Wow. I had to read this twice to ensure it wasn't an Onion satire
. . . nope, this is how it is. Should be copied and given to every student with every FAFSA (the form that starts each little trickle of debt, with each one joining all the other little trickles of debt into a mighty river and then a bottomless abyss of debt that is drowning more and more young people (and many not so young people) each year, as they learn that student loans are often like herpes or drug-resistant syphilis: a lifetime of suffering for a brief act of poor judgment committed by a young person without even the legal right to buy beer.
As I wandered around the crowd of NYU students at their rally protesting student debt at the end of February, I couldn’t believe the accumulated wealth they represented – for our industry. It was lip-smacking. . . .
Putting aside some of the less savory aspects of loan origination, we can consider this, “good news in the pipeline.” As bill collectors and debt buyers only work on what is termed bad debt, which is guaranteed under these circumstances and in today’s economic environment – we are in for lifetime employment!
Will Students Begin Dusting off the Pitchforks?
Alan Collinge of StudenLoanJustice.org is one of the aggrieved that is leading a backlash. His research has shown that the Department of Education makes more on its defaulted loans than it does on its paying portfolio. As Alan states wryly, “This is exactly what the first President Bush meant when he declared his intention “to run government like a business.” . . .
I allow that it is a bit of a bummer to consider the very real but incalculable cost to America and Americans in the damage done to those who intended to use their education to better themselves and their communities.
These people were to be our future nurses, engineers, lawyers, salespeople – taxpayers! As many employers now pull credit reports on job applicants, our defaulting student loan applicant is almost automatically assured a “No, thank you” no matter how otherwise qualified they might be.
This is just one way in which those who went to expensive private schools to earn a more prestigious degree are denied the gainful employment sufficient to even pay back the loans! These are the people who are now marginally employed, living either on the welfare of their family…or the state…and are poster children examples of the products of Predatory Lending and heated pursuit.
“Student-loan debt collectors have power that would make a mobster envious.”
This was told a reporter in a WS Journal interview last year with Elizabeth Warren, a Harvard Law School professor and bankruptcy specialist and now Director of the new Consumer Financial Protection Bureau. (Another source to thank. Republicans are campaigning to cut this department’s funding in half).
As reported by Mother Jones, the new Consumer Protection Bureau – created to crack down on shady real estate loans and predatory lenders – was not given that same authority to deal with student loans described as by (the then) New York Attorney General Andrew Cuomo as the ‘Wild West’ of lending.
“Private student loans are exactly the kind of dangerously under-regulated financial product that the Consumer Financial Protection Bureau needs to oversee,” Pauline Abernathy, vice president of the Institute for College Access and Success, said. “Failing to give the new bureau full authority over all private student loans would leave young people and other vulnerable consumers, and our economy, at the mercy of unscrupulous lenders.” And collectors, I might add.
A potential problem for us: student see no difference between loan predators and varmints . . .
Think again. Here's why:
This is the text of a post to a lawyers' group from a member who is trying to figure out how to help a client:
I need some help with the following scenario:
Client co-signed student loans for “friends” with Sallie Mae. Friends have stopped (or never started) paying on the loans. Sallie Mae has sent client a letter demanding payment. Friends are no longer communicating with client.
I have not been able to find a way to extricate client from the loans absent the original debtor making 24 consecutive months payments AND Sallie Mae agreeing to remove her.
I am trying to determine client’s rights as against “friends.” Can client get a judgment against original debtor and garnish wages because they didn’t make payments?
Yikes -- imagine yourself trying to figure out how to go after a "friend" for an unpaid loan that you co-signed. While the professionals laugh all the way to the bank, you'd be left trying to figure out how to get and collect a judgment against a person with no written contract between you. Good luck with that.
MORAL OF THE STORY: do not co-sign for a loan for a friend or family member unless you could afford to make the loan yourself and lose the entire amount.
College debt meets real life
Living with parents. Struggling to cover medical bills. Abandoning dreams of the perfect job. . . .
"My student debt has made me nervous to take chances," one woman wrote.
"I haven't been able to afford health insurance," said a 2010 graduate of Minnesota State University Moorhead.
"Student debt has deterred me from pursuing many job offers (and passions -- I would love to work with a nonprofit organization assisting veterans) that did not pay enough," said a woman who expects to pay back more than $40,000 in student loan debt over 30 years.
Many students surveyed went straight to graduate school. That decision defers loan payments but eventually adds to them.
"That may not be the best idea in the long term . . . . At least it gives you a little more time. It's especially hard with this job market."
Halfway through, the survey asks: "Looking back, how would you change your college experience, related to finances?"
"I wouldn't have gone," Ezra Kazee answered. Kazee finished his political science degree at Winona State University in 2008. Thanks in part to $300 monthly loan payments, his family lives paycheck to paycheck, he said. "At the end of the day I have mortgaged my life and my children's future for an education that did absolutely nothing for me." He works as a debt collector.
OregonLaws.org is such a great service -- it lets "civilians" (non-lawyers) find the statutes and see them presented in an intelligent, useful format. I like it so much that this office is only the second OL.org sponsor ever.
But you can sponsor or assist too! Before John Gear Law Office opened, I was contributing a measly $2 a month to OregonLaws.org, just because it is such a cool project. If you ever turn to the site for help, consider becoming a participating member -- surely it's worth $2 a month to have access to the laws in a clear, helpful format.
Should you walk away from your mortgage? Declare bankruptcy? Try for a short sale? Tap retirement savings and hang on? Seek a modification?
Frankly, I have no idea what you should do.
What I can tell you is why consulting a lawyer as soon as you think there might be mortage trouble makes sense.
What a lawyer can do for you is tell you how, under the law, each of those alternatives (and others) will affect you (your credit score, tax situation, . . . ) so you you can decide your best course of action.
But there are a lot of people are getting to know the ins and outs of all this. Why hire a lawyer?
What you get when you hire an attorney is a professional with an ethical duty to put your interests first, ahead of everyone else's. If you talk to someone in the real estate industry (your banker, broker, agent, homebuilder, a refi salesperson, or a "foreclosure rescue outfit"), they have zero duty to consider your interests at all, much less to put your concerns ahead of theirs. And, typically, their interest is in having you pour as much money into your mortgage as you can, regardless of whether you ultimately lose the house or not.
Of course I'm delighted if you make an appointment and consult with me about your situation. But even if I never see you, I hope you will call an Oregon attorney for advice before you find yourself with your options foreclosed along with your house. You can request referrals from the Oregon State Bar Lawyer Referral Service by calling 800-452-7636 and telling them you want a referral to an attorney who can counsel you about your options for dealing with your mortgage. Don't wait until the foreclosure process starts --- you have the greatest number of options if you take control of your situation while you are still current on your mortgage.
. . . then isn't it worth spending 1 or 2% of the value of that deal to be sure you really know what's in it?
Welcome to my world: clients come into my office after having been taken advantage of or treated badly by a company -- a dealer, a bank, a mortgage company, a student-loan lender, a pharmacy, you name it. In many of these cases, the clients come in knowing exactly what has gone wrong. They show me the problems in their paperwork . . . right above their signatures. And they explain how clearly they can see now that they should have taken things a little slower and gotten some advice on that deal before hand. The other day, a couple came to see me. They're struggling with what a $50,000 lemon is doing to what were supposed to be Golden Years of travel and enjoyment. They've had a lifetime of work and some health issues, and planned to be off with the grandkids right now, not in my office. I think I can help them -- but I have to be honest and warn them that
(1) there are no guarantees in legal disputes . . . as just as I feel their cause is, they could lose, no matter how well I represented them; and
(2) the law is definitely stacked against consumers -- if we sue Lemon Dealer and they make an offer in settlement that comes nowhere close to compensating the clients for their misery over this lemon, they have to take that offer very seriously, because if we go to trial and don't beat the offer, they could be on the hook for dealer's legal expenses. So they could feel an intense amount of pressure to settle for an inadequate amount, just to end the pain of uncertainty and avoid the risks of a bad result.
Bottom line is this: litigation is costly and about as much fun as a root canal without painkillers. But if Mr. and Mrs. Lemon Buyers had paid $500 . . . just 1% of what they spent on their lemon . . . to have me read their contract and warranty before they signed, I could have saved them an ENORMOUS amount of frustration and sleeplessness with the transaction, and probably had the dealer knock the whole $500 off the price in the first place.
Please, regardless of who you go to, if you're looking at a pre-printed contract for an amount larger than you'd care to lose in a ripoff or dispute, then have an Oregon attorney review it for you and warn you about any pitfalls and help you make sure you understand exactly what you are promising and what they are promising.
Remember: Every pre-printed contract someone gives you has been examined by SEVERAL attorneys with a microscope. The problem is, every one of those attorneys worked for the other side. So they had one and only one mission: to make the contract iron-clad against you and to give as much flexibility and freedom to their client as the law allows. And the law allows one hell of a lot of freedom to the drafter if the consumer goes along with it, as indicated by signing on the dotted line --- which consumers nearly always do, without so much as reading it.
People have gotten so used to doing things without consulting attorneys that they don't even realize that, time was, ordinary people were careful to consult one before signing a big deal, because they were more (properly) skeptical of the people on the other side. People who grew up in the Depression knew that banks and big companies were not their friends; but that memory is dying, and we have far too many people who think the beautiful people in the ads are what the companies really are.
If you have so little money that you can't afford 1-2% of the cost (2% for smaller contracts) to have an attorney review your contracts before you sign them, then you don't have enough money to sign the contracts.
Another story about the way students are encouraged to borrow huge sums
for the promised rewards that rarely come. The single mother in a small town near Salt Lake City wanted an associate's degree as a first step toward medical school. She said she chose Everest, a for-profit college, after a recruiter guaranteed that she could apply her credits toward a higher degree at the University of Utah.
It wasn't until after she graduated in 2008 — two years and $30,000 in student loans later — that Miller learned the state university wouldn't take her credits from Everest, a unit of Santa Ana-based Corinthian Colleges Inc.
"I got completely taken advantage of, and now I'm struggling to pay the bill for it," said Miller, now 26. "I got sold my degree by a used-car salesman. I got a lemon." . . .
If you did, you've got money coming
, but you have to speak up here: To make a claim, customers can visit www.oregonlatefeesettlement.com
John Gear is a MAP volunteer attorney. If you are a service member, service family member, or know someone who is, you should know about the Oregon State Bar's Military Assistance Panel (MAP). The Oregon State Bar’s Military Assistance Panel connects Oregon lawyers with Oregon’s deployed servicemembers and their dependents in need of legal help.
Since 2003 the Oregon State Bar has been addressing legal concerns of Oregon soldiers deployed overseas. Federal and state legislation provide additional legal protection to persons entering or called to active duty in the US armed forces. Information on the Servicemembers’ Civil Relief Act (SCRA) and state laws protecting service men and women is available here.
Although many military personnel and their families are aware of the Servicemembers’ Civil Relief Act (SCRA), they may not have the legal expertise or financial resources available to take advantage of the Act’s important provisions. The Oregon State Bar administers a referral panel that lists lawyers willing to help. Our volunteer lawyers have been trained to provide legal assistance primarily relating to the SCRA. Many volunteers are also willing to assist with family law, consumer/credit law, real property/landlord-tenant law, and estate planning issues.
Volunteer lawyers expect to give at least one hour of advice and counseling to a cli- ent free of charge. It is up to the lawyer and client to decide whether to continue the lawyer/client relationship beyond the pro bono consultation. How It Works: To participate, servicemembers – 1. Contact the Oregon Army National Guard at (503) 584-3571 for an authorization (military reference or “MR”) number; and then, 2. Contact the Oregon State Bar’s Lawyer Referral Service at (503) 684-3763 for a referral to a participating lawyer; and then, 3. Contact the participating lawyer.
In July 2010, Congress created a new federal agency to protect American consumers. The Consumer Financial Protection Bureau will be a cop on the beat, working to make consumer financial markets work better for American families. As the first new consumer agency of the 21st century, we can communicate directly with the people we serve.
Today, that work is just beginning. We’re moving quickly—building a terrific team, finding office space, and unpacking a lot of boxes.
Things aren’t all in place yet, but we don’t want to delay reaching out to the people who care about this agency. We’re excited to announce the launch of our website, ConsumerFinance.gov, for one very important reason – to start a conversation with you. With the launch of our site, we will be Open for Suggestions.
We hope you are eager to learn what this new agency will do and how it might affect you. In turn, we are definitely eager to hear what you have to say. Starting today, you can use the Internet to send us your best suggestions and questions for the bureau:
If you have a video camera, record a YouTube video and upload it as a response to our welcome video at http://www.youtube.com/CFPB.
If you like Twitter, tweet your suggestion using the hashtag #CFPB. You can also follow us at http://www.twitter.com/CFPB.
If you are on Facebook, you can “Like” us at http://www.facebook.com/CFPB, and post your suggestion on our wall.
If you want to use our website, you can post suggestions at http://www.consumerfinance.gov/openforsuggestions.
In the coming days and weeks, staff who are building this new agency will record direct video responses to some of the most frequent questions and most interesting suggestions. You’ll see the faces and meet the people who come to work every day to make a difference for the American people. We look forward to getting to know a little more about you, too. More is coming, so be sure to check back at http://www.consumerfinance.gov/openforsuggestions throughout the coming weeks.
Open for Suggestions is just one way that we plan to keep our conversation going with you. Be funny! Be creative! Most of all, be real about what matters to you. This is a great chance to go into your community with a camera, laptop, or mobile phone, or just a pen and paper, and help others participate. Involve your friends, your family, your colleagues and classmates, your faith community, and anyone you know who might be counting on this agency for information and help.
If you aren’t ready with a specific comment, that’s OK. Just let us know you are there—and stay in touch.
We can’t do it without you.