Monday, May 21, 2012

Dangerous student loans

Survivalists worry about nuclear wars, pandemic plagues, etcetera.

One serious danger that doesn't seem to make many peoples list, but maybe should:  student loans.

Seniors Social Security Garnished for Student Debts
Ellen Brown, Truth Out, 11 May 2012 (hat tip: NC)
Congress has removed nearly every consumer protection from student loans, including not only standard bankruptcy protections, statutes of limitations and truth in lending requirements, but protection from usury (excessive interest). Lenders can vary the interest rates and some borrowers are reporting rates as high as 18-20 percent. At 20 percent, debt doubles in just three and a half years; and in seven years, it quadruples. Congress has also given lenders draconian collection powers to extort not just the original principal and interest on student loans, but huge sums in penalties, fees and collection costs.
 The lead in this story is an elderly lady who had a small student debt of $3,500 that she asked for forbearance on and then let it slide.  What she did not realize is that that debt would total out to over $17,000 in the next ten years.  When Clinton was president (1996) congress voted to allow the garnishing of Social Security to pay government debt.  And the rest is history.

Student loans are just a bad deal.  The future is too unpredictable to take on the type of risk they involve.  People do get sick.  Sometimes they cannot find work that pays as well as they anticipated.  If the elderly can have their social security garnish, think what happens to the young people who have a really long time to let the bill run up.

I wonder how long before the government starts lending people money to buy lottery tickets?


PioneerPreppy said...

No Kidding!!!

I paid cash for my degree (which hasn't done a damned thing for me since I refuse to follow Feminist indoctrination training) but I took out one student loan for 1K way back in the 80's.


I paid that thing off three times over the years and it took 20 years... YES 20 years for them to finally fix it and the treasury to send me a check for the extra $2000.00 minus some fees of course.


During the 90's I had my income tax refund with held twice over it as well and it had already been paid off before they took em.

Never Again.

russell1200 said...

Ouch, I have had some loans that ballooned, but they were not from the government.

PP: It looks like you got a lesson that did not have much to do with the course work.

And of course this is all administered by the people that are going to save us from ourselves.

We may need saving, but it is not coming from that crowd.

Liz said...

Tell me this is a joke! Student loans are dangerous? In what way? I was about to apply for a student loan but I have seen this post and have wondered how did that happened. I used to know student loaning as a helpful way especially on educational financing matters. Sad to know such thing here!

russell1200 said...

Liz: You look like your building up a spam bot delivery vehicle based on your profile. But at least you read the title of the post.