Student loans have become one of the most lucrative businesses for investors at the expense of hard-working people trying to get an education.
Student Loans have become so profitable due to the lack of standard consumer protections for the borrowers. These loans lack the ability to discharge in bankruptcy, refinancing rights, statutes of limitations, and are subject to unchecked fees and penalties. Social Security and Disability benefits can also be taken away, as this student loan borrower, Pat from ME, tells StudentLoanJustice.org:
Due to a number of family problems, I moved from Bangor to Portland, Maine, but I finished with a graduate degree in 1996. By that time I had paid over $11,000 for my $5,000 debt. The Dept. of Education will be quick to tell you that they did not keep track of my fees and penalties. At graduation, I again had no savings, no assets, no computer, no car. At that point the HELP people said I still owed approximately $2,000.
I looked for a position as an advanced practice nurse. My field was in oncology, and at one point Sloan-Kettering was interested in me. However, I could not imagine how I could afford to move to a new city. I could barely maintain rental costs and other monthly bills. I could not afford to file for bankruptcy.
I tried to make an arrangement-a year after graduation and after catching up with all of the above-to pay the $2,000, but the HELP people insisted that I now owed much more. I had used this time to participate in a national oncology program which allowed me a number of opportunities to look for work. My finances, however, never allowed me to make the necessary leap.
At about this time credit card companies were making a large sales push, and I was able to obtain one. I was then able to pay back taxes, pay for some dental work, buy a computer and get caught up on my bills. Except for this so-called HELP loan I have had no other debt since.
Now in my later 60s, I have been fending off a number of diagnoses, and have come to rely on Medicare and Social Security to a great degree. Approximately $150.00 is taken from the latter every month to pay the interest on this same HELP loan. I still work as a nurse (there is a nursing shortage, and I work short shifts)-on a per diem basis and I am still able to do some freelance indexing. However, the HELP people say I now owe @ $11,000 again. The "offset" from my Social Security benefits is not applied to the principle. There is no way I can ever obtain this amount. In fact, I expect my income to decline sharply in the years to come.
I plan to write my federal representatives in both Massachusetts (where I lived when I obtained the loan) and Maine for possible assistance. After years of anxiety and exhaustion trying to keep up, until I heard about StudentLoanJustice.Org, I did not think there was any hope.
It is crucial that we act now to restore standard consumer protections to student loans.