Student loan debt topped $1 trillion for the first time late last year — more than credit card or auto loan debt. Buried in that alarming statistic are countless heartbreaking stories of students who never will break free of their debt.
Congress cannot let this go on. An army of young Americans shackled with loans they can never repay could be ruinous for the economy.
The federal government started its student loans in 1965, opening college doors to young people who would pay back the loans when they got the job. Later, the federal government added a provision that the loans could not be discharged in bankruptcy. That put a stop to the practice of declaring bankruptcy after graduating from, say, medical school and leaving the government holding a big IOU.
But in 2005, the prohibition on discharging student debt through bankruptcy was extended to private loans. Some for-profit schools found they could make big profits by encouraging students — wooed with promises of high-paying jobs — to borrow huge amounts.
The schools get the money upfront, and their bottom lines are unaffected if students don’t graduate or don’t get jobs in their fields. Ninety-five percent of the for-profit school revenue comes from the federal government. Accrediting agencies — funded by the schools they oversee — provide scant protection. It’s a system that’s ripe for abuse.
The weight of all that debt may be affecting the overall economy, as cash-strapped young people put off getting married and buying big-ticket items such as cars and houses.
President Barack Obama is pushing proposals to make repayment easier. Sen. Dick Durbin, D-Ill., is promoting legislation that would remove the protection against bankruptcy for private loans.
Those efforts sound wise to us. Being financially destroyed at a young age is one lesson young people don’t need to learn first-hand.
Chicago Sun-Times (April 19)
What needs to be done is for these for-profit schools to be cut off from their money trough, or at the very least, have their funding based on their graduation and actual job placement rates. There are entirely too many of these so-called ‘school’s’ running around (just look at these ‘school’s’ advertising on the TV) selling a whole bunch of crap passing as an education when all they want is the kid’s loan money. After that these same school’s, that so loudly proclaim their student’s job placement rate, are almost fanatically drive to toss the same kid’s under the closest bankruptcy bus they can find. At least 1 of these so-called ‘College’s in NH has been forced into bankruptcy and now has their ‘student body’ all scrambling for whatever legal protections there are.
These school’s are little better than mob-run extortion mill’s, with the added benefit of no legal oversight or protection’s to keep these same kid’s from getting stuck with interest rate’s on these so-called loan’s, that we as taxpayer’s are stuck with, at rates even Goldman-Sachs couldn’t dream of. Both Durbin and Obama’s move toward a more serious oversight, and even out-right regulation, of these ‘mill’s’ is both more than called for and is long overdue in being put in place. The really interesting part in all of this is seeing who’s gonna come out against making the educational system more financially responsible for their student’s graduation rate’s ? If there was ever a demonstrated need for the Fed’s Dept of Education, I for one would be hard pressed to find a better example of need and requirement coming together. This ‘racket’ is one bag, given the current voting trend of young folk’s, a great many who are now going to see the direct correlation of their vote to the relief positions the Candidate’s out there are claiming, for ALL TO SEE, is one that no one wants to be holding when the music stops. And when the digging start’s, given the political inevitability, one can bet that there are gonna be a whole lotta’ faces and names popping up that no one would have ever expected. As it is said so frequently on Sunday morning’s, ‘Now is the time to come to Jesus ’cause after your on the cross it’s too late’. Folk’s, the cross’s have been erected. The only remaining question is a simple one Who’s first ?
This is what you get when academic standards are so low that anybody can go to a college. Go back to S.A.T. scores, and rigorous standards to gain entry and this problem will go away.
First of all, no one is forcing students to take on ruinous levels of debt. Kids and parents need to show some fiscal responsibility here.
Second, I think the government needs to restrain itself and not approve loans that will never be repaid. I can tell you the bank will look very carefully at my ability to pay back the money before loaning me a cent!
There are also for profit colleges that LIE to students, like Education Management Corporation run by former Maine governor John ‘Jock’ McKernan
http://www.courthousenews.com/2012/04/13/45603.htm
http://studentloansblog.nextstudent.com/2012/03/27/illinois-attorney-general-slams-student-loan-debt-from-for-profit-colleges/
Then what are the other options? No education and work a minimum wage job? Be born rich?
Part time while working? Many people take this path without incurring impossible debt loads.
Biggest problem is the economy too a s#$% and everyone took a step back. All the jobs kids were going to take are being held by older people who can’t move up or are reluctant to retire. The economy is stagnant. Student loan debt isn’t much of a problem if you have a job.
Our university system much like our educational system is bloated and inefficient. There is little accountability for doing a subpar job. Teachers and professors are inexperienced in how to operate in this new and very dynamic world. There needs to be more encouragement towards Science, Technology, Engineering and Mathematics. Let kids know if they want art, business or law degrees they wont have as many opportunities.