Wealthiest US colleges suing students over default loans

[myreality]

Wealthiest US colleges suing students over default loans

Graduate student borrowers are defaulting on almost US$1 billion in federal loans that were given out to the poor. US colleges such as Yale, Penn State and George Washington are coming after them in the courts, suing for nonpayment.
All three colleges have pursued lawsuits against students who defaulted on their Perkins loans. The exact number of lawsuits is not known, but just last year alone the University of Pennsylvania filed at least a dozen lawsuits over the Federal Perkins Loan, Bloomberg reported.
Colleges are suing to collect unpaid Perkins Loans, given out by individual colleges to students who demonstrate extreme financial hardship.

Colleges depend on repayment of money to finance the new Perkins loans and so when graduates fail to pay back the borrowed sum, the current students are put at risk of not receiving new loans.
Between June 2010 and 2011 students defaulted on $964 million in Perkins loans, 20 per cent more than five years ago, Bloomberg reports.
The result is that the colleges go after the students in courts to collect the money.
“If you borrow to go to school, it may not be just the government that ends up coming after you if you can’t pay,” attorney Deanne Loonin told Bloomberg. “We offer credit very easily.” If the student doesn’t benefit financially from the education, “the government or the school comes after them very aggressively.”
Borrowers with multiple debts often put aside paying back the Perkins loans because it has a lower interest rate than other private loans.
After graduating with a Perkins loan, students get a nine-month grace period and a 5 per cent per annum interest rate afterwards.

Perkins is given out to those from low-income families and “they may have the least ability to pay it back,” Associate Director of Student Financial Support for the University of California System Nancy Coolidge told Bloomberg.
As the cost of higher education continues to soar, more and more students are forced to take out loans, which increased US education debt to US$1 trillion.
The average size of student loan debt has also almost doubled from US$17,233 in 2005 to US$27,253 in 2012, according to a study released by FICO Labs.
The increased amount of debt is connected to the increased number of defaults on loans, Daily Free Press quotes the study as saying.
In addition, a poor economy and high unemployment make it very difficult for recent graduates to repay their loans.

Around 5.9 million people nationwide have fallen at least 12 months behind in their payments.
This number has grown by a third in the last five years, according to a State Higher Education Finance survey.
Many who can’t repay their loans feel they have no choice but to default. It’s a decision that can be disastrous – ruining a borrower’s credit and increasing the amount they owe.
In the meantime, President Barack Obama is working to expand education opportunities for working class families by increasing the Perkins fund from US$1 billion to US$8.5 billion and putting the Education Department in charge of the loans instead of the institutions.

http://rt.com/usa/news/us-colleges-suing-students-539/


Kick them while there down, don't let them get up. If they try, kick them harder.

[Cream Soda]

Suing people who owe you money and aren't paying.

I wouldn't care how much money I had, if someone borrowed from me and didn't pay it back, I'd try to get it back as well.

[myreality]

Suing people who owe you money and aren't paying.

I wouldn't care how much money I had, if someone borrowed from me and didn't pay it back, I'd try to get it back as well.

I agree, but its not entirely the students fault. Instead of working with the students having financial hardship they are going all out to take anything they can without any concern to these student lives or futures (but hey that is business). Honestly i think its the parents and the colleges fault for creating this whole mess. The economy crashed, jobs are hard to find, parents are forcing their kids to go to the almighty college and taking out loans regardless of future debt in the hopes of landing a job. The colleges are handing out the loans to unproven kids like candy on Halloween night then get angry when they find out these kids cannot pay it back. So instead of reworking their lending practices to lower the chances of future defaulting students they go and destroy any chance these kids would've had at a life, while continuing their faulty lending practice.

[Cream Soda]

While that may not be the best method, it's students 12 months or further behind, rather than someone who just got behind, so they had a year or longer to get their shit together. Now if in that year, they were trying to work something out with the school, and then the school shot them down, then yea, shitty on the school's part.

If they just stopped paying, ignored calls/letters, etc., then they get what's coming to them.

[test123]

These pity topics are so hipster. We demand free money for everyone now!

[myreality]

While that may not be the best method, it's students 12 months or further behind, rather than someone who just got behind, so they had a year or longer to get their shit together. Now if in that year, they were trying to work something out with the school, and then the school shot them down, then yea, shitty on the school's part.

If they just stopped paying, ignored calls/letters, etc., then they get what's coming to them.

A year seems very short when one is in debt, 52 weeks a year 26 paychecks (hopefully). I know i don't need to preach to you about getting by with barely any money to eat. So i will skip that. You must remember though these kids have no real life experience, i wouldn't be surprised if some of them have no idea how to handle their situation or what resources are available to them.

/em puts soapbox away

While everyone needs to pay back all their debts i feel the colleges are going about it the wrong way. Instead of working towards a solution they are steamrolling these students into a life of debt while setting up others to be in the same predicament. I wish their could be a 2 year gap between high school and college to build up some real world experience instead of jumping into a an expensive 4 year delayed program.

[Cream Soda]

Again, I am saying not if they were trying. Let's say they made 2 payments in the year, or just gave them $20/month or something. Something to show they were trying.

If they did absolutely nothing, paid nothing, didn't return phone calls, letters, or try to work things out in any way shape or form for an entire year, I have 0 sympathy for them.

[myreality]

Again, I am saying not if they were trying. Let's say they made 2 payments in the year, or just gave them $20/month or something. Something to show they were trying.

If they did absolutely nothing, paid nothing, didn't return phone calls, letters, or try to work things out in any way shape or form for an entire year, I have 0 sympathy for them.

I agree whole heartily. If that is the case. I do not have any faith it is, but this is all we have to go on so far.

I will have to keep tabs on this story.

[Ragnus]

If colleges are the next ones that are going to be begging for bailouts it would be a pretty existential crisis for Republicans. While they have a prime opportunity to destroy one of the things they vilify most, they have the other two bailouts hanging over their head which could prevent a filibuster.

Shit like this is exactly why I'm telling all of my kids to get their bachelor's degree as cheaply as possible. My fiance is in community college right now and they quality of education is at least on par with the college I went to. Their job placement program is way better also. Hell, I know a couple people who won't hire graduates from Ivy League schools because they tend to be completely full of themselves.

[kuronosan]

I agree, but its not entirely the students fault. Instead of working with the students having financial hardship they are going all out to take anything they can without any concern to these student lives or futures (but hey that is business). Honestly i think its the parents and the colleges fault for creating this whole mess. The economy crashed, jobs are hard to find, parents are forcing their kids to go to the almighty college and taking out loans regardless of future debt in the hopes of landing a job. The colleges are handing out the loans to unproven kids like candy on Halloween night then get angry when they find out these kids cannot pay it back. So instead of reworking their lending practices to lower the chances of future defaulting students they go and destroy any chance these kids would've had at a life, while continuing their faulty lending practice.

Sorry, I don't agree. Perkins loans are the absolute last resort a student is given to help pay for tuition and even then there is a pretty hard limit to how much you get (I know this because I have a Perkins and I read the entire agreement). It is absolutely impossible, unless you are unemployed, to not defer your Perkins loan as it is directly administered by the school. If you work in the public sector, you can cancel 15% of it every year.

This isn't a case, unless I'm reading it wrong, of students being tricked into borrowing money by dirty corrupt lenders. The guidelines of a Perkins loan are fairly straight-forward and the terms are crystal clear. You aren't even offered a Perkins unless you absolutely do not qualify for any other type of financial aid first (or the difference of said financial aid is not made up).

These students should feel lucky they aren't being taken to court for defaulting on their federal loans. Don't blame the schools. Blame the system.

I will give them the benefit of the doubt though - if they tried to work with the school and the school said no, then I can fault the school. If the school tried to offer reasonable terms and the students dropped the ball (much more likely, given the high profile schools) then fault the student.

[Abandon]

kurono, shitting on dreams since 2006

[kuronosan]

No, I do think it's retarded that we're in this position. Being somebody who is a doctor-hopeful and between his wife and him self owns about $100k in student loan debt, this does scare me.

I would just like to see a little more of what is going on before we start damning schools for being evil overlords. These aren't just CCs or State schools that are suing. They're Ivy-League schools.

You don't just walk into Ivy League unless a) You want to go to it no matter what the cost or b) Your parents are paying or c) You are paying nothing.

[Brill Weave]

If they did absolutely nothing, paid nothing, didn't return phone calls, letters, or try to work things out in any way shape or form for an entire year, I have 0 sympathy for them.

Pretty much this.

[archibaldcrane]

I just paid off my shitty Perkins loan a couple days ago. 5% interest? Fuck you. My other loans got consolidated to 2.875%, but they couldn't consolidate the Perkins for some reason.

[Dotsudoku]

This makes me excited to take out my first student loan next semester '~';

[Waraji]

Get Scholarships, like a boss. Do the people who have to take out loans to pay for school not try hard enough to nab scholarships?

I can't say I have much sympathy for them, seeing as I've had friends who've lost their scholarships (pretty much full ride) because they decided to have fun. I rode all 5 years of my college experience through Scholarship money, never had to pay a cent.

[Shade]

I have a student loan in Canada through the National Student Loan Service Center. There is a Repayment Assistance program that you can apply for, if your income is beneath X amount of dollars / month. It is good for a six month period, and then you have to reapply for it. During this period, you don't accrue interest on your loan, and your mandatory payment is based on your income. So they like, help you out in order to make sure they get your money. But hey, Canada.

[Lucavi]

Look at some of the schools in that article, though. I didn't see one mention of a community college, or any mention of students attending 2 years of community college, cleaning up with good grades, then transferring to a larger school on a modest scholarship for 2 years, getting a degree, and having very little debt. What I do see, however, is a lot of students who assumed that they could borrow whatever they wanted because they'd "land the good job" afterwards, like it was some certainty, and pay everything back with their Wall Street paychecks.

I see 3 major problems with this situation:

1) Big schools started jacking up prices far too much once they realized that they could get away with it because it'd be easier for students to borrow. Capitalism, baby!
2) Public schools do too much to drive every single kid into college, without focusing on what the kid actually wants to accomplish in life. Even back when I graduated from high school in 2001, the motto from teachers was "it doesn't matter WHAT you want to go to school for, just go! Fuck, take basket-weaving for all I care; you'll STILL make more money!"
3) Too many people believed the hype of any amount of debt being worth a degree from a particular university, without thinking of how they'd actually pay the goddamn loans back. I personally know friends who skipped going to a smaller school, offering the same degree, DESPITE the fact that they had a full ride there, simply because going out of state to the bigger school would "look better on their resume".

Yeah. Five years and $45,000 worth of Federal debt later, they're wishing they could do it over again. Then they act shocked when it comes time to file for bankruptcy and the debt has remained. That shit's not going anywhere, stupid.

I have little sympathy for these students. I interview people all the time for my job that did the same thing, over and over. The good news is that, due to the fact that I'm actually interviewing them, they've managed to secure a potential position that pays good coin, but every now and then you see the same jobs, but with people with 0 debt because they either got a degree from a modest school, or were smart enough to get a full ride at the big ones. Those are the ones I smile at, because its good to see someone that planned an intelligent path forward.

Pay your shit back. You went to school; you got the debt; you agreed to those rates to get your piece of paper, so you deserve to have your credit shot to all hell if shit didn't work out.

[Dotsudoku]

I started in CC for money's sake, but my university doesn't offer much for physical science scholarships.. for whatever reason

Prepaid runs out this semester ;-;

[Niiro]

I forget what country it was that has the student loan deal where student loans are gradually repaid in the form of an income tax on all post-graduation income until the loan is settled.

Idk why more countries don't do that.

Spoiler: show

Well, I do, but the reasons are crap and it just makes me annoyed.