President Obama announced changes to student loan laws this week. It's not enough, but it's a welcome start in an area that is one of the biggest scams in the country. And it's a scam largely perpetrated by our institutions of higher learning (which I'll just call "Universities," but I also mean colleges, vo-tech schools, etc).
Here's how the Student Loan Scam works. UM (which stands for "University of Money") needs more money. They want to pay faculty more, put on more fancy dinners for visiting scholars, build a house for thier president, and start a campus in El Salvadore. So, UM can do one of two things: (1) budget efficiently to afford these things, or (2) raise tuition.
Well, UM knows that student loan money is the easiest dollar to get. Students can sneeze on a student loan application and get tens of thousands of dollars in loan money. There is no thought as to how the fine art major will repay $80,000. The loans come fast and furious, and they're not just for tuition. Need a housing loan? Here's an extra $15,000. Need a summer loan? Here's $5,000. Need a loan to take bar exams or medical licensing or similar exams? Here's another $10,000.
Everyone feeds off this easy money. Local housing raises rents. The campus bookstore increases textbook prices. The exam review courses raise their rates. You get the idea.
So, UM decides it's much easier just to raise tuition. There is absolutely no motivation for UM to trim its budget or act with any semblance of fiscal responsibility at all. If they need more, they know the students can get it, so they charge more.
And the increasing price of tuition has beared out that this is exactly what is happening. Tuition hasn't raised with inflation. If inflation raised at the same rate of tuition, a loaf of bread would cost $25. Tuition has increased at it's own exorbitant rate.
So student debtor (who we'll just call "debtor," because she won't be a student forever, but will be a debtor forever), takes out more, because that's what it takes to afford going to UM.
Who loses in this equation?
The University? Not the University (or faculty, or bookstore, etc)--they got their tuition money, and lots of it.
The Student Loan Company? No way. The laws are designed to make sure they get paid--they have powers than none of your other creditors have. They can garnish your wages without a court order and without even suing you. They can tack on 23% interest overnight if they want to. Some professions may even bar you from being licensed if you're in default on student loans. Student loans are also completely and totally immune from, and nondischargeable in, bankruptcy. And before you start with the "well that's government money, we need to make sure the taxpayers don't get fleeced" talk, the protections also apply, for no apparent reason, to private lenders as well.
The Poor, Downtrodden, Children, or Society? Not really. If you amassed huge debt be a teacher, you're still gonna teach. Social workers are still gonna be social workers. In fact, saddled with student loan debt, you're probably more likely to take any job you can, no matter what the salary, making you good cheap labor for businesses.
Student Loan Debtors? Bingo. You're gonna pay no matter what. You have no recourse. You are, as they say, "The Biggest Loser" here.
Remember that student loans aren't just for doctors and lawyers--the trucker, the IT specialist, or the guidance counselor all, among many others, are professions that incur debt.
It's time to end this student loan scam once and for all. I would urge you to push your congressman for student loan reform. Many proposals are being suggested, including allowing debtors to discharge private student loans in bankruptcy. It's time something be done to even the bar, as more and more, students are continuing victoms of this scam, perpetrated by our universities and the student loan companies themselves.
Questions? Call us today at 954 987-0515 or http://www.weaverlegalgroup.com/.
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