student loan
Content
THE
STUDENT LOAN SCHEME
GATEWAY DRUG TO DEBT SLAVERY
-2ND EDITION-
Everyone knows we Americans are swimming in credit card debt. But just this year a new debt has quietly surpassed our consumer spending addiction.
Student loans, now at $829 billion.
How did this happen? Let’s start from the beginning…
1965
Lyndon Johnson signs the Higher Education Act (HEA) as part of his „Great Society‟. Millions of students are now able to afford college with Federally guaranteed loans and scholarships.
1978
After stories surface of some doctors and lawyers discharging their student loans debt by filing for bankruptcy immediately after graduation. The Bankruptcy Reform Act disallowed discharge for 5 years after first payment. The actual discharge rate at the time was less than 1%.
1990
The non-discharge period was extended to 7 years.
1998
Congress completely eliminated the ability to discharge student loan debt in bankruptcy. The same rules apply to debt from criminal acts (you murder someone and are sued) and debt from fraud. Loans for education are the only type of loans that has this Federal „no-escape‟ clause.
2005
Amendments to the Bankruptcy Code provide the same non-discharge protection to private student loan lenders. Now all student loans, government and private are almost impossible to discharge.
Additionally, the following protections were removed from student loans.
Statute of limitations on collections Truth in Lending Act Fair debt Collection Practices Act The right to refinance Adherence to state usury laws
The hardest collection methods are reserved for student loans. Miss a few payments and you can be subject to: Wage garnishment without a court order Suspension of state professional licenses Garnishment of social security / disability income Withholding IRS tax refunds
“Student-loan debt collectors have power that would make mobsters envious”
Elizabeth Warren Harvard Law Professor Chair of the TARP Congressional Oversight Panel
Now wait a minute. Why are we treating our fledgling students like criminals?
LOL! Because it‟s obscenely profitable of course. Why else?
Albert Lord CEO of SLM Corp (Sallie Mae)
Here is how it works
Sallie Mae is the largest originator of student loans. The Federal government guarantees the full amount of this loan. There is no risk to Sallie Mae.
Sallie Mae loans you $20,000 with a 12 year term.
You pay off loan at 8.8% interest over 12 years. Total finance charges: $23,376
You are unable to make monthly loan payments of $293. The federal government pays Sallie Mae the balance of the loan plus interest.
After 270 days, the loan is in default status. GRC is owned by Sallie Mae. This is known as the second bite of the apple.
GRC adds 25% to the loan as a collection fee. GRC also gets a 28% commission on the loan, which you have to pay for.
Whenever there is millions of losers there‟s always a few giant winners. Al Lord & Tim Fitzpatrick have taken home over $400 Million from Sallie Mae over the past decade.
GRC can then take Money from your paycheck and tax refund until they are paid. This is why it‟s so profitable for everyone involved when you default. Sallie Mae gets huge returns with no risk and the government eventually gets its money back with interests. Defaulting students are a money machine. Its even benefits the school.
The government needs to get its money back so it sends the debt to a collections agency like General Revenue Corporation (GRC), The Nations Largest.
There is no statute of limitations on your student loan debt. You WILL pay, even if it has to be deducted from your social security checks or those of the cosigner.
Since defaulted loans are a net gain to the government and its collection agencies, they have no incentive to moderate school prices. High prices mean higher loans. Higher loans mean more defaults and more profit for everyone. This has allowed school tuition to rise twice the rate of inflation & four times the rate of wage growth.
How are defaulting students a benefit to schools?
Well there can‟t be too many students who default. All you have to do is get a job and pay it off.
25% of the government student loans default. At community colleges it‟s 30%. At two year colleges it‟s 40%.
At the height of the subprime mortgage mess, default rates were 25%. And those were loans people could walk away from in bankruptcy or even be bailed out by the government. But don‟t expect any bailouts for students, since it‟s the government going the loan sharking here.
Didn‟t Obama overhaul the student loan program this year? He called it “one of the most significant investments in higher education since the G.I. Bill.”
So we have a debt larger than all of our credit cards, more toxic than subprime mortgages and a nightmare to recover from. It‟s a grim outlook for the next generation of students. But you don‟t have to finance your education with loans at all. Here is how to avoid the mess all together.
Save. Aid. Work Saving is a Do well in school A part-time job critical life and seek out during school and skill, and merit-based full-time during the saving for financial aid and summer can give you college should Or scholarships. Or a leg up in terms of be a priority Exhaust all grant money and for student or opportunities experience. parent. As before turning to always, earlier loans. is better. Frugal Live at home and go to a local community school for two years, then transfer the credits when you more direction. Wait Learn part time online until you figure out what you really want. Bill Gates said “five years from Or now, on the web for free, you‟ll be able to find the best lectures in the world. It will be better than any single University.”
Typical dropout
Or you can … Fight Tell Congress to stop treating you like a criminal and to restore consumer protections for student loans.
STUDENT LOAN SCHEME
GATEWAY DRUG TO DEBT SLAVERY
-2ND EDITION-
Everyone knows we Americans are swimming in credit card debt. But just this year a new debt has quietly surpassed our consumer spending addiction.
Student loans, now at $829 billion.
How did this happen? Let’s start from the beginning…
1965
Lyndon Johnson signs the Higher Education Act (HEA) as part of his „Great Society‟. Millions of students are now able to afford college with Federally guaranteed loans and scholarships.
1978
After stories surface of some doctors and lawyers discharging their student loans debt by filing for bankruptcy immediately after graduation. The Bankruptcy Reform Act disallowed discharge for 5 years after first payment. The actual discharge rate at the time was less than 1%.
1990
The non-discharge period was extended to 7 years.
1998
Congress completely eliminated the ability to discharge student loan debt in bankruptcy. The same rules apply to debt from criminal acts (you murder someone and are sued) and debt from fraud. Loans for education are the only type of loans that has this Federal „no-escape‟ clause.
2005
Amendments to the Bankruptcy Code provide the same non-discharge protection to private student loan lenders. Now all student loans, government and private are almost impossible to discharge.
Additionally, the following protections were removed from student loans.
Statute of limitations on collections Truth in Lending Act Fair debt Collection Practices Act The right to refinance Adherence to state usury laws
The hardest collection methods are reserved for student loans. Miss a few payments and you can be subject to: Wage garnishment without a court order Suspension of state professional licenses Garnishment of social security / disability income Withholding IRS tax refunds
“Student-loan debt collectors have power that would make mobsters envious”
Elizabeth Warren Harvard Law Professor Chair of the TARP Congressional Oversight Panel
Now wait a minute. Why are we treating our fledgling students like criminals?
LOL! Because it‟s obscenely profitable of course. Why else?
Albert Lord CEO of SLM Corp (Sallie Mae)
Here is how it works
Sallie Mae is the largest originator of student loans. The Federal government guarantees the full amount of this loan. There is no risk to Sallie Mae.
Sallie Mae loans you $20,000 with a 12 year term.
You pay off loan at 8.8% interest over 12 years. Total finance charges: $23,376
You are unable to make monthly loan payments of $293. The federal government pays Sallie Mae the balance of the loan plus interest.
After 270 days, the loan is in default status. GRC is owned by Sallie Mae. This is known as the second bite of the apple.
GRC adds 25% to the loan as a collection fee. GRC also gets a 28% commission on the loan, which you have to pay for.
Whenever there is millions of losers there‟s always a few giant winners. Al Lord & Tim Fitzpatrick have taken home over $400 Million from Sallie Mae over the past decade.
GRC can then take Money from your paycheck and tax refund until they are paid. This is why it‟s so profitable for everyone involved when you default. Sallie Mae gets huge returns with no risk and the government eventually gets its money back with interests. Defaulting students are a money machine. Its even benefits the school.
The government needs to get its money back so it sends the debt to a collections agency like General Revenue Corporation (GRC), The Nations Largest.
There is no statute of limitations on your student loan debt. You WILL pay, even if it has to be deducted from your social security checks or those of the cosigner.
Since defaulted loans are a net gain to the government and its collection agencies, they have no incentive to moderate school prices. High prices mean higher loans. Higher loans mean more defaults and more profit for everyone. This has allowed school tuition to rise twice the rate of inflation & four times the rate of wage growth.
How are defaulting students a benefit to schools?
Well there can‟t be too many students who default. All you have to do is get a job and pay it off.
25% of the government student loans default. At community colleges it‟s 30%. At two year colleges it‟s 40%.
At the height of the subprime mortgage mess, default rates were 25%. And those were loans people could walk away from in bankruptcy or even be bailed out by the government. But don‟t expect any bailouts for students, since it‟s the government going the loan sharking here.
Didn‟t Obama overhaul the student loan program this year? He called it “one of the most significant investments in higher education since the G.I. Bill.”
So we have a debt larger than all of our credit cards, more toxic than subprime mortgages and a nightmare to recover from. It‟s a grim outlook for the next generation of students. But you don‟t have to finance your education with loans at all. Here is how to avoid the mess all together.
Save. Aid. Work Saving is a Do well in school A part-time job critical life and seek out during school and skill, and merit-based full-time during the saving for financial aid and summer can give you college should Or scholarships. Or a leg up in terms of be a priority Exhaust all grant money and for student or opportunities experience. parent. As before turning to always, earlier loans. is better. Frugal Live at home and go to a local community school for two years, then transfer the credits when you more direction. Wait Learn part time online until you figure out what you really want. Bill Gates said “five years from Or now, on the web for free, you‟ll be able to find the best lectures in the world. It will be better than any single University.”
Typical dropout
Or you can … Fight Tell Congress to stop treating you like a criminal and to restore consumer protections for student loans.
