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Invest In Students Now

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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.

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 to discharge the loan through bankruptcy, no matter the circumstance. Even unpaid federal loans can result in garnished wages and tax refunds. 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.

If you have a student loan or may acquire a student loan in the future, be sure to educate yourself about the different types of loans and the effect they may have on your life. Another important piece of advice is don’t be afraid to take action. You can join the movement spear-headed by Rev. Jesse Jackson that seeks to organize students campus by campus to demand more affordable students loans through the government.