So this happened:
Seven armed U.S. marshals arrived at [Paul Aker’s] door in Houston last Thursday, arrested him on the spot, and took him to jail. He owed all of $1,500, outstanding since 1987. Aker told Fox 26 that without any warning, his 29-year-old debt was forcibly being collected; the marshals took him to federal court and made him sign a payment plan.
Along with many who saw the story, I was convinced there had to be more to it. Well, there sure is.
This article is mostly about why student-loan servicers are terrible, but the reality is they just make a bad system worse. [New York Times]
From the Washington Post:
The measure, championed by Senate Democrats, would cut Pell Grants in order to free up money to pay companies that collect student loans on behalf of the Department of Education.
Sounds like robbing the poor to give to the rich.
When you filled out the FAFSA before your freshman year of college, you probably did not consider the chance that you would still be paying off those loans well into retirement.
Rosemary Anderson could be 81 by the time she pays off her student loans.
She is not alone.
For all seniors, the collective amount of student loan debt grew … to about $18.2 billion last year.
In 2010 (I guess that is the most recent year for which there are numbers), 4% of seniors were still paying off their student loans. That is a small percentage, for sure, but it is growing. And most of these senior debtors are probably living on fixed incomes — social security in many cases. That’s probably why 25% of seniors with student loans are in default.
(h/t Legal Skills Prof Blog)
Among the for-profit colleges targeted by a Senate committee led by Senator Tom Harkin are Minnesota schools Capella University, Walden University, and Rasmussen College. While the committee won’t investigate every for-profit school MPR reports that Globe University and the Minnesota School of Business are engaged in similar practices.
[The] allegations paint a picture of schools that target students eligible for subsidized loans and grants, but who have low prospects for academic success. They also raise questions about whether students at those schools — and the taxpayers who subsidize them — are getting their money’s worth.
“The amount of defaulted loans — $76 billion — is greater than the yearly tuition bill for all students at public two- and four-year colleges and universities.”
From Das Krapital’s Moe Tkacik:
The student loan shark bubble will, after all, ultimately prove far worse for business than the subprime mortgage bubble. But it also demonstrates that the shadowy ruling elite’s overwhelming contempt towards its citizenry runs deeper and dates back farther than full time chroniclers of American decline ever believed.
Read The student loan crisis that can’t be gotten rid of on Reuters. [Aaron!]
Guest post by Frank Pipitone.
Unless you have been hiding under a rock, you have heard or read about the looming student loan economic crisis. The National Association of Consumer Bankruptcy Attorneys (NACBA) refers to this coming crisis as the student loan “debt bomb.” A brief look at the NACBA report and the startling statistics explains why they coined this explosive title.
Over 37 million Americans are currently saddled with student loan debt with the total amount owed in excess of 1 trillion dollars. While these numbers are frightening, some of the trends outlined in the report are more concerning:
The debt-reduction bill President Obama just sent to Congress would allow agencies collecting federal debts—including student loans—to use robo-calls to collect. Hey, maybe more harassment would get more people to pay down the federal debt.
(Hat tip to Consumerist!)
When people think of consumer debt, they think of credit card debt. According to the Federal Reserve, however, student loan debt has now surpassed credit card debt among consumers.