Invest In Students Now
Student loan burdens are very high—to the point that it is questionable if education is worth it. In fact, the student loan industry has lobbied for and won some perhaps-too-favorable legislation for their own profit, profit that rivals the credit card industry.
There are two kinds of student loans, federal and private. Federal loans are guaranteed against default and have set interest rates that range from 2-9%. However, federal student loan monies, except for Direct Loans, are often dispersed through for-profit or private companies such as Sallie Mae. Next there are private loans. Private loans are not guaranteed against default and often require a co-signer. These private loans have few consumer protections such as truth in lending or statute of limitations protections.
So what happens when students can not repay their loans? They usually end up paying large late fees that can double their loan debt. For both federal and private loans it is impossible, or next to impossible, to discharge the loan, no matter the circumstance, through bankruptcy. Even unpaid federal loans can mean your wages and tax refunds will be garnished. Federal loans may also be turned over to private collections agencies which can charge up to 25 cents on the dollar against the owed amount.
CollegeBasics suggests you get educated about your loans. Go to Studentloanjustice.org or read Alan Collinge’s book The Student Loan Scam. Another action students and their parents can take is to join the effort spear-headed by Rev. Jesse Jackson that seeks to organize students campus by campus to demand more affordable students loans through the government at Reducetherate.org.
