Student loan sharks
Friday, February 27 2009
If you have student loans, have a kid who might want to go to college, or know anyone who wants to go to college, ever: you need to listen to this program on NPR’s On Point (or at least, read this article).
The short version: in the ’90s Congress changed the Federal student loan program to give private lenders a lot more power in recouping their loans. Basically, if you have a student loan – whether through Stafford or some other “government” program – it ultimately comes from a private lender. That lender has tremendous power to recoup that loan, which means you as a borrower:
- can’t get out of the loan by declaring bankruptcy
- can lose your professional license if you default on your loans
- might end up paying twice or more what the loan was originally worth in penalties.
For sick or disabled people, the situation has an added wrinkle: your disability or social security payments can be garnished to pay off the loan. Even if you are too sick to work, you still have to pay off your student loans.
For those of you who are doctors, one of the callers on the radio program was a PCP; she calculates that her loans won’t be paid off until she’s 65. If she defaults, she could lose her license, thus her job – but still be on the hook for the total amount and more.
If any of this seems the least bit problematic, let me suggest StudentLoanJustice.org as your next stop from here.
(picture used under a CC license by Flickr user miusam-ck)
