Student loans in the news

Paying for College
1

<p>The president's budget plan calls for direct government funding of student loans, cutting out private industry:</p>

<p>Student</a> loan companies' shares plunge on Obama proposal - Los Angeles Times</p>

<p>It'll be interesting to see how this plays out.</p>

<p>Also, there is a good radio program on WBUR (Boston) discussing student debt loads. I would recommend it to any students reading this forum - let the buyer beware! I know there are good FA people out there, but students need to ask more questions and go into this with their eyes wide open.</p>

<p>"To look at the bright side of student loans, there’s no way an awful lot of young Americans would get through college without them these days. They pay the bills.</p>

<p>But look at the dark side of those loans, and it’s a scary picture out there. Skyrocketing college costs have pushed new graduates deeper into debt than ever. And the debt itself is often structured as the most unforgiving loans you’ll ever find.</p>

<p>My guest today, Alan Michael Collinge, says it’s a scam just shy of loan-sharking — and that colleges are in on the game.</p>

<p>This hour, On Point: Shining a bright light on the rough side of student loans."</p>

<p>The</a> Dark Side of Student Loans - WBUR and NPR’s On Point with Tom Ashbrook</p>

2

<p>is this referring to the Perkins loan or Stafford end of the student loan program? It must be the Stafford end. </p>

<p>Can they lower those rates too please. I think the rates on student borrowing ought not to be higher than those for buying a house. I’m really fortunate that all my son’s loans are subsidized. I’m really hoping that by the time he graduates they will allow a big refinance down to lower rates. I know the Stafford subsidized is being lowered progressively already.</p>

<p>The capitalist banks had the run of the hen house for long enough.<br>
They looted and plundered their way enough.</p>

<p>Maybe the government won’t need to withhold originator and guarantor fees, another $$ for the student loan companies.</p>

3

<p>I know there are good FA people out there, but students need to ask more questions and go into this with their eyes wide open.</p>

<hr>

<p>It is NOT the fault of FA people that students choose to take on so much debt. Believe me, the FA people in my office all cringe at student debt. We are trying to proactively assist them, offering online & workshop-style financial literacy courses. We can’t get students to participate. We offer plenty of opportunities for high school & college students/families to learn about the financial aid process so that they can be better able to understand the realities & the choices facing them. Few take us up on it - and of those who do, many still don’t really listen. We just brainstormed again the other day, hoping to come up with ways to reach people. We DO care - very much! We just can’t seem to protect people from themselves. You have no clue how many people don’t even understand that they must pay back their loans (let alone with interest).</p>

<p>Maybe the government won’t need to withhold originator and guarantor fees, another $$ for the student loan companies. </p>

<hr>

<p>Actually, all Direct Loans (the government-originated Staffords) do have originator & guarantor fees. My D has a FFELP loan (through a private lender) - I prefer the terms, and there are no fees (actually, they have to charge fees - but they return them to the loan, so it’s effectively no fees). Not all FFELP lenders are “unfair” — unfortunately, though, it seems too many are & that may be the death of that system. From a school standpoint, Direct Loans are easier.</p>

4

<p>my stafford loan lender didn’t withhold any fees at ALL. They were not on my school’s ‘preferred list’ but I looked long and hard and found discoverstudentloans a part of Discover bank, discover card, etc. It was a few extra steps to use them as a lender, but worth saving the fees.</p>

<p><a href=“http://www.nasfaa.org/publications/2009/go10budget022709.html[/url]”>http://www.nasfaa.org/publications/2009/go10budget022709.html&lt;/a&gt;
more info that I found</p>

5

<p>Those origination and guarantee fees are manadated by Congress as another means to supplying a positive cash flow from student loans. Some of those fees are actually paid to the government itself, not retained by the FFELP lenders, to offset those loans which are defaulted.</p>

<p>The news from the White House is deeply saddening, especially given the current economic problems facing this country. If FFELP loans go the way of the dodo, leaving only Direct Loans, this economy is going to be in much worse shape than it already is. </p>

<p>Unemployment rates are already skyrocketing across the country, how many more will be unemployed if Obama gets his way?</p>

<p>The national debt is already over $10 trillion. How much higher will it climb if all loans are issued through Direct lending? Does anyone understand that the funds from Direct Loans come directly from the Treasury Department and automatically increase the national debt each time the money is disbursed to the school?</p>

<p>Do parents understand that they will have to provide more upfront money to their college students if all schols were forced into Direct? The last time there was a major rush into Direct, the Department of Education could not keep up with the workload and schools had to wait MONTHS to receive any money from the government. This means that students who rely on some of their student loan money to cover the day-to-day living expenses also had to go without those funds until the Feds could issue the money to the schools.</p>

<p>The Department of Education cannot handle the current workload, let alone any drastic increase. I cannot tell you how many times I have had to quote DOE regulations to DOE employees because they don’t even know their own rules. Just recently, when handling a student’s issues, I had to read directly from their own regulations to make them submit a statement to a student saying they were eligible for additional financial aid funding. The DOE agent tried telling me that the regulation was wrong and outdated, until I forwarded them a copy of the regulation that was from the current FSA handbook issued by the Department.</p>

<p>And how many more students will default on their student loans? FFELP lenders work extra hard to help students avoid defaulting, providing default aversion programs and debt management programs. Direct Loans doesn’t provide this type of information to students. When I started to default on my Direct Loans 10 years ago due to an error they made (my social was entered into their computer wrong so they couldn’t accept my payment because they couldn’t find my account), they just sent notices saying I was late in payments. When I called, I couldn’t get any answers, they couldn’t find my loans, they said the notices were a mistake and intended for someone else. 10 years later, my loans are finally out of default and my social has been fixed in their system…after I learned how the system works by learning financial aid from the inside out.</p>

<p>This is a HORRIBLE decision by Obama and his team…they really have not thought this out.</p>

6

<p>I am definitely pleased with my D’s lender. I would also hate to see this industry go down in flames because some lenders were (or were perceived to be) unscrupulous. The backlash against lending seems unfair.</p>