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. Scott from ME describes how his debt nearly doubled because of the exorbitant fees tacked onto his student loan:
I am an English teacher. It is a job I love, but I am struggling a great deal to support my family of four largely because an increasing student loan burden. It is a situation that has grown worse for me since I became a teacher in 2000 when I graduated. I know my situation is not unique and there are other teachers who struggle with similar debt and who, like me, have considered leaving or have already left the profession simply because they cannot afford to stay.
When I graduated in 2000 and began teaching, I quickly realized that it would be very difficult to pay more than $35,000.00 in student loans. Now, eight years later, I have two children and I am still struggling to stay in teaching and pay back our student loans. When we consolidated our two loans in 2003, the total was about $42,000.00. Now, because of the interest that has accrued while we have made the minimal payments to avoid default, our balance has nearly doubled to $72,000.00.
Furthermore, Sallie Mae never told me that by getting a spousal consolidation loan I would eliminate my eligibility for many types of deferment in the future. For example, I recently was told I am not eligible for a Federal Direct Consolidation Loan, one that would help relieve our burden tremendously, simply because ours is the one kind of loan that does not qualify-a spousal consolidation loan. Senator Collins, I can honestly tell you that I have never been more frustrated trying to do the right thing-pay my loans and avoid default. Yet each day default seems more imminent and even bankruptcy offers no hope as student loans cannot by dissolved through bankruptcy unless you are unable to work.