Older people are giving up hope of paying off their student loans before they die
While commenting on Alan Collinge’s Student Loan Justice site about much of what is being revealed here, I pointed out the problem with interest, interest on top of interest, paying interest before principal, etc. .
It is a problem. You never touch principle. I am very happy to see the Student Loan Justice site and Alan get the attention it deserves with this article by the Insider.
It is unbelievable, people are accruing interest during forbearance and paying all of the interest before paying principle. This does not occur with regular loans. Late payments over a period of time are harshly penalized. Much of the interest accumulated is what students pay first before principle.
Most of the issues with Student Loans results from the efforts of one person who started the process of attacking students who were late. Joe Biden started the attack on students with their loans in the nineties. He has limited any type of forgiveness or escape from the loans and the oppressive penalties, the interest on the penalties, and the interest on the interest.
I can assure you former President Trump did not go through the same penalties with his many bankruptcies. Our young and older are.
Joe needs to fix the problem.
Older people are giving up hope of paying off their student loans before they die: ‘There’s a real fear in dying in this,” Insider, Ayelet Sheffey
Linda Navarro, 70, borrowed $20,000 in 1990 for graduate school, according to documents reviewed by Insider. She owes $145,000 and has an estimated payback of $212,544.
“When student loans took over my life, I stopped looking forward to anything,” she told Insider. “You are on a hamster wheel, and you will not get off. You know that you will never get off.”
Before attending graduate school, Navarro had served in the Navy but didn’t qualify for loan forgiveness under the GI Bill because she missed the 10-year window to use the bill’s student-loan-forgiveness benefits. Because of income losses during school, she said she ended up losing her home and was not even able to complete her graduate program.
Navarro said she initially attempted to pay off her loans in monthly amounts she could afford, but as the bills grew, she went into forbearance. She later learned her salary was being garnished. Now she is on an income-driven repayment plan, which sets her monthly payment based on income.
“There’s a real fear in dying in this,” Navarro said. “And the best part is that my family has to prove that I died so the loan will die as well.”
‘It’s a corrupt lending system’
The student-loan system isn’t broken — it’s corrupt, Navarro said. She referenced her substantial loan balance and said she received a lack of help from her loan servicers, the government, and elected officials.
“It is a corrupt lending system. It has been allowing unbearable agony and suffering,” Navarro said. “It’s enough. I want my life back.”
According to a Wall Street Journal report, a former JPMorgan executive, Jeff Courtney; found for over three decades, the government had been making the student-loan system look profitable when in reality more and more borrowers were going into default.
When examining why his findings did not align with the government’s profit expectations, Courtney found that Education Department budget officials weren’t looking into borrowers’ credit histories to estimate the likelihood that they would repay their loans, The Journal said. And when borrowers defaulted, the government kept charging interest, he found.
The Education Department did not respond to Insider’s request for comment.
‘I just want to be represented’
Warren and Schumer’s CNBC op-ed said the student-debt crisis was effectively punishing people pursuing higher education.
Lawmakers: “Older Americans with student debt include people who did not have a chance at a degree when they were younger because they had a family to support. They took a shot at the American dream and went to college later in life. Now their student debt eats away at the retirement security they worked so hard for.”
Theresa Teders is one of those people.
Now 67 years old, she got a bachelor’s degree in 2004 and a master’s degree in 2008. She entered the social-services industry after graduation, working with adults with special needs, just before the Great Recession hit.
After Teders lost the job she went to school for, she started driving for Uber and Lyft, but the pandemic affected gig-economy work, too. So Teders is living on Social Security and unemployment benefits and carries a student-debt load of $46,000.
Teders: “I just want to be represented. Everybody I talk to says, ‘Yeah, older people should have their debt forgiven.
If it is never expressed it is not expressed, how does the government and federal lawmakers know we care out here?”
Teders and millions of other Americans rely on Social Security to help them pay for basic needs, and Warren and Schumer said taking away those benefits left older people in a “cycle of inescapable debt.”
Many Democratic lawmakers, foremost among them Warren, are keeping pressure on President Joe Biden to cancel $50,000 in student debt for every American. Amid calls for the President to use executive authority to get the job done, Biden asked the Education and Justice departments to review whether it’s in his power.
There’s a clear solution, according to Warren. She told Insider: “It’s time to cancel student-loan debt, and President Biden can get it done using existing executive authority.”
Teders: any form of forgiveness would significantly benefit her and that she wanted to ensure that older Americans were not left out of the conversation.
“When you’re older and have spent years and years giving back to the community, there’s very little 65- and 70-year-olds or older are going to be able to do to make that kind of money to pay off these loans,” Teders said. “We use what we have to survive and to live.”
corrupt, Navarro said. She referenced her substantial loan balance and said she received a lack of help from her loan servicers, the government, and elected officials. “It is a corrupt ”
Brain mortgage
Al Capone himself knew that “charity covers a multitude of” murder. do you see what has happened? when Al set up his soup kitchens in Chicago?
it was like Hey I’m robbing people killing people for the money, the money for the poor.
Congress has perpetrated yet another Capone scam front-loaded with charity.
Do this :
vote for separate high schools in each City, one high school for training industrial workers, what the Germans call the gymnasium. another school for preparing folks for college, the prep school of sorts. those who don’t get the scholarship to go to Harvard can simply go back to Vocational School before they
are
17
.
Justin:
They had schools like that such as Lane Technical High School in Chicago which had shops to teach students anything they wished to learn.
The Bankruptcy Act being unfriendly to educational debtors actually goes back to the 1978 Reform Law, which was otherwise a pretty pro-consumer bill. Under the influence of the Creditor lobby, the educational lobby(both non-profit and for profit), and the collection lobby this broad amount of debt was made non-dischargeable, which of course is contrary to the historic principle of the bankruptcy law to let debtors who get overwhelmed by their debts, for whatever reason, a fresh start. Also, in regard to the 2005 and 2013 law, although Biden can be blamed for voting for it in 2005, these were Republican Bills and there was a vendetta against working class people burden with this kind of debt. https://en.wikipedia.org/wiki/Bankruptcy_Abuse_Prevention_and_Consumer_Protection_Act
Rick:
Just a bit of history.
As the legislative debate intensified, Biden was appointed to serve as one of three of the Senate Democrats’ representatives in a conference committee to meld the House and Senate versions of the legislation. The National Consumer Law Center sent a letter to Biden and other Senate negotiators asking them to prevent the final bill from including what the group called an “unwise and unjust” crackdown on student debtors, congressional records reviewed by IBT show.
But the legislation produced by Biden and his fellow conferees ended up including the provisions exempting government-sponsored educational loans from traditional bankruptcy protections for at least five years after a student graduates. In announcing the final deal, the sponsor of the bankruptcy legislation, Sen. Dennis Deconcini, D-Ariz., specifically thanked Biden in a floor speech for his “lengthy and time exhausting work” on the measure.
Within a few years, the crackdown that began in 1978 would extend beyond just government loans. In 1984, as Biden was gaining seniority on the Judiciary Committee, the Delaware lawmaker reprised his role as one of his party’s top negotiators on a new legislative proposal. Under that bill — which was signed into law by President Ronald Reagan — bankruptcy exemptions were extended to non-higher-education loans like those for vocational schools, according to the U.S. Department of Education.
Biden has been a part of this for a long time and on the opposite side.
https://groups.google.com/g/public-nemp/c/OStzAFmXcw0 and https://truthout.org/articles/millennials-are-the-most-indebted-generation-they-can-thank-joe-biden/
There is a pretty big space between completely forgiving these loans and the kind of loan sharking that is going on now. Step One would be to treat them like any other loan. Subject to bankruptcy law etc. There is and never was any excuse to treat them any differently than a mortgage. Do, that, see how things evolve then we can see what else needs to be done further up the road.
SW
I am going to tell you what the “damn” big space is and the steps:
– The interest on forbearance after they already know the person has lost their income.
– The paying off of interest accrued before before touching principal. I do not know of any loan today which has this penalty.
– The larger than normal penalties accrued on student loans by servicers.
– The interest on the penalties accrued.
– The costs to recast the multiple loans which wipe out any gains made from by payments.
You get rid of all of this and then you can begin a dialogue on what is left starting with what was the circumstance leading to the creation this loan such as noncredentialled schools misleading students.
No other person or citizen taking out a loan is subject to the type of loan – sharking and usury that students are. Even our thieving president who lied about his assets was able to enjoy bankruptcy multiple times.
Public education for all funded by taxpayers needs to be updated to meet today’s educational requirements for yesterday’s gainful employment objectives.
Yes, the system is corrupt. But there are some problems with the answers proposed here.
First that strikes me is that I have never had a loan, or seen a loan, or heard of a loan in which the interest was not paid first. So I wish those who say this is not the practice would explain what they mean more clearly.
Second, and I am sorry this will make me sound like Scrooge, but I am sympathetic with old people who can’t pay their bills..more sympathetic than you might realize, but I have trouble with the idea that just because you are old you should not have to pay your bills. Can someone who believes in this make a case for it.
On the other hand predatory lenders and predatory lawyers, and judges who literally don’t give a damn visit unconscionable cruelty on those who come within their claws, and we need to find ways to alleviate that.
Some “education” business are fraudulent . Those loans should be forgiven and the “lenders” should be prosecuted and fined.
The banks (lenders) must be made to carry a large part of the risk that a lender will default. That should make them less eager to lend money to people who won’t be able to pay.
Bankruptcy is not as easy as it might seem. The laws have been changed since you and I were young, and it’s hard to keep your home and the tools of your trade…so that you have a reasonable chance of recovering your ability to earn an income after going through bankruptcy, That needs to be fixed.
Education should not be oversold… many (i think most) “students” have no good reason to be in college. And if they are to be in trades, it would be better if the high schools gave them a good start toward that, and afterwords apprenticeship programs (unions) or employer training, should be relied upon more than speculative debt to learn a trade that may no longer be in demand, or for which you do not have a well founded interest or talent.
specirfically to Run: ALL other borrowers are subject to theiving practices similar to those experienced by students. Mouch of this thieving practice can be avoided by taking care to avoid the fine print. If you really can’t pay your bills, then bankruptcy…modified as suggested above… needs to be an early answer and not one that comes after all of your resourses are exhausted.
As for Biden. we may hope the young Biden was just stupid and not corrupt or predatory. in any case it is useless to blame him now. He might be part of the solution now if he is not made to feel he needs to defend his previous mistakes.
Coberly:
Unless you wish to “just” pay interest (which you can choose in “some” cases such as a mortgage), I know of no personal loans where you are forced to pay interest only instead of interest and principal.
Most of these are government loans which are cast at the schools and the private businesses playing like they are schools. You are making loans to 18, 19, 20, and 21 year old people. They are not old people like us who have had the advantage of knowledge.
“ALL other borrowers are subject to theiving practices similar to those experienced by students.” BS Coberly. You just demonstrated how little you know about the issue. And “No,” all borrowers are not subject to thieving practices similar to those experienced by students. That is just plain ignorance.
Run
It doesn’t help for you to call my comment BS or “plain ignorance. I will repeat, I have never had or heard of a loan in which you were not required to pay accrued interest first. I have close friends who have loans not student loans which are subject to thieving practices by lenders.
I may be ignorant of what you know, but I asked you to make your case, not call me names.
I think I did make a number of reasonable suggestions about how to go about addressing the problem. Since you think they are BS…so obviously BS that you do not need to explain what is wrong with them (and BS implies more than “wrong” but that they are deliberate lies), I can see no point in continuing this conversation.
Run’s comment, and my reply, appear to have ended up on the wrong thread. I think he meant to yell at me about my thoughts about fixing the student loan problem.
run @ 11:55 a.m.
– The paying off of interest accrued before before touching principal. I do not know of any loan today which has this penalty.
run @ 7:06 p.m
I know of no personal loans where you are forced to pay interest only instead of interest and principal.
these are not the same thing.
coberly @ 12:26 p.m.
I have never had a loan, or seen a loan, or heard of a loan in which the interest was not paid first. in every loan i have seen your payment is applied first to interest accrued since last payment, the remainder of your payment is then applied to principal. if the interest accrued since last payment is greater than the amount of the present payment, then none of the payment will be applied to principal. as far as i know, unpaid interest becomes part of “principal” in your next statement. and you pay interest on that unpaid interest now “principal. otherwise the bank would be giving you a free loan.
much as i don’t like the banks i have dealt with (they cheat when they can get away with it) i can’t imagine them giving you free loans.
if anyone has had other experience i would be glad to hear about it… details may matter.
NDEA loans may have been different. I had a dispute with the first college I went to and refused to pay a bill. Many years later I decided to “render unto Caesar” and paid the bill. I don’t think they were charging me interest all that time. for which I suppose I should be grateful, if I hadn’t been still mad at them. But if they HAD charged interest I doubt I could have paid it. In general I believe in paying bills. Sometimes even bills for bad service. but life can overwhelm people some times… and some bills are fraudulent… exacting the full pound of flesh under those circumstances then seems criminal, as Portia explained to Shylock. it’s what bankruptcy was designed to address.. until it was “reformed” and administered by sleepy automatons.
maybe instead of calling me names, we should try to find out first what we agree about.
that was a long time ago. i think it is quite possible the reason the college did not charge me interest is because the government paid them (as it guaranteed the loan). in which case their taking my payment was probably not quite honest… which is what i would have expected of them.
gets too complicated, best forgotten about. another reason for jubilee.
for anyone who is getting confused…one of Run75441’s comments above, and my reply first appeared on another thread. they have subsequently appeared here… under Run75441’s name.
Yeah, plenty confusing. In any case student loan debt can be much larger than other forms of debt that are not secured by property as mortgages and car loans are. So, two wrongs might not make a right, but still make the Right happy.
Maybe there will be an app for that. An investment bank can create an app service that sells junk bonds to put students through college. Then it would be a simple matter for college applicants to include the prospectus for their junk bonds with their application to attend a college.
To Coberly:
I can only presume that you have never taken out a student loan. As you say, “details matter”, and for student loans, the details make your statement that “ALL other borrowers are subject to thieving practices similar to those experienced by students.” completely asinine, frankly.
First, unlike ALL other loans, student loans are uniquely stripped of the same, uniform bankruptcy protections that all other borrowers enjoy. They are also stripped of statutes of limitations (again, a protection that ALL other loans in this country have). They have also been stripped of Truth in Lending Laws, Fair Debt Collection Laws, and even state usury laws do not apply to federal student loans.
Second: The congressionally created collection regime is like nothing you or anyone who has never had a student loan has ever come up against. There are massive penalties, fees, and collection powers like wage and tax return garnishment without a court order, suspension of professional- and even driver’s licenses, confiscation of social security and disability payments, and even termination of public employment. All of these harms can and are brought to bear against defaulted student loan borrowers who see their loan balances explode (often) to many times what was originally borrowed.
So…your rather cavalier, broad statements about student loans are completely off-based, and ill-informed.
What is most important to this discussion: The entire federal lending system is now catastrophically failed. Even before the pandemic, around 65% of borrowers were unable to make payments, and 80% of all borrowers were “underwater” on their loans. Over a quarter had already defaulted on their loans, and the default rate for borrowers was absolutely headed to 75%- if not higher. TODAY, that is surely higher still as the economic fallout of the pandemic comes home to roost.
The default rate for sub-prime home mortgages, by contrast, was a mere 18%. So this is a catastrophically failed lending sytem the likes of which this country has never before seen. It is dead, failed, toast, finished. There is no saving it.
At this late date, the very moderate solution of returning the bankruptcy protections (that the Founders called for ahead of the power to raise an army and declare war in the Constitution) is not enough. It is the first step that must be taken, obviously, but by itself, will only ensure the bankruptcies of 20-25 million people, if not far more (in an average year, less than 1 million people file bankruptcy for any reason). So this would overwhelm the bankruptcy courts to the point of seizure.
Remember also: We just threw out Trillions in PPP loans that don’t need to be repaid- and that ALL ADDED TO THE NATIONAL DEBT AND REQUIRED MONEY TO BE DRAWN FROM THE TREASURY. Cancelling all federally owned student loans (about 87% of all student debt) requires NO money from Treasury, and adds NOTHING to the national debt.
In view of this, it is obvious that this big-government, nationally threatening, catastrophically failed lending system must be “taken to the bath, and drown in the tub”. It is vanishing into a mist of popular illegitimacy as we speak.
We can find a cheaper way to fund higher education in this country.
The student loan system is dead. The pandemic was the nail in the coffin. And whatever your opinion might be cannot change this fact.
dear alan
should i stop reading after “completely asinine”? or would you like to try again?
alan
can you tell the difference between “all borrows.. similar” and “all…practices?”
alan
well, i sneaked a peak, and it’s clear you have nothing to add toward a solution but shouting and arm waving. your trouble is you can’t read, or you would have seen that what you are shouting about has nothing to do with what I actually said.
US News – January 2013
https://loans.usnews.com/articles/how-much-student-loan-debt-is-too-much
Fred:
Have you “ever” taken out a student loan or maybe a child of yours did?
To Coberly:
Good First Point. I do apologize. The proper spelling is “Asinine” I attempted to correct, but the editing function could not be found.
As to your other points, I read them carefully and responded appropriately, and even quoted your comment to begin my response.
I presented you with strong evidence that your comment about student loan borrowers experiencing the same tricks that other borrowers face as, indeed, asinine.
As you appear unwilling or unable to exchange on any of the several cogent points of fact that I raised. That is disappointing. So…I will simply point you to some other relevant materials for your edification, should you ever choose to inculcate valid new information about this failed, predatory lending system.
1. Even the federal government is making a profit on defaulted student loans (a claim that no other lender for any other type of loan can make). This was true in 2010, and remains true today:
https://studentloanjustice.org/defaults-making-money/
2. In over a third of US states (by and large “red” states), the citizens now owe more than the entire state budget in student loan debt.
https://studentloanjustice.org/pr3-3-21/
3. Conservatives are being tricked to the wrong side of the loan cancellation issue, and it is costing them important elections, like Georgia.
https://studentloanjustice.medium.com/conservatives-have-a-major-student-loan-problem-e0063adc267d?postPublishedType=repub
Alan
you idn’t have to convince me you can’t read. i got it the first time.
Alan Collinge is the originator and head of the Student Loan Justice Org.
Angry Bear has featured multiple posts detailing the issues with student loans, the lack of acknowledgement by adults of the issues, the predatory nature of the financial interests making the loans to 18 year-olds and servicing them, the lack of consumer protections and legal recourse which are available to other citizens and presidents for “that” matter, the usurious intent of the loans, the drag on the economy created by thousands of younger adults who will never reach their potential due to these loans, etc.
Alan has initiated a petition seeking redress from Joe Biden to address the issues of student loans held by previous students, seek forgiveness of the original loan and usurious additions, and restore consumer protections which are available to other citizens. He has over 1 million signatures on the petition to date .
Joe Biden was one of the chief instigators of removing consumer protections from these loans as a Congressional Representative and again as a Senator.