcy protections from credit cards, or any other type of unsecured, free-market debt. Make no mistake: there are large injustices with the student lending system generally, but this move set a new low.
The banking industry and their lobbyists promised increased loan availability to disadvantaged students in return for the wholesale removal of this critical, free-market mechanism, but never delivered, the record now clearly shows. What they did deliver were tens of billions of dollars in outrageous loans that would make a subprime mortgage broker blush, with APRs as high as 28%, dropped onto the backs of unsuspecting students through deceptive and corrupt marketing techniques for which there simply is no comparison (consider that often, students would call their school's financial aid offices, and unbeknownst to them, at the other end of the line was a student loan marketer pretending to be a university employee, and this point is proven, but we could go on at length here).
It was assumed by all that at the first possibility (i.e. when the democrats recaptured one or both houses of Congress), this grave injustice would be quickly righted. So in 2007, when Democrats swept both Houses, this painful period for the citizens was clearly at an end. Or was it? The democrats, to their credit, did introduce legislation to reverse this robbery, but didn't put their back into it, evidently. The first attempt the legislation was quietly killed. A second attempt was narrowly defeated in a House vote thanks to the Blue Dogs cooperation with republicans like Howard "Buck" McKeon, and others. The third attempt, introduced last Spring, was on a slow road to passage, and would have been fine, but for an inconvenient election in November.
Surely the banking lobbyists charged with keeping this beach head were richly rewarded for their efforts. After all, a leaked Sallie Mae strategy memo that surfaced around the time the Democrats took power in Congress put preserving the current bankruptcy laws as the 2nd highest priority. And over four years, the record is clear that this mission was accomplished.
Consider, however, what is lost to this dangerous and predatory lending system. While we won't be seeing them marching on Washington anytime soon, former students by the hundreds of thousands are currently reeling, devastated by this toxic debt. Their cosigning parents, grandparents, aunts, and uncles who wanted only for their loved one to get a college education now face financial ruin, and that is absolutely not in any way an exaggeration. And for what? So Sallie Mae can reap excessive profits from predatory loans made on a hyper-inflated commodity, which is higher education?
Ironically, the entities who so cleverly led the students into these monstrous debt situation are the same people now chastising the students about not reading the fine print. They now dispense belated words of wisdom on borrower responsibility from on high, effectively insulating themselves from all blame. But the ironies do not end there...the democrats who were so quick to rush to the financial aid of the financial industry (including Sallie Mae, and the other student lenders), have gone quiet on this final attempt at returning the bankruptcy protections that should have never been taken away, it seems. And where are the beltway advocates? It seems, that the only ones left in this fight are the citizens, and the Congress elected to represent them. Oh..and of course the banks with their money, expert advice, and threats designed to protect their profits no matter the public cost.
Democrats: Do what is critically needed right now, and return at least this obvious critical protection to the consumers before this term expires.
Students: Help fight and speak up about this issue before the problem becomes worse. If you feel enslaved by Private Student Loans, then do something about it
you can look up http://www.opencongress.org/bill/111-s3219/blogs?sort=newest
More like this:
- Not what Thomas Jefferson had in mind — Nov. 12, 2015
- Issa's Committee Reports on Countrywide's VIP Loans — July 5, 2012
- Will Wall Street Cool on Bridgepoint? — May 9, 2012
- Tribune Co. Files for Bankruptcy, Saddled with $13 Billion in Debt and Decline in Ad Revenues — Dec. 8, 2008
- Bankrupt — May 12, 2005