Student Loan Debt Clock

Wednesday, May 16, 2012

Today's News on the Student Loan Debacle

Please call today: Senate & Congress Phone & Address Directory

 (From a FB friend)

Join the ‘student loan debt’ advocates & champions in the fight towards changing American perceptions; there is a movement to reach and change societal norms and heuristics in regards of how people think of ‘student loan debt’ and the serious repercussions in aggregate when the next financial crisis hits. When the student loan bubble bursts, and it will; the devastation will be long reaching into all our financial institutions, and then society will finally understand the foreboding economic condition and the actors who were involved in allowing this student loan debt catastrophe to happen: the responsible persons for the Student Loan Debacle, is majority of Congress & the Senate. And how did "WE the PEOPLE" and our wishes become a special interest group that those in Washington can negate.

And the thousands of individuals who are rising up and saying to Congress and the Senate “enough is enough, get out of the pockets of special interest groups; quit catering hand and foot to the PACS,” and do the job you were elected to do by the American people, in assisting the American people and not big corporations, you know the United States citizens, the ones who are paying your salaries!

I can’t emphasize enough, walking away from student loans is really not an option. Because, your student loans never go away! EVER! There are many ways in which your debt can be dealt with by the utilization of various programs. There is a link on the right, Navigating Through Your Student Loan Nightmare, which may help. More info on restructuring your debt will come later.

Congress and the Senate should be held accountable because of the lack of financial protections they eradicated; or should I say, [the bankruptcy protections] they have done away with, for the sake of their special interest associations.

Become Engaged - become a person who participates in their own life and assists in a greater cause for the good of the whole, and not just for the sum of its parts.

Today’s theme is again on the student loan debacle; sub-prime economics & unethical business practices within the student debt recovery system which is backed by our federal government.

A comment I found on the net:  by Unemployed_Northeastern

1965: Government student lending begins.  Outstanding balance: $0
2000: $200 billion owed
the end of 2008: $440 billion owed

Very Valid Points! (If anyone can prove his claims as to be invalid, I welcome it).

2012: $1 trillion owed, with another $113 billion expected to be borrowed.

Plug those numbers into Excel or a graphing calculator or Wolfram Alpha.  What you have, more or less, is an exponential curve.  Not a linear or geometric increase - an exponential increase.  I would add that a commenter over on CHE said that because these figures are based on "cohort borrowing," they likely do not represent the full amount that is currently owed; nor do these figures take into account the decades of capitalizing interest that will accrue during payback.

1.  The targeted lobbying to rid student loans of all consumer protections - statute of limitations, state usury and consumer protection laws, the Truth in Lending Act, the FDCPA, the ability to discharge in bankruptcy, the unheard of collection/garnishment measures.

2. The role of SLABS (Student Loan Asset-Backed Securities), their [until recently] invulnerability to market downturns because of the draconian repayment measures I listed above in #1; their influence in raising college costs and getting rid of the consumer protections in the first place, and the general public's almost complete ignorance that student loans are sliced and diced into securities the same way that mortgages were (and are).

3.  The deeper players in this puzzle.  One example: the largest higher ed think tank in the country is The Lumina Foundation.  With $1.5 billion in endowment (in 2007, anyways), it is wealthier than all but a handful of universities.  Their stated goal is to have 60% of America hold college degrees of some sort by 2025, and fund a lot of research papers to help promote higher education.  Not a penny of the $1.5 billion goes to student scholarships or the like.  If one roots around their web page for awhile, they can discover that this organization was founded when one student loan provider (USA Group) sold its assets to another (Sallie Mae), then took the proceeds and reinvented itself as a non-profit foundation.  So, the largest pro-college group in the country was founded, funded, and is operated by current and former student loan execs.  There is not, to my eye, one mention of a student loan crisis on their website, as opposed to the lengthy coverage here on the Atlantic, in the NY Times, and elsewhere - but not The Washington Post, since of course they own (and are subsidized by) for-profit education provider Kaplan.

A little history on who allowed the bankruptcy law to become invalidated towards student loans, wouldn’t you like to ask your representatives why they took your consumer protections away in regards to student loans; when ‘WE’ the tax payers are funding ‘fly by night’ corporations who take our tax dollars and then file bankruptcy and then start all over again with more of our hard earned money as in tax dollars?

Wouldn't you like to ask, why did you allow our bankruptcy protections to go by the waste side, but you can give billions to bail out large corporations. I want to know, WHY!

How many of those who supported the bill to take our consumer protections away, are now in bed and reaping huge profits from the onerous practices of the student loans collection agencies, which are backed and paid for by our federal government… More on that to come.

S. 256 (109th): Bankruptcy Abuse Prevention and Consumer Protection Act of 2005
Sponsor: Sen. Charles Grassley OR 11 USC § 523 - Exceptions to discharge

(8) unless excepting such debt from discharge under this paragraph would impose an undue hardship on the debtor and the debtor’s dependents, for—
(i) an educational benefit overpayment or loan made, insured, or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution; or
(ii) an obligation to repay funds received as an educational benefit, scholarship, or stipend; or
(B) any other educational loan that is a qualified education loan, as defined in section 221(d)(1) of the Internal Revenue Code of 1986, incurred by a debtor who is an individual;

Sponsor: Sen. Charles Grassley
show cosponsors (12)
Sen. Thomas Carper [D-DE]
Sen. Michael Enzi [R-WY]
Sen. Orrin Hatch [R-UT]
Sen. Ben Nelson [D-NE]
Sen. Jefferson “Jeff” Sessions [R-AL]
Sen. Richard Shelby [R-AL]
Sen. John Thune [R-SD]
Sen. John Sununu [R-NH, 2003-2009] (joined Feb 03, 2005)
Sen. Michael Crapo [R-ID] (joined Feb 07, 2005)
Sen. Jim DeMint [R-SC] (joined Feb 07, 2005)
Sen. David Vitter [R-LA] (joined Feb 16, 2005)
Sen. Charles “Chuck” Hagel [R-NE, 1997-2009] (joined Mar 03, 2005)

Look for yourself?
AK Sr Sen. Lisa A. Murkowski Republican Yea
AK Sr Sen. Ted Stevens Republican Yea
AL Sr Sen. Richard C. Shelby Republican Yea
AR Sr Sen. Mark Lunsford Pryor Democratic Yea
AR Sr Sen. Blanche Lambert Lincoln Democratic Yea
AZ Sr Sen. John Sidney McCain III Republican Yea
AZ Jr Sen. Jon Kyl Republican Yea
CA Sr Sen. Dianne Feinstein Democratic Nay
CA Jr Sen. Barbara Boxer Democratic Nay
CO Sr Sen. Ken Salazar Democratic Yea
CO Sr Sen. Wayne A. Allard Republican Yea
CT Sr Sen. Christopher J. 'Chris' Dodd Democratic Nay
CT Sr Sen. Joseph I. 'Joe' Lieberman Independent Democrat Nay
DE Sr Sen. Joseph Robinette 'Joe' Biden Jr. Democratic Yea
DE Sr Sen. Thomas Richard 'Tom' Carper Democratic Yea
FL Jr Sen. Melquiades Rafael 'Mel' Martinez Republican Yea
GA Sr Sen. Clarence Saxby Chambliss Republican Yea
GA Jr Sen. John H. 'Johnny' Isakson Republican Yea
HI Sr Sen. Daniel K. Inouye Democratic Yea
HI Jr Sen. Daniel Kahikina Akaka Sr. Democratic Nay
IA Sr Sen. Charles E. 'Chuck' Grassley Republican Yea
IA Jr Sen. Thomas 'Tom' Harkin Democratic Nay
ID Sr Sen. Michael D. 'Mike' Crapo Republican Yea
ID Sr Sen. Larry E. Craig Republican Yea
IL Sr Sen. Richard J. 'Dick' Durbin Democratic Nay
IL Jr Sen. Barack Hussein Obama II Democratic Nay
IN Sr Sen. Richard G. 'Dick' Lugar Republican Yea
IN Jr Sen. Evan Bayh Democratic Yea
KS Sr Sen. Charles Patrick 'Pat' Roberts Republican Yea
KS Sr Sen. Samuel D. 'Sam' Brownback Republican Yea
KY Sr Sen. Mitch McConnell Republican Yea
KY Jr Sen. Jim Bunning Republican Yea
LA Sr Sen. Mary L. Landrieu Democratic Yea
LA Jr Sen. David B. Vitter Republican Yea
MA Sr Sen. Edward M. 'Ted' Kennedy Sr. Democratic Nay
MA Sr Sen. John Forbes Kerry Democratic Nay
MD Sr Sen. Barbara A. Mikulski Democratic Nay
MD Sr Sen. Paul S. Sarbanes Democratic Nay
ME Sr Sen. Olympia Jean Snowe Republican Yea
ME Jr Sen. Susan M. Collins Republican Yea
MI Sr Sen. Carl Levin Democratic Nay
MI Jr Sen. Debbie Ann Stabenow Democratic Yea
MN Sr Sen. Norm Coleman Republican Yea
MN Sr Sen. Mark Dayton Democratic/Farmer/Labor Nay
MO Sr Sen. Christopher S. 'Kit' Bond Republican Yea
MO Jr Sen. James M. 'Jim' Talent Republican Yea
MS Sr Sen. Thad Cochran Republican Yea
MS Jr Sen. Chester Trent Lott Sr. Republican Yea
MT Sr Sen. Max S. Baucus Democratic Yea
MT Jr Sen. Conrad R. Burns Republican Yea
NC Sr Sen. Richard M. Burr Republican Yea
NC Sr Sen. Elizabeth H. Dole Republican Yea
ND Sr Sen. Kent Conrad Democratic-NPL Yea
ND Jr Sen. Byron L. Dorgan Democratic-NPL Nay
NE Sr Sen. E. Benjamin 'Ben' Nelson Democratic Yea
NE Sr Sen. Charles T. 'Chuck' Hagel Republican Yea
NH Sr Sen. Judd A. Gregg Republican Yea
NH Jr Sen. John E. Sununu Republican Yea
NJ Sr Sen. Frank R. Lautenberg Democratic Nay
NJ Sr Sen. Jon Stevens Corzine Democratic Nay
NM Sr Sen. Jeff Bingaman Democratic Yea
NM Sr Sen. Pete V. Domenici Jr. Republican Yea
NV Sr Sen. Harry M. Reid Democratic Yea
NV Jr Sen. John Eric Ensign Republican Yea
NY Sr Sen. Charles E. 'Chuck' Schumer Democratic Nay
NY Jr Sen. Hillary Rodham Clinton Democratic Did Not Vote
OH Sr Sen. George V. Voinovich Republican Yea
OH Sr Sen. Michael 'Mike' DeWine Republican Yea
OK Sr Sen. James M. 'Jim' Inhofe Republican Yea
OK Jr Sen. Thomas Allen 'Tom' Coburn Republican Yea
OR Sr Sen. Ron Wyden Democratic Nay
OR Jr Sen. Gordon Harold Smith Republican Yea
PA Sr Sen. Arlen Specter Democratic Yea
PA Jr Sen. Richard J. 'Rick' Santorum Republican
Yea RI Sr Sen. John Francis 'Jack' Reed Democratic Nay
RI Jr Sen. Lincoln D. 'Linc' Chafee Republican Yea
SC Sr Sen. Lindsey O. Graham Republican Yea
SC Jr Sen. James W. 'Jim' DeMint Republican Yea
SD Sr Sen. Timothy Peter 'Tim' Johnson Democratic Yea
SD Jr Sen. John R. Thune Republican Yea
TN Sr Sen. Lamar Alexander Republican Yea
TN Sr Sen. William H. 'Bill' Frist Republican Yea
TX Sr Sen. Kay Bailey Hutchison Republican Yea
TX Jr Sen. John Cornyn Republican Yea
UT Sr Sen. Orrin G. Hatch Republican Yea
UT Jr Sen. Robert F. 'Bob' Bennett Republican Yea
VA Sr Sen. John William Warner Republican Yea
VA Jr Sen. George Felix Allen Republican Yea
VT Sr Sen. Patrick J. Leahy Democratic Nay
VT Jr Sen. James Merrill 'Jim' Jeffords Independent Yea
WA Sr Sen. Patty Murray Democratic Nay
WA Jr Sen. Maria Cantwell Democratic Nay
WI Sr Sen. Herbert H. 'Herb' Kohl Democratic Yea
WI Jr Sen. Russell D. 'Russ' Feingold Democratic Nay
WV Sr Sen. Robert C. Byrd Democratic Yea
WV Sr Sen. John D. 'Jay' Rockefeller IV Democratic Nay
WY Sr Sen. Craig Thomas Republican Yea
WY Sr Sen. Michael B. 'Mike' Enzi Republican Yea

Supported the Bill,
Senators Diane Feinstein, Barbara Boxer, Chris Dodd, Joe Liebermann, Daniel Akaka, Tom Harkin, Dick Durbin, Barack Obama, Ted Kennedy, John Kerry, Barbara Mikulski, Paul Sarbanes, Karl Levin, Mark Dayton, Byron Dorgan, Frank Lautenberg, Jon Corzine, Charles Schumer, Ron Wyden, John Reed, Patrick Leahy, Patty Murray, Maria Cantwell, Russ Feingold, John Jay Rockefeller IV, Hillary Clinton did note vote.

For more info:

Usury laws vary slightly from state to state however the commonality is this; an excessive or illegally high rate of interest charged on borrowed money.  All types of student loans are exempt from theses state laws regarding the practice of capitalizing interest.

Student Loans have become the most profitable and the most oppressive type of debt in our nation’s history. This debt has been the financial ruin of millions of hard working Americans.
Profitability is the key reason these debts cannot be discharged in bankruptcy—lenders have spent millions lobbying for their own interests at the expense of student loan borrowers.

Currently, student loans cannot be discharged when the debtor declares bankruptcy, which means that, unlike most other unsecured debt, student loans will stay with the debtor post-bankruptcy--this was not always the case:

Prior to 1976: Both Federal & private student loans were dischargeable in bankruptcy without exceptions.

1978: With the introduction of US Bankruptcy Code (11 USC 101 et seq), exceptions to discharge were implemented. The ability to discharge is limited to loans in repayment for 5 years or representing an undue hardship.

1990: The five-year period was extended to seven years.

1998: Congress reauthorized the Higher Education Act, eliminating the seven-year rule

2005: The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 expanded to 
include private student loans.

The popular argument against discharging student loans in bankruptcy is that it will be abused--although at the time Federal loans could be discharged, less than 1% were discharged--hardly an abuse.  The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 include a number of safeguards to prevent abuse and fraud and make it difficult to file bankruptcy.  It is also important to note that there is no evidence that student loan debtors are more likely than other borrowers to file for bankruptcy.  
Why then was the law changed making student debt the most dangerous debt in America?  The answer is simple--Lending giants such as Sallie Mae paid for these laws by spending millions of dollars lobbying.
In 2009 alone, Sallie Mae spent 3.4 million dollars lobbying against changes to student loans proposed by President Obama, and since 1989 Sallie Mae has been the single largest contributor to John Boehner's leadership PAC. (History of Sallie Mae lobbying)

The argument of "abuse" is nothing more than a fear tactic perpetrated by the lending industry and the elected officials they own.  Ironically, these lenders, even when intending to defraud the public by overvaluing their holdings, can themselves file for bankruptcy should they chose. 

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