Monday, October 01, 2007

Student Loans - Beware!

Fianlly the mainstream press has caught up with me! Today Projo has an article "Student debt viewed as brake on U.S. economy." I'm giving you another link as I can't locate theirs. I wrote about this last Sunday after they did an article on a new Newporter who has much bucks.
Firstly, the problems could be decreased by the fed'l government making more loans available in greater amounts. Colleges/univertsities could stop offering some of the perks & get their prices realistic. Parents could also begin refusing to pay the outrageous prices.
When students don't have enough bucks they can get quickie online loans & are often encouraged to do so by frequent mailings & colleges themselves (thank you Salve & P.C.)
Students would be wise to shop around but aren't the most astute borrowers. Why would we expect them to be? Colleges often push high-interest loans. The down side is payback time. And forget bankruptcy. The new laws prevent that on these loans.
Students who may or may not have parents co-signers (themselves besieged with debt) are no longer able to use the home equity market to pay for college. With promises of big bucks after attending colleges, students are willing to take the chance & borrow.
Trouble is that most of the time those jobs do not exist. Students can be stuck with these high interest loans for a long time with these businesses involved (often middlemen who originate the loan only) making big bucks off of these kids' high hopes.
Another problem with these loans goes back to the investors in these businesses & banks. There are no numbers yet from no-pays, but these loans promise to go bust fast than the snowbirds head south & harder than a day-off bagel. This market fall could hit harder than the sub-prime as these students have borrowed more money and with NO collateral.
This ain't good for any of us. These kids are out future and we want them fat, happy, and sucessful. Otherwise, who's going to support us, buy the goods - cars & houses, pay taxes.
These kids often end up taking nowhere jobs just to pay off their loans. More low-paid workers we don't need. It's the twenty-first neo-con Republican indentured servitude with a new twist - well-educated and often not from a poor background.
Be Aware, students! Ask questions! Check the full-time employment rate & salaries of recent grads of these expensive colleges, otherwise walk without a satisfactory financial aid package.
I graduated owing federal loans of $3000 at 3 1/2%. I thought I'd never walk away from it. I was lucky, though. I found a job in a federally impacted area teaching. Most of the loan was forgiven after ten years of work. At one point when I had no work, the bank was driving me crazy with phone calls. My Dad called them & they agreed to stop & I could pay them back when I started working again. Friendly neighbhood banks are usually parts of mega-conglomerates & don't work like that anymore (too bad).
But you & my son ain't gonna be so lucky, so you'd better be smart! The feds are some states are finally taking a look at this wild west of the lending business. N.Y. fined Salve & P.C. for accepting illegal "kickbacks" (shame on them for steering students to these expensive loans). Students need protection with these loans just like any other consumer. They need all the paperwork & info. They need to be given 30 days to shop around.
Theconservative rightneeds to step aside and start showing exactly where their family values are. Cheating kids so that a few can become quite wealthy doesn't cut it.
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