Students In default: Why bother trying to pay?

As I sit here unemployed yet again due to the Recession that is devastating our country, and especially Michigan, I read the latest news of student loans. I get a daily feed from google alerts on all sorts of student loan related topics.

I see the talk of the service companies like Sallie Mae that are trying to lobby congress so that people can keep their jobs - jobs that exploit students.

I see a few articles about the income based repayment plan, but not many. I wonder if people really understand why that option is no good for a number of people; especially those with older loans.

I see reports of default rates (based on 2 year tracking) starting to rise, mainly due to the economic conditions and the fact that current graduates are unable to find work.

And I see further discussions on the Government take over of the industry and its effects on current active students. Not much is mentioned about those students who are in default. Only a one liner here and there, mentioning how much the defaulted students are costing the government.

Nothing is being discussed about helping those students. Only recently did I hear about the court case that might be heard by the US Supreme court over bankruptcy and student loans. Also some local governments are calling for loan forgiveness to help with the economy. Yet still nothing about student with older defaulted loans.

Every once in a while I hear how another person in financial crisis is now facing wage garnishment, or worse. Most I hear about is students who have given up even trying.

Why is this? Why do they give up? Answer: Simply because to them, there is no sense filling the pockets of some collections agency, while seeing no change in their status. In other words, seeing all their payments being made, being used up by the collections agencies, and not one penny going to paying off the principal. They are in effect, being forced to pay someone to collect money from them for doing nothing other than taking money from them. And that is just plain stupid.

Congress needs to change the laws so that at least some percentage of every payment must be put on the principal, so that it can get paid down. If not, there is no sense in defaulted student loan borrowers with older loans, to even try to pay off their loans, as there is a huge chance that what little they can pay, will never cover the collections cost and the interest payment for that month, let alone have anything left to put on the principal.

If a defaulted student cannot make a big enough payment to get ensure some of the payment is used to pay off part of the principal, they might as well not even make the effort, as it will be a waste of resources. They would be better off putting that money in a jar buried in the back yard. At least that way the government won't be able to take it without some effort and it won't be wasted paying for someone to do nothing more than taking it from them.

WANTED: COPY of Non Court studentloan wage garnishment order.

In preperation for a possible future lawsuit, and to possibly help those who are currently under non court ordered Student loan wage garnishmet, I need a copy of said garnishment.

If anyone reading this blog is under wage garnishment that was issued by the lender, servicer, US Dept of Education, and has a copy of that wage garnishment, please send me a copy of it.

Please send me a copy with your name, and personal information removed or covered up. I will need to see all pages, front and back, which are part of the garnishment.

Send your copy to maczeff at yahoo dot com and make the subject line read : Wage order copy.

Thank you.

Lessons From the Home Mortgage crisis can apply to student loans.

As a part time paralegal I have been keeping an eye on the home mortgage fiasco. And I see many parallel similarities to the student loan industry.

While Home Mortgages were never intended to be low interest, easy to pay loans to help people get started in life, the way they have been handled by the financial industry has something in common with student loans.

First, both Student Loans (SL) and Home Mortgages (HM) are based on contracts. For the purposes of this article, I will only be talking about government guaranteed student loans, and not private issued ones, although some of the information may apply to those as well. When a person makes a HM loan, they talk to the bank who issues the loan. When a person applies for a SL, they talk to the financial office of the local higher education school. In this respect, these loans are different. The government does not have a Representative present during the time of the creation of the loan contract for a SL. But the bank does have its Representative present during the time of the creation of the HM loan.

After a time, the SL like the HM can get sold off to another party, especially if the SL is in default.

Currently in the HM foreclosure court cases a big issue is who has legal standing to bring foreclosure suits. The person holding the original note. Due to the way these loans are bundled as securities, sold and resold many times over, the party filing for foreclosure doesn't even have the paperwork, or the original note. Therefore they have no standing. The same thing happens to student loans.. And this morning I got to thinking about this simple fact.

If the US Department of Education (USED) is the guarantor of the loan, and a student defaults on the loan, the Department pays off the loan. They should be the holder of the note. And this is what got me going on this. Last week I was helping 2 former students (recent, compared to myself) who are in default due to the poor economy here. Both have been out of school for 5 years and both out work for over a year. They went to the government student loan website and got their information on their loans.

It amazes me that in all 3 cases, theirs and mine, that Bank of America is being shown as the holder of the loan. Yet it is the USED that tried to issue a non court garnishment on my (non existent) paycheck, and it is the USED that constantly sends all 3 of us, notices. Strange. Also, Bank of America has never tried to contact any of us.

If the current court system both on state levels and on Federal levels are throwing out HM foreclosure cases because the party commencing the suits have no legal standing due to their not having the proper paper work and thus not the holder of the note, then it makes me wonder how the USDE can continue its actions without being in violation of the law, if it does not have the original notes.

If Bank of America is shown to have the notes, and the USDE continues to contact us, it could stand as proof that the USDE has the original notes, and did not sell the notes to Bank of America. As such, naming Bank of America as holder, is a misrepresentation of the facts.

If USDE paid off the loans, but then sold that debt to Bank of America, then the USDE has no business contacting us for any reason as they are no longer the holder of the loan, unless they never transferred the paperwork to the proper party after the sale. This is what has been discovered happening in a large percentage of the HM foreclosure cases. The paperwork does not follow the bill of sale.

Either way something here is not right and I dare say is fraudulent.

Either way, it all boils down to who has the note. And remember these 2 facts:
1. Fraud voids everything.
2. There is no statute of limitations for fraud.

And while this may not get us any relief from the debt, it may give us some relief from collections efforts and some financial breathing room.

Corinthian Colleges back in the news, 30 years of Predatory Practices.

The subprime student loan racket. That is the name of the latest article posted in the new American foundation blog page. http://www.newamerica.net/publications/articles/2009/subprime_student_loan_racket_19223

Comments injected in red are mine - Votsslf blog Ed.

And once again a predatory proprietary school is in the news. What is bad about this one, is this school has been sued by the state of California recently for the very practices stated in that article.

Martine Leveque a 43 year old working class mom, decided to get trained in a new field, and went to this school, only to find out it was a total joke, and a waste of money.

Again the recruitment practices and enrollment practices of this trade school are exposed, and its the same ole stuff that we have been hearing about for over 20 years.

The school, near Leveque's home in Alhambra, California, offered a Licensed Vocational Nursing program that would take her just one year to complete. When Leveque contacted the admissions office, she was told she would receive hands-on training from experienced nurses in state-of-the-art labs with the most modern equipment--including a recently purchased $30,000 mannequin that could simulate the birthing process. She also says recruiters told her that she would be able to do rotations at the University of California, Los Angeles Medical Center, one of the nation's best hospitals.

Leveque was intrigued, though she was initially put off by the $29,000 tuition. But the school's recruiters assured her there was nothing to be concerned about: Everest had an exceptional track record of helping students find employment--they claimed the typical Everest College LVN graduates landed a job paying between $28 and $35 an hour straight out of school. And the school would arrange a financial aid package to cover her costs.

In the end, Leveque decided to enroll. The day she came in to fill out her paperwork, she says, the recruiters rushed her through the process and discouraged her from taking the forms home to look over. To make matters worse, the program did not come close to delivering on the promises that had been made. The instructors had little recent medical experience. Instead of really teaching, she says, they usually just read textbooks aloud in class and sometimes offered students the answers on tests ahead of time. On the rare occasions when Leveque and her class were given time in the lab, she found that the equipment was broken down and shoddy--except for the expensive new mannequin, which no one knew how to use. Instead of the promised rotations at UCLA Medical Center, her clinical training consisted of helping pass out pills at a nursing home. (A spokeswoman for Corinthian Colleges denied many of Leveque's allegations, insisting that the company does not condone cheating, that all LVN instructors at Everest College have "at least the minimum qualifications" set by the California Board of Vocational Nursing, and that UCLA Medical Center "is not and has never been" one of the school's official clinical training sites.)

Since graduating in 2008, Leveque has been unable to find a nursing job, perhaps because she never learned how to perform basic tasks such as giving shots. Instead, she works as an occasional home health care aid earning at the most $1,200 a month--not enough to pay her rent on the cramped apartment she shares with her sister and son or keep gas in her car, much less pay off her student loans. As a result, her loan balance has ballooned to $40,000, and she has no idea how she will ever pay it off. "My credit is ruined," Leveque says. "I made one mistake, and I will be paying for it for the rest of my life." (yes, we have heard that before, haven't we?!) -ed


Leveque's story is far from unique. Each year, more than two million Americans enroll in for-profit colleges, also known as proprietary schools, and their popularity has only grown since the financial crisis. While traditional four-year colleges are struggling with dwindling student bodies and budget gaps, proprietary schools are reporting record enrollments as the newly unemployed try to retool their skills so they can wade back into the job market. Some of the largest for-profit chains say their numbers have doubled over the last year.

The students who are flocking to these schools are mostly poor and working class, and they rely heavily on student loans to cover tuition. According to a College Board analysis of Department of Education data, 60 percent of bachelor's degree recipients at for-profit colleges graduate with $30,000 or more in student loans--one and a half times the percentage of those at traditional private colleges and three times more than those at four-year public colleges and universities. Similarly, those who earn two-year degrees from proprietary schools rack up nearly three times as much debt as those at community colleges, which serve a similar student population. Proprietary school students are also much more likely to take on private student loans, which, unlike their federal counterparts, are not guaranteed by the federal government, offer scant consumer protections, and tend to charge astronomical interest-in some cases as high as 20 percent.

These figures are all the more troubling in light of these schools' spotty record of graduating students; the median graduation rate for proprietary schools is only 38 percent--by far the lowest rate in the higher education sector. What's more, even those students who make it through often can't find jobs. The reason for this is simple: while some proprietary schools offer a good education, many more are subpar at best. Thus large numbers of students leave with little to show for their effort other than a heap of debt. Not surprisingly, students at proprietary schools are far more likely to default on their loans than those at other colleges.

The appalling treatment of disadvantaged students at the hands of proprietary schools ought to be a national scandal, especially at a time when America desperately needs more college graduates to stay competitive. But the problem has barely registered in Washington. That's partly because the proprietary school lobby has enough clout among lawmakers on both sides of the aisle to keep the issue quiet. But Congress and the Obama administration have also had their hands full advancing other higher education reforms--in particular, legislation to kick private lenders out of the federally subsidized student loan program. This will create tens of billions of dollars in cost savings that will go toward larger Pell grants for low-income students. But that measure, vital as it is, affects only lending within the federal student loan program. It leaves untouched the private loans that are increasingly being foisted on students like Leveque and the loosely regulated schools that are profiting as a result.

The for-profit higher education sector is no stranger to scandal. In the 1980s and early '90s, it came to light that hundreds of fly-by-night schools had been set up solely to reap profits from the federal student loan programs, in part by preying on poor people and minorities. The most unscrupulous of them enrolled people straight off the welfare lines, and got them to sign up for the maximum amount of federal student loans available--sometimes without their knowledge or consent.

The rampant abuses caught the attention of the news media, sent shockwaves through Capitol Hill, and led to a year-long, high-profile Senate investigation led by Senator Sam Nunn, the Georgia Democrat. The standing-room-only hearings had all the trappings of scandal, with trade school officials pleading the Fifth and a school owner, who had been convicted of defrauding the government, brought to the witness table in handcuffs and leg irons. (this is the US Senate report 102-58 that I constantly mention in this blog)-ed.

Key lawmakers considered kicking all trade schools out of the federal student aid programs--a virtual death sentence given the institutions' heavy reliance on these funds. But Congress ultimately stepped back from the brink and instead strengthened the Department of Education's authority to weed out problem institutions. Under the new rules, for-profit colleges had to get at least 15 percent of their tuition money from sources other than federal loans and financial aid. Also, if more than a quarter of a school's students consistently defaulted on their loans within two years of graduating or dropping out, the school could be barred from participating in federal financial aid programs. The idea was to get rid of those schools that were set up solely to feed on federal funds and didn't provide the meaningful training students needed to get jobs and pay off their debt. As a result, during the 1990s more than 1,500 proprietary schools were either kicked out of the government's financial aid programs altogether or withdrew voluntarily. In an effort to rein in abusive recruiting tactics, in 1992 Congress also barred schools from compensating recruiters based on the number of students they brought in.

These changes shook up the industry. The old generation of trade schools gradually died off and were replaced by a new breed of for-profit colleges--mostly huge, publicly traded corporations. The largest, the Apollo Group, owns the University of Phoenix, which serves more than 400,000 students at some ninety campuses and 150 learning centers worldwide. Others include the Career Education Corporation, which serves 90,000 students at seventy-five campuses around the world, and Corinthian Colleges, which serves 69,000 students at more than 100 colleges in the United States and Canada.

What is not being said, is some of those old generation trade schools got bought up by these newer ones. National Education Centers, for example, was bought up by Olympia schools who then were bought by Corinthian Colleges. However the real record is showing the same operating standards are still applying. That is, go for the under privileged, the lower class the low income and promise them everything, just get them to sign up and graduate. These schools have a record now of 30 years of student loan farming. For them it is not about education, it is about profit.

Not only did these companies promise that their schools would be more responsive to the needs of students and employers than the previous generation, they also said they would be more accountable to the public because, as publicly traded companies, they were heavily regulated.

In reality, the new breed of schools had quite a bit in common with their predecessors; in some cases, they even operated out of the same buildings and employed the same personnel. What's more, rather than making them more accountable, the fact that they were publicly traded created a powerful incentive for them to game the system. After all, to keep their stock prices up and investors happy, the schools had to show that they were constantly expanding, which meant there was intense pressure to get students in the door and signed up for classes and financial aid.
With so much at stake, these schools quickly found ways to skirt the new rules. To get around the caps on student loan default rates, for instance, many of them began hiring agencies to help former students get forbearances or offering lines of credit so alums could make their student-loan payments--but only during the initial two-year window, when defaults were counted against the school by the Department of Education. After that, students were left to wrestle with the debt on their own. As for the rule requiring schools to get at least 15 percent of tuition from nongovernment sources, it had some unintended consequences. Rather than, say, enrolling people who could afford to pay some tuition out of pocket, many schools started pushing students to take out private student loans.

But this began to change around 2000. At the time, college tuition was skyrocketing--a trend that has only accelerated--and federal grants and loans weren't keeping pace. To fill the gap, financial aid officers started cutting deals with lenders to bring in private loan money. In the case of proprietary colleges, most of the large publicly traded chains forged arrangements with Sallie Mae, the nation's largest student loan company. (Once a quasi-government agency like Fannie Mae, it became entirely private in 2004.) In exchange for pots of private student loan funds that they could dole out at will--meaning without regard for students' ability to repay the debt-the schools gave Sallie Mae the right to be the exclusive provider of federal student loans on their campuses. Lenders vie fiercely for this privilege because federal loans are guaranteed by the government, meaning the Treasury pays back nearly all the money if the borrower defaults. Thus lenders get to pocket generous fees and interest and bear almost no risk.

Sallie Mae clearly understood that these private loans were going mostly to subprime borrowers who might not be able to pay them back; in 2007, Senate investigators uncovered internal company documents showing that executives expected a staggering 70 percent of its private student loans at one for-profit school to end in default. Investigators concluded that Sallie Mae viewed these loans as a "marketing expense"-a token sum to be paid in exchange for the chance to gorge on federal funds.

From the schools' perspective, it didn't much matter whether students would be able to pay off their debt any more than it mattered if they stuck with the program or graduated with the skills they needed. As long as students were enrolled long enough to be considered a "start," meaning that they attended classes for a week or two, the schools got to keep some of the money, and they got to include students in their official enrollment tally, which gave Wall Street the impression they were expanding. (In other words, these schools were STUDENT LOAN FARMING! )-Ed

The frenzy only intensified after Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act in 2005. This made it almost impossible for those who took out private student loans to discharge them in bankruptcy and, not surprisingly, turned the private student loan market into a much more appealing target for lenders.

YET despite all this, we still see these companies exploiting students and finding ways to farm the student loan market - leaving the student with useless educations, and outlandish bills that they cannot pay; all so the corporation can earn profit. -ED

For awhile it looked like the meltdown on Wall Street, and the ensuing credit crunch, would put an end to predatory lending at for-profit schools. In 2008 Sallie Mae quit offering subprime private loans to students at for-profit colleges because the astronomical default rates had helped throw its stock price into a nosedive. But the proprietary college industry has found a way around this roadblock, namely making private loans directly to students, much the way used-car lots loan money to buyers rather than going through a third party. For example, in a recent earnings call with investors and analysts, Corinthian said that it plans to dole out roughly $130 million in "institutional loans" this year, while Career Education and ITT Educational Services Inc., another for-profit chain, have reported that they expect to lend a combined total of $125 million.

Significantly, many proprietary schools are pushing institutional loans even when they know students won't be able to pay them off; Career Education and Corinthian Colleges only expect to recover roughly half of the money they distribute through their institutional lending programs, according to communications with shareholders. Why would they lend knowing they won't get the money back? Because any loss is more than offset by federal loans and financial aid dollars, which, despite the surge in private educational lending, still fund the bulk of tuition at proprietary schools. Say a student gets a $60,000 federal financial aid package and supplements it with a $20,000 institutional loan. The school comes out $40,000 ahead even if the borrower ultimately defaults. Plus, getting students in the door pumps up enrollment numbers, which makes for happy shareholders.

These proposals are a good start, but more steps will be needed. For starters, the Department of Education should publish the data that it already collects on the number of students at each school who default over the lifetime of their loans. At the moment, it only releases the number who default during the first two years after leaving college, which is of limited value, not only because this is such a short time span, but also because the rates can be easily manipulated by schools.

Just publishing lifetime default rates would give prospective students a clearer picture of the risks of enrolling in a particular school. But the impact would be far greater if Congress used this data, along with graduation rates, to weed out abusive institutions; ideally, any school that failed to meet a certain threshold should be kicked out of the federal financial aid programs.
At the same time, Congress should require companies that offer private student loans to give the same kinds of flexible repayment options and consumer protections as are available through the federal student loan program, including allowing borrowers to repay their loans as a percentage of their income. Lawmakers also need to revisit changes Congress made to the bankruptcy code in 2005, which make it exceeding difficult for financially distressed borrowers, including those with private student loans, to discharge their debt in bankruptcy.

These changes would go a long way toward helping people like Martine Leveque escape their mountains of debt and ensuring that future students don't wind up in the same situation. It would also guarantee that taxpayers don't go on bankrolling giant companies that profit by exploiting those who are struggling to build better lives.

End article. My cheers and salute to the author of that article, Mr. Stephen Burd, Editor of Higher Ed Watch.
Mr. Burd has hit it Dead on Target. A sniper shot to the core of what is clearly an ongoing problem with the Predatory trade schools. It is clear by his article, and from my own research which has been published here, that these schools should be disbarred from participating in any student loan program authorized by or controlled by, the US government, or that uses any government funds.
These schools are in it for the profits they can get off the backs of students. They care little about the education and/or quality of education. From 1980 to 2010, 30 years of exploitation.

When are we going to say enough is enough, and start helping the victims of these schools?!

For profit Schools in the news again, This time U of Pheonix.

In the world of for-profit higher education, and higher education in general, the University of Phoenix has historically been viewed as the 800-pound gorilla.

As of Tuesday, it may be more like a 1,000-pound gorilla. As Phoenix's parent company, the Apollo Group, reported its fourth quarter and annual earnings Tuesday, it announced that the university's enrollment of degree-seeking students grew to 443,000 as of August 2009, up 22 percent from 362,000 in August 2008. The biggest growth in Phoenix's enrollments, by far, came among students seeking associate degrees, which rose by 37 percent, to 201,200 from 146,500 in 2008.

About two-thirds of the university's new students as of August are female, 27.7 percent are African-American, and about half are 30 or over.

The university attributed the sizable increases to a range of factors, including increased efforts in retaining students, expanded marketing, and the "current economic downturn, as working learners seek to advance their education to improve their job security or reemployment prospects." Many community colleges and several of Phoenix's major peers in for-profit career education, including Kaplan Higher Education (21.9 percent) and Corinthian Colleges, Inc. (24.4 percent), have reported sharp upturns in student enrollments this fall.

"During October 2009, we received notification from the Enforcement Division of the Securities and Exchange Commission indicating that they have commenced an informal inquiry into our revenue recognition practices. Based on the information that has been disclosed to us, the scope, duration and outcome of the inquiry cannot be determined at this time. We intend to cooperate fully with the Securities and Exchange Commission in connection with the inquiry."

Apollo officials provided little in the way of additional information about the inquiry, which is likely to focus on how the company accounts for revenue. For-profit colleges must adjust their financial statements to account for financial aid payments they refund to the federal government after students drop out of school.

Apollo also said that it had taken an $80.5 million charge against its fourth quarter earnings to cover the costs of a possible settlement in a federal whistle blower lawsuit that Apollo is in negotiations to settle.

So once again a for profit, predatory school looks like it is about to be sued.

Ending 40 years of Corporate welfare of student loans.

What would you think about a law that saved billions of tax dollars while providing American college students with more affordable, dependable student loans?

Unless you’re used to getting paid billions for doing next to nothing – like the private student loan industry is – I’m guessing you would think that law was a darn good idea.

Last month, the U.S. House of Representatives voted 253-171 to pass the Student Aid and Fiscal Responsibility Act (SAFRA). If passed by the Senate and signed by President Obama, this legislation would expand higher education, help fund school construction and support early childhood learning.

And, if those gains were not enough, SAFRA would also make more financial aid available to students – and save the government money at the same time.

Currently, the Federal Family Education Loan program (FFEL) pays private lending institutions billions of dollars in fees every year to loan American tax money to college students. Instead of continuing to provide this annual corporate welfare to private lenders, SAFRA would allow all federal student loans to be made directly to students.

But why does the U.S. government give billions to private lenders every year just so these lenders can loan our own money back to us? And why is Uncle Sam required by law to cover 97 percent of the debt if student borrowers default on their loans?

The answer is both sad and funny. The FFEL program, it turns out, was devised by government bureaucrats trying to solve a problem created by government accountants.

The FFEL program (pronounced ‘fell’) was created in 1965 as a response to arcane federal accounting rules that recorded direct loans to students as annual losses. And although federal tax money subsidized every FFEL loan made through private lending institutions, these ‘private’ loans were only recorded as losses if the student defaulted.

After President George H.W. Bush revised these accounting standards in 1990, the Clinton administration began a direct loan program in 1993. Instead of paying out 15 percent of the loan amount to private lenders as a fee, this new direct student loan program actually earned about a two percent profit, according to an exhaustive analysis of the student loan industry published in August by Rolling Stone writer Tim Dickinson.

Getting SAFRA passed by the U.S. Senate and onto the president’s desk seems like the proverbial ‘no-brainer’ to real American fiscal conservatives. Even if you hate Obama, you have to prefer earning billions of dollars in profits to simply giving them away.
But there are plenty of corrupt pseudo-cons out there who are rallying hard against this legislation. And these contemptible corporate shills – Blue-Dog Democrats and Red-State Republicans alike – are being fed campaign donations by an army of financial industry lobbyists who stand to lose billions in profits if SAFRA becomes federal law.

One such group of financial industry hucksters is the American Student Loan Providers (ASLP). They represent the nation’s leading private, nonprofit and state-based education and financial organizations that provide federally guaranteed student loans through the FFEL program, according to the ASLP Web site.

Having the government take over all federal student loan originations, “would involve one of the largest expansions of a government program in recent memory,” according to one ASLP policy statement, which also happens to be quoted on GOP.gov, the Web site of congressional Republicans.

I guess Republicans in Congress figure it’s better to give away billions of tax dollars every year rather than to earn a profit by helping American students. Anti-Obama politics are one thing, but not supporting legislation that saves billions of tax dollars and helps educate U.S. college students just seems – what’s the word – unpatriotic.

But regardless of such partisan politics, SAFRA represents a bushel full of carrots for the American people – without any sticks. Providing a secure source of funding for college students is certainly good public policy. But doing so at a profit rather than at a loss is something even rarer in federal legislation: it’s good business.

Supreme Court to hear student Loan Bankruptcy case

http://blogs.forbes.com/moneybuilder/2009/10/21/supreme-court-set-to-hear-student-loan-case/comment-page-1/#comment-83

Supreme Court Set to Hear Student Loan Case
October 21st, 2009

Should you be able to discharge your student loans if you file for bankruptcy? The Supreme Court may soon have an answer.

In an article on Forbes.com, Asher Hawkins notes that a case slotted for the Court’s late 2009 calendar could have major implications for millions of student borrowers.

“If Francisco Espinosa prevails, those struggling with student loans could find it easier, through bankruptcy filings, to avoid paying them off. However, the student loan industry warns that a high court decision permitting such tactics could enable each debtor to erase thousands of dollars worth of obligations and, presumably, raise costs for many other borrowers,” Hawkins writes.

Since the story was published yesterday, it’s started a considerable debate. One person argued that “We can't turn this country into a nanny state where the expectation is to blame the institutions for all your failures.” Meanwhile, another person chimed in by writing, “I agree that recent college grads should not be allowed to immediately discharge their debt, but after a reasonable time (5 or 10 years) it should be considered just like any other debt. Why are we protecting the student loan companies and not the other debtors?”


My response to this article:

In the 1980’s the government was giving student loans out to anyone who could breath and sign their names. Many predatory schools at the time took advantage of this, and left a lot of people with useless educations and bills they could not pay, according to a US senate report (102-58). Some of these students had bankruptcy protections when they signed up for the loans. Then those protections were removed.

Since then various studies by a number of groups including law firms, have concluded that there really was no justification for removing bankruptcy protections from student loans.
I agree, that allowing students to file bankruptcy within the first few years after school is a bad idea. But after 10 to 20 years later, and after being able to prove that they have struggled to maintain financial stability, the student should be allowed to discharge these debts.

This would greatly help those students of the 1980’s whom congress recognized as a class of people, yet for whom congress never offered any kind of relief from the debt that the congress knew the students could not pay due to the scamming by the predatory schools.

Oh by the way. Since 2007 I have been researching the student loan industry history and my research has shown me that there is 1 player in the game that has lead the way for most of the changes that have removed all consumer protections from student loans. That player is Sallie Mae Corporation. I count myself lucky I do not have loans with them. This way I can still be neutral in my research, when it comes reporting what I have found out about that company and it is not pretty.

The original idea behind the Higher Education Assistance Act was to ensure America would have qualified higher educated individuals and to give these people a good start by offering them low cost loans to pay for school. It was never intended to be a cash cow profit making venture for banks and loan processers. The fact that Sallie Mae (and other such companies) are making millions off the backs of these students is proof that the student loan industry has transformed from one of helping students, to one that exploits them.

Restoring Bankruptcy protections only re-balances the playing field.

End response.


And ALAN COLLINAGE of Student Loan Justice thinks a court case is USELESS?!! Here we have one that just might help us..

Exploited Students, victimized by Predatory loan system.

Wow, I'm wondering if I should change the name of this blog to include the thousands of students that have been victimized by the predatory exploitation of the students by the student loan industry.

Now that the Government is eliminating the middle man, we are starting to see just how many people depended upon making their lively hood on the backs of students!

www.indystar.com/article/20091019/OPINION01/910190312/1002/OPINION/Direct+student+loans+would+lack+quality+service.

For example, The INDY STAR has a letter to the editor claiming that government direct student loans would lack the quality of service that was given to students by this person - who happens to work at Sallie Mae. Ah ha! So that is what this is. The same company that for years has been exploiting students. Well I for one am glad this person is loosing their job. Time to go find a honest job that doesn't exploit people. And what is even better, is this person is a Sallie Mae Employee. Good.

And on the same day, the sunsentinel.com reports that yet another group of Sallie Mae jobs is about to be threatened. (GOOD! -ed)

With unemployment at 11 percent in the Sunshine State, the concern on everyone's mind is jobs. This concern has particular significance for the 700 Sallie Mae employees in Florida, because our jobs are in jeopardy. But it is not the bad economy that's threatening them — it is our own representatives in Washington that are planning to legislate out hundreds of quality jobs.

The common thread here is Sallie Mae, corp loosing jobs. And the exploitation of students whose payments pay for all those parasites at Sallie Mae. No wonder college costs skyrocketed.

Taps for students.

If any story comes close to representing what many of us now know, this is it.
I call it "taps for students" as it represents what so many of us have come to accept. Mind you, most of us did not get a chance to get a 2nd, 3rd, or even first real degree, but were stuck with a worthless peice of paper from some lame trade school.

Taps for students, author unknown.

My student loan debit has grown beyond what I could have even imagine when I borrow the funds to go to college. But with the idea that was driven into the minds of young America in the 70's, 80's, and 90's, I knew that to get a good paying job I had to have a college education.

So, like many of young people that came from family with just enough income to keep their children from qualifying for the free and reduce grants and no extra income to help their children go to college, I took out student loans to pay for my education. I wish I had known then, what I know now.

Today, with twenty years of experience, three college degrees (two that I struggled hard to paid for without student loans), and massive student loan debt, I earn the some lesser amount of pay as individuals that work with me that have high school diploma or GED and less work related experience.

So, you can imagine how the American dream has change for many who have to make the decision to pay a house note over paying their student loan payment. Not because you don’t want to pay your student loan back but, your student loan payment is the same amount as the house note.

And by no mean is this home a $200,000.00 house, or this car a $30,000.00 vehicle or a $20.00 lunch each day of the week. They are the basics, just what I can afford to make my family comfortable, because I know that when I retire I will still be paying my student loan back.

Everyday, I know that my decision to get a college degree was wrong for me. The degrees have not produce the promise that America told many of us during those decades of my pre adult life and the student loan debt has destroyed any chance I might have had to retire comfortable and debt free.

End.

yes, that is exactly what so many of us have now accepted, the fact that we will die poor, in debt, and a burden on society.

Who is defaming who, Alan?

On Sunday, August 16, 2009 9:14 PM Alan Collinge wrote to me, (after he kicked me out of his Student loan justice groups):

"You seem to be interested in making me look bad rather than doing anything positive to solve the problem.

If you malign me publicly, then I will respond in kind. I wil ber more than happy to explain in a public way how you sat on our newsgroup for three years, and criticized every action that I took, or asked others to take , while doing absolutely nothing beyond writing on our group, and making a few comments on other blogs here and there. i will talk about how you refused to lead your state when ofered th opporunity. I will talk about the dozens of plans for action that you announced, asked people to do work on, but then never followed through with.

When you talk s**t about people who are trying to do good despite your efforts, it usually has a bad result for you as well as them.

Alan Collinge, StudentLoanJustice.Org "

To which I responded:
Excuse me, but what the f**k are you talking about?
Who was it who did the 25 item call for reform? (me and those who helped)..
WHO is still trying to find a legal solution for those of us with pre-1990 loans?
Who is STILL pushing for the restoration of consumer protections? (Hint - ME)
So how the hell is that defaming you?

You want to look like an ass? Go for it. Here is how to do it.. Tell them you offered me the position of state leader when I was not in a position to be able to take on the responsibility and give it the attention it deserved. You knew this. I answered that I could not because of my situation. That is not a refusal to take the job, rather it is acknowledging that the job is so important, that I believe someone else who is more stable home wise, job wise, should take it..

Hell son, I am living off the good graces of my sister right now,in a small room I built in the basement of their home, with no job, on unemployment, a broke down 1992 car, and 2 abscessed molars that are giving me tons of pain, and have NO insurance to cover their extractions, while collecting a measly 900 a month on unemployment that is going into my car so that I have transportation IF someone does offer me a job..

Now do you mean to tell me that You really want someone that is that economically unstable to be state leader? Not to mention the fact that I was in the middle of relocating, and then re-relocating back to my original starting point.

Now if by chance, this ridicules message is in response to a posting that I left on another blog page, or some media page, you should go back and re-read it. In the latest one, I said I AGREED with you position on it, and agreed that we need to restore consumer protections. Did you see that? or did you just read what you wanted to read about me saying that those of us with pre1990 loans should have some kind of legal remedy available, if we can find it.

Remember what MACZEFF (another spam ID I use) told you? Hey engineer boy, I *AM* MACZEFF. I will continue to push for the restoration of consumer protections, but I still think we are going to need a legal solution to act as a big stick to get it done. THAT is my opinion.

Have you read my blogs lately? Yeah I burned your ass a couple of times for kicking me out of the group. Why create a so called "no action" group if we cannot discuss things you consider to be useless actions?

You forget Alan, I have been fighting the IRS successfully for over 25 years. I belong to several paralegal and legal E-groups, 3 of which I run as a moderator, 2 of those I am owner, not including the new google pre1990 group. We have been discussing new theories and ideas including "honest services fraud". Ever hear of that one? Ohh its a good one, especially for those of us with loans that were obtained during a time when Consumer protections DID exist.. and we can use that as leverage to get ALL protections restored because the law must be equitable.

I know I am probably talking way beyond your understanding. You are an engineer, not a lawyer. Me, I'm just an electronics tech, ham radio op since I was 15 (30+ years now), a paralegal, and a lay law person who has been studying law, and court cases and procedures for over 20 years, and a tool and die machinist (journeyman, 18 years). I may not be able to talk the engineering lingo, but I do know my law.

Right now we have a congress that is responsible for the biggest financial mess in our nations history, far out stripping the depression and FDR eras.. These people are responsible for the mess we have, for removing consumer protections.

1st Amendment exercise: IT is my OPINION, that we can try to get these same crooks to restore the protections, but I THINK we will have a better CHANCE of success, after the 2010 elections when the American people clean out congress and those people responsible for creating that mess.

You have a problem Alan.. You are focused on ONE thing..and only one solution to the problem. As an Engineer, you should know that rarely works. Sometimes ya gotta re-think the problem and come up with a different solution, or more than one solution to solve the problem.

You cannot defame me, without making yourself look stupid, so if that's your goal.. go for it.

Until then, may we both succeed before this nations monitory system collapses.. because after that, none of this will matter."

Alan then wrote back asking me not to contact him in the future. I responded with a reminder that it was HIM who contacted me first, and that I was only replying to his message.