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 . . .