When i sit manning my post at my full-time protection job I listened contently to May 2, 2012 "Coast in order to Coast. " On the show was a guy named Alan Collinge, founder of StudentLoanJustice. org. Alan is really a dedicated political activist working diligently to spread awareness and persuade congress to repair a broken Federal Student Loan system. While on air he delivered to light a method of deceptive practices that loan companies actively pursue to pad their wallets with outrageous profits while borrowers end up saddled with outstanding balances totalling three times or even more of the original amount owed. Unlike traditional personal debt banks want borrowers to default. Lax restrictions and an irresponsible insufficient consumer protections all play an integral role for making this possible and it needs to stop.
As I listened I heard about a $900 a month loan payment going into default due to a drop in income and marital trouble. Upon trying to get an income based repayment plan the borrower saw his payment jump to $1600 monthly. How is that possible I thought to personally. Someone unable to make the current payment has become expected to pay nearly double that? Surprising enough that wasn't the shocker of the whole scam. Federal student loans are guaranteed through the government. So when a borrower defaults on the loan the lending company has the right to collect 100% of the outstanding balance in the government. However thanks to a nearly restrictionless market due to congressional loop holes the bank instead sells the loan at 100% to some collection agency often times owned by the unique lender. The agency then tacks on outrageous penalties and fees towards the outstanding balance. All legally and now also guaranteed to be paid by america government.
As you can see by pushing a defaulted loan to a different division a lender has now manufactured a assured profit with manipulated fees and collections costs. Pull this maneuver for some years then cash that loan in and the lending company can triple their investment or more even while knowing the borrower will never be able to pay for that loan. In fact that is what these lenders rely on because no payments from the borrower spells guaranteed payment from The government.
The bottom line here is that the education loan program is nothing shy of legalized fraud. Honest hard working American's who've paid their student debt off or are current on payments may believe that forgiving the debt of those that cannot afford it's unfair and a drain on taxpayers, but the cold truth is not forgiving it costs far more and big banks would be the ones cashing in. If a borrower can't afford to pay for their debt at the original amount owed, the taxpayers can get to pay double, triple, or more of the initial tab. All of which is a sum of fabricated fees allowed legally.
Alan and his organization are actively advocating for that same consumer protections that are enjoyed by other consumer debt. The same rights someone who maxes out his charge cards purchasing meaningless desires already is awarded. The only difference here is that borrowers of the money were led to believe they were doing the one thing that would guarantee them a prosperous future. Instead these were thrown into the pool of legalized loan sharks.
With some $1 trillion in outstanding education loan debt and a stagnant jobs market, taxpayers can't afford to financially support this Mob economy any longer. It's time our elected representatives begin standing up for that citizens that entrusted them and hold banks responsible for making good on their investments. Help Alan and his organization take the responsibility off hard working Americans and their tax bucks. Check them out at StudentLoanJustice. org and participate in the fight.
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