There is kind of a hidden money machine here.
“To start, nearly $69 billion of the current $86 billion in student loans is backed by the U. S. Treasury, meaning that even if the loans go into default, the lenders are protected. These loans are subsidized by the government in order to keep interest rates low for borrowers and guarantee profits for lenders.
Between 1992 and 2004, the cumulative subsidy cost was 39 billion . . . . .
….the Supreme Court ruled in 2005 that lenders have the right to garnish even Social Security income from those who are delinquent on their student loans.
In 1971 I graduated from college with a student loan of $3,500. I was just an innocent kid. I started making payments right away and was two months ahead on payments. Then I received a promissory note in the mail to sign, for my student loan.
I started reading the note. It had a phrase in there, “If the government fails, you are still liable for full payment.” There was another that stated, “Even if you file for bankruptcy, you will still pay this note in full.” And one other statement that eludes me. Anyways, I took a pen and crossed out the three offending items.
I went to the bank and turned in the note and they sat there for over an hour yelling at me saying you can’t do this! I pointed out to them that I had already spent the money and that, what I couldn’t do, I had done. End result, they defaulted my loan, even though I was not even close to being delinquent on the loan.
This company provides a seemingly legitimate service to students. What’s not realized is that this is more of a machine that supplies money to help Schools fill slots on their campus that would otherwise remain empty. Notice it’s the school and loan provider that have a symbiotic relationship. The victim is the borrower. High hopes, dreams, all of the stuff that every kid wants in their youth.
Advise your kids to be careful with student loans. These people will loan you enough to make you regret ever borrowing it. Just remember when that promissory note arrives, you might not want to sign it.
I still paid off my student loan, never filed bankruptcy, and the government didn’t fall. The company provides a valid service, but beware when you graduate with your degree in “whatever,” there may be no jobs available. The college didn’t mention that did they? So when it comes to blame, is it the loan company or the college or the student? We know who the winner is, do you?
