Wealthiest US colleges suing students over default loans

[Headspace]

I'm getting raped by grad school (good luck finding a full ride in the education field), but my girlfriend will have her nurse practitioner with zero debt so whatever I guess.

Should get better funding once I hit Ph.D track, but eh.

[notorious bum]

This would be like squeezing blood from a turnip for the overwhelming majority of America's students, but these are Ivy Leaguers. They know they'll score some cash off of the rich families that decided they wanted to teach their lil snowflakes how to make it on their own(and failed horribly). Smart move.

[Callisto]

iirc the numbers correctly, due to the massive amount of alumni endowments that these colleges receive, and their already massively stocked coffers due to previous ones, most Ivy League schools could charge no tuition for the next 20 years or so and break even.

[Serra]

A huge part of the problem is that many kids going to college just have absolutely no fucking clue about anything money related. Even if mommy and daddy paid for everything up to college, the kid hasn't had to learn anything about a budget, let alone how much compound interest can blow ass over several years. Many people I went to school with had no idea what they really wanted to do, and just treated college like a roulette wheel and hoped that the money they are putting down pans out for them in a few years. It was bad almost a decade ago when I went, I am sure it is even worse now.

I was forced to take out some pretty serious loans, but I busted my ass to get a decent job out of college and lived like absolute shit for 4 years to pay off my loans ASAP. Twenty years of interest? Hell no. My loans weren't even for 50% of my college costs, I cannot even imagine how people are going to pricey schools on nothing but loans and managing to pay them off. Not shocking at all.

There are some really good introductory business classes that I think are really good for students to take/sit in on. I remember sitting in on I think accounting some random semester because I had a friend who was taking it after a class we had together. It was like a 300 person class, so it was really easy to sit in unnoticed -- although I sometimes wondered if the professor knew I wasn't supposed to be there.. At first I was doing it just to pass time till lunch, but I actually found it really informative and had a lot of good information about just managing your finances, constantly preparing for retirement, etc.

[Epysian]

It really is a problem of teenagers generally not knowing shit about money, and parents who may not realize that the reality of college education has changed. Costs have gone up, and a degree doesn't mean instant job these days, even before the recession.

I got a BA in English, and knew I wanted to potentially go into three fields. Education and Publishing aren't necessarily high paying jobs. And if I decided to go to Law School, I definitely didn't want to pay through the ass for undergrad. So I went to a state school and came out with around $22k in loan debt. When I was looking for a real job, working part time was enough to pay my bills, so I was fortunate.

How many teenagers are forward thinking? How many parents sit down and discuss financial matters with them? I'm guessing, not a lot. But seriously, if you take out loans, pay that shit back dummies.

[archibaldcrane]

Well, that, and this.

http://www.theatlantic.com/business/...ed-how/256237/

[Seraph]

Well, that, and this.

http://www.theatlantic.com/business/...ed-how/256237/

And to expand on that...
http://www.thesimpledollar.com/2011/...ncial-reality/

[Lucavi]

iirc the numbers correctly, due to the massive amount of alumni endowments that these colleges receive, and their already massively stocked coffers due to previous ones, most Ivy League schools could charge no tuition for the next 20 years or so and break even.

That doesn't apply here because capitalism. Are you some kind of anti-American or something? To stop making money hand over fist; to cease being as aggressive as humanly possible is... socialist! Barbaric! COMMUNIST!

[Milkster]

U.S. Congressmen Steve Cohen (D-Tenn.) and Danny Davis (D-Ill.) Wednesday introduced legislation that would treat privately issued student loans the same as other types of private debt in bankruptcy.
This is the fifth time a bill like this has been introduced in the House, but Cohen feels it stands a better chance now given the current focus on student loan debt, including a reported rise in student loan debt among members of Congress.
“Congress taking action on student loan debt is long overdue,” said Cohen in a statement. “People who seek higher education to better their futures should not be dissuaded from doing so by the threat of financial ruin. Our bill takes a modest but important step in achieving this goal.”
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The bill, HR 532, would amend the U.S. bankruptcy code to allow private student loans to be discharged in bankruptcy proceedings. A report from the Consumer Financial Protection Bureau (CFPB) last year indicated that some $150 billion of the $1 trillion in outstanding student loan debt was from private lenders.
But the growth in private student loans is likely to slow in coming years.
The Student Aid and Fiscal Responsibility Act, which got attached to and passed with the healthcare reform bill in 2010, effectively killed federally guaranteed private student lending. Going forward, all student loans that would have been previously guaranteed by the government are going to be originated directly by the U.S. Department of Education.
Cohen’s bill would not allow federal direct loans to be discharged in bankruptcy.
There are still plenty of private lenders participating in the student loan market. The Federal Direct Student Loan Program does not originate loans to pay for non-accredited schools. Federal direct loans also only cover tuition and certain approved fees, but not all costs to attend college. Private lenders can provide loans to cover some gaps. Chase, among other large lenders, has a formal program to cover federal loan shortages.
The recent focus on the magnitude of the student loan debt problem might help the bill’s prospects. Just last week, credit reporting agency TransUnion said that more than half of student loan accounts are in deferred status. The bill has already picked up 14 co-sponsors.
Individual members of Congress are also reporting more student loan debt that they are responsible for paying.
According to a report Thursday from the Center for Responsive Politics, the amount owed by U.S. Representatives and Senators in 2011 totaled as high as $4.3 million, compared to a ceiling of $2.4 million in 2008. Congressional finance disclosures require members to only report ranges of debt rather than hard numbers. The total number of Congressional student borrowers did definitively grow over the same time, though, from 30 in 2008 to 46 in 2011.
The bill has been referred to the House Committee on the Judiciary, of which Cohen is a member.

http://www.insidearm.com/daily/colle...er-house-bill/

[notorious bum]

Cool, wake me up when the lobbyists finally lose the foothold on allowing private school farms to siphon money from the poor using federal loans and grants.

[Callisto]

http://www.insidearm.com/daily/colle...er-house-bill/

Danny Davis is kind of a nutjob, it sucks because he supports many progressive things but then gets into stuff like this.

IL politicians have in recent years tried to take some stands against the absurdity of college costs, but nothing has really come of it. I know they were trying to build some sort of price-fixing case against textbook stores but I believe that died, I haven't heard anything on it in a couple of years.

Loosely related, but I went to a relatively prestigious private Chicago school for three years and didn't have enough money to finish, school's $29k/year(believe it was $24 at the time), with what was left over after grants I owe about $50k in defaulted federal direct loans, and even without the private collections they're already total sharks. They've refused three separate offers from me to make monthly payments that I could actually afford, they wanted double what I offered and basically told me to get lost. They garnish my tax returns, but thankfully not my wages(I stopped filing returns three years ago so I could file all at once after I get the loans out of default). I didn't get the loans consolidated, and the school is on quarters rather than semesters so the quantity of individual loans was 50% more than at other schools, so there's 18 individual hits to my credit every time they re-up it, pretty much can't get a car/credit card/home loan despite having otherwise sterling credit. Don't really see the point in making peoples' lives even more difficult for money they're likely not going to collect anyways.

[Plow]

Well, that, and this.

http://www.theatlantic.com/business/...ed-how/256237/

government will pay off perkins loans if you teach anything in a low income area, math or science pretty much anywhere, or join the peace corps

it's also fixed 5% with 10 years to pay, and a max of 27k for undergrad, 60k for post grad

so worst case you'd owe roughly 7k a year and have options available to get the debt canceled (by taking a job you might not like but is definitely there for the taking, and keeping it for about 5 years), and oh btw a postgrad degree

[Azull]

Won't allowing private student loans to be included in bakruptcy just mean far less of those loans will be given? Kids will either have to use the normal federal loans or just not go to school.

[Acevalefor]

http://www.insidearm.com/daily/colle...er-house-bill/

And the unintended consequence will be that private loans are no longer available because the risk is too high. So instead of students being dissuaded for risk of financial ruin, they will be dissuaded by lack of funding in the first place.

[Restrat]

It would also force more kids to go to state schools that you can for sure cover with just federal loans, rather than more expensive private schools... which is probably a good thing.

[Lucavi]

It would also force more kids to go to state schools that you can for sure cover with just federal loans, rather than more expensive private schools... which is probably a good thing.

^ This. You'd be surprised just how often kids whine to mom and dad that they don't want to attend school in-state, yet didn't work hard enough to obtain scholarships for those out-of-state schools. Even when you show the bastards the potential bill, they don't balk.

First world problems, I guess.

[archibaldcrane]

It kinda sucks, but you really shouldn't be going to a school where you need private loans. Go somewhere cheaper.

[Pirian]

It kinda sucks, but you really shouldn't be going to a school where you need private loans. Go somewhere cheaper.

For undergraduate school, I completely agree. With graduate school it matters a whole lot more.

[archibaldcrane]

I just don't really get it, I mean my grad school was, what, 21k a year and I got through my two years with just work-study, a small TA stipend and a bunch of government loans. Why are people needing private loans?

[Callisto]

It kinda sucks, but you really shouldn't be going to a school where you need private loans. Go somewhere cheaper.

Yeah in hindsight that's the path I should have taken all along(this was back in 2001 mind you, so I didn't exactly know the economy would explode and it seemed like an easy go to college > graduate > get job life path), though when I came in the school was like 'oh don't worry, you just fill out the paperwork and anything that isn't covered by grants you can take out loans and defer them until after you graduate'. I went full time for two years, then part-time(sort of, I was technically full-time, but one class short of the regular load) for two, in 2005 the school sent me a letter mid-quarter saying the grant rules had changed and since I wasn't taking a full-time course load I was only going to get a portion of my grant, and I owed $2k in cash immediately or I was out. Lost my job that same month, so just kinda hung there in the cycle of unable to finish degree because I had no job and unable to get a job because I had no degree.

The only way I could have covered the difference was private loans, because my federal loans for the year were set already, so there may have been a case for doing so at the time, but there wasn't enough time to procure one since I got like a one-week notice before being booted out.

At this point pretty much everyone should go to two years of community college or state school before transferring somewhere better, at least until there's some sort of reform in the secondary education pricing structure.