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Banks’ Lending Frenzy Left Borrowers Buried in Student Debt, Report Details

In the run-up to the financial crisis, banks and other lenders made risky private student loans. In the years since, default rates have soared and borrowers are still suffering.

(File photo by Mel Evans/AP Photo)

Much like the mortgage market, the market for private student loans has gone through a big boom and a messy bust. Some banks and lenders played fast and loose with student loans, aggressively marketing them to borrowers who couldn't afford that amount of debt, according to a new government report.

"Borrowers who took out loans at the height of the boom are still suffering from those excesses," said Consumer Financial Protection Bureau Director Richard Cordray in remarks to reporters on Thursday. The report, released jointly by the U.S. Department of Education and the CFPB, is the government's first major study of the murky private student loan market, for which there has long been little regulation or reliable data.

American borrowers currently owe more than $150 billion in private student loans, according to the report. Default rates soared in the years since the financial crisis, and more than $8 billion in private loans are in default.

In the run-up to the financial crisis in 2008, the boom in risky private student loans was fueled by Wall Street investors' demand for securities backed by bundles of student loans, the report said. See the below graph, which draws from proprietary loan data collected from major lenders:

 

After the crisis, investor interest in all manner of loan-backed securities — including student-loan-backed securities — collapsed. And with less packaging and reselling of loans to fund the creation of new loans, the private student loan market has since dialed back and raised its lending criteria.

The result: private loans are now much harder for borrowers to get.

According to the report, more than 90 percent of the dollar amount of private student loans originated last year were co-signed — so if the primary borrower is unable to repay the loan, the cosigner will also be responsible for payment. That's up from 55 percent in 2005.

 

Much of what the report describes — private student loans originated by financial firms often for immediate sale and securitization — is helpful context for understanding the quandary of many borrowers and their cosigners.

In June, we detailed the plight of Francisco Reynoso, a gardener in California who cosigned on several private student loans for his son between 2005 and 2007 — in the very heyday of the lending boom. His son later died in a car accident and now the bereaved father is saddled with the debt. Since his debt was resold times over, its not even clear to whom Reynoso owes the money may appeal to for forgiveness.

"For the relatively high number of [private student loan] borrowers currently having difficulty with repayment, it is hard to avoid default and equally hard to escape it, as compared to options available to federal borrowers," the report explains.

Federal loans offer more flexibility and protections than most private loans—such as deferral and forbearance options or lenient repayment plans for low-income borrowers. Federal loans also are discharged if the borrower dies or suffer permanent disability. (See our reporting on the federal system for disability discharges.)

Some private student lenders, within the past year, have started to offer fixed-rate student loans, touting interest rates that are in some cases competitive with federal rates. But as Education Department and CFPB officials note, these loans are only a good deal for borrowers with exceptional credit who can qualify for the lowest interest rates and are willing to forgo the additional protections offered by federal loans.

Check out the full report. And if you're a borrower who sees your own student loan story mirrored in this report, email us at education@propublica.org to let us know.

You can also check out the CFPB's new tool if you're struggling with your loan payments, or file a complaint with the agency for problems specific to private student loans.

Why did these ” students ” take out the loans in the first place ?  They have no assets or income, to speak of… 
And now their lives will be ruined by bankruptcy.

Why did their parents not tell them to work their way through college, just as previous generations have done ?
Why has this country got to borrow for everything and think we can continally kick the can down the road.?
The younger people get enmeshed in this culture and now we see the results
Some of it is caused by bad parenting and lack of sound money advice.

Back to how the government operates !!!  No sound money policies there

Alessandro Machi

July 21, 2012, 5:49 a.m.

Debt Neutrality is the answer, and whichever presidential candidate backs debt neutrality could win the election in November of 2012.

Debt Neutrality means debts get paid down with no more interest rate charges, penalities, or fees added on to their existing consumer debt. Debt neutrality could even mean a reversal on penalties and fees from the past couple of years as well.

In exchange for debt neutrality, consumers pay down their debts knowing that as they make payments to their debts, the debt decreases an amount equal to the payment they are making.

Debt Neutrality would instantly begin to reverse the 3 trillion in consumer debt that presently exists in the U.S. and that is not being paid down. Presently, consumer debt payments are going into a black hole that includes 300 billion dollars a year in new interest rate charges on this consumer debt comprised of student loans and credit card debt AND litigated credit card debt that has been converted from an unsecured debt to a secured debt.

Alessandro Machi

July 21, 2012, 5:58 a.m.

Lets think about that 3 trillion dollars in consumer debt and the 300 billion in interest rate charges every year (plus who knows how much more is being generated in penalties and fees, could easily be another 100 billion dollars a year).

When president Obama proposes any type of consumer or small business “relief”, he speaks in terms of tens of billions of dollars up to 50 billion dollars, and most times these are simply loans that simply create MORE DEBT. 

The recent consumer mortgage foreclosure relief fund is only 25 billion dollars. You add it up and the programs that the Obama administration comes up with are just fractions of the 300 to 400 billion a year in interest rate charges on existing consumer debt. And, most of those programs are just designed to create more debt.

The american people are being scammed by both political parties who pretend as if their hands are tied. Consumer Debt Neutrality would begin healing the U.S. economy in less than a year’s time and neither political party has the guts to propose it.

Instead, we get progressive democrats demanding student loan forgiveness, which I find outrageously irresponsible, and neo conservatives clamoring for people to “get a job” and simply tread water as indentured servants for the rest of their lives because of the never ending interest rate charges on existing debt.

Demand Consumer debt neutrality before you have nothing left to lose.

Michael Krist

July 21, 2012, 2:53 p.m.

We are staying away from student loans for my daughter.  Instead we all are working a little harder to save money so we don’t have any debt to pay the thieves.  We also managed to get a few grants and scholarships and doing the thing over at comoinis.com.  She ended up raising over $2,300 there.  All gifts from our community investing in my daughter and her and all of our future.

The banks aren’t the only ones to blame. Colleges, universities, and our government have been relentlessly promoting higher education as the guaranteed road to career success, no strings attached. Add to that an academic culture that tells students to “find a career that you love and don’t worry about making money” and you’ve got a hot mess of outrageously unrealistic expectations.

Marcello’s right, and only scratching the surface.  How many times have we heard that “everybody deserves a college education” from various public and private officials?  How many parents tell their kids that they can major in anything they want, even if it’ll hurt their job prospects, as long as they finish a degree?  And how much has the price gone up?

The entire culture has been engineered to ensure that students enter the workforce several years’ salary in debt.

And with the job market down, where do the kids go after graduation?  Graduate school!  More debt!  Whee!

Worse, we’re quickly moving towards an era where colleges are worth progressively less.  In the face of people posting information and training for free on the web that’s more polished and thorough than any college professor presents (I say this as an adjunct professor at a fairly big-name school, so I know exactly what you’re getting for your money), what have colleges done?  They’ve started putting their own courses online…but for a fee.

Now, the benefit of going to school has never really been the coursework.  Yeah, you might get lucky (and I hope I do that in my classes) and find a professor who puts an interesting spin on a topic that motivates you to learn more, but in most cases, you’re just attending class for someone to, sadly, read you parts of the textbook.  The value of school is in networking, getting to know fellow students, academics, and industry people so that you start your career with a support system.  Also, building a peer group of motivated people makes you more motivated to learn the material, if you’re not the sort that ordinarily sits in the corner pushing yourself to learn something.

But by moving online, what are schools destroying?  Only their best selling points.

Add to that the idea that the Internet (and some low-cost technology) is destroying the old idea that you “can’t get experience without a job, and can’t get a job without experience.”  Wanna be a geneticist when you grow up?  Build yourself an OpenPCR setup (six hundred bucks).  A programmer?  Contribute to Firefox, Linux, or a million other projects that people have heard of (some projects also need tech writers, marketers, and advertisers).  An animator?  Download a copy of Blender and give it a shot.  A journalist?  Grab your smarphone and a blog and start investigating and producing.  Explore your local waterways with OpenROV, a remote submarine robot you can build in a few hours (eight hundred bucks).  Produce a feature-length movie with your smartphone and cheap/free software.  Test product ideas with a 3D printer (as little as three hundred bucks for a small one like Printxel).  Edit and write articles for Wikipedia.

That’s only a tiny fraction of an expanding field of open or ad hoc possibilities, but hopefully makes the point that there are groups and technologies that’ll give you direct, hands-on experience, often with guidance from professionals in exchange for volunteer help.  Yes, in some cases, it’ll cost a few hundred dollars for equipment, but not much more than a computer and it’s a direct investment, if it’s a field that interests you.  And as someone who’s gone through the hiring process on both sides of the desk, “worked on X, Y, and Z projects, here’s my portfolio” looks far better on a resume than “was secretary of school chess club” in any field.

That also assumes you don’t have access to a neighborhood where you can learn accounting from a local accountant and practice with a local restaurant, or help manage a soup kitchen or theater, like an informal apprenticeship.  For some (most?) kids, that might be even better.  I know the interns I work with grow quickly.

I’m not getting into this to scare people away from going to school.  I wouldn’t trade the time I spent getting my degrees, and I recommend it if the means exist.  But schools are shooting themselves in the foot, and I half-wonder if this push to keep students in debt is the education industry scrambling to ensure they don’t die when the become completely obsolete.  As I mention above, the current mode of operation is, if you can’t find a job, go back to school to defer (and increase) the loans.  So the schools do benefit, here, as much as the banks.  Possibly moreso, given their alternatives.

Separate from my rant…

Michael, do yourself a favor and call the financial aid office at every school you can find.  If you’re polite and can arrange your call during a quiet time at the school, the counsellors working there will often try to help even if your daughter isn’t going to enroll there.

More importantly, they’re not all created equal.  Some will know about opportunities the others missed or were trying to save for their favorite students.

Some also see this landscape and end up going freelance, charging a fee to research financial aid opportunities that fit your situation.  Depending on your needs, it’s usually not a bad deal, but only go with someone the other counsellors you talk to have heard of.

I only wish I could “ruin my life through bankruptcy.” I have tried, trust me. There is no way out of student loan debt. They are like a fiscal cockroach. If a student borrower is in too deep, their only recourse is to emigrate to a new country. Less than 1% of those who attempted to discharge student debt through bankruptcy were successful. Basically you need to be disabled. There are huge swaths of the upcoming generation that will never be able to get a mortgage. A lot of people my age who chose college and didn’t come from a rich family will not have family’s of their own because it would just not be responsible to bring a child into the world when you are saddled with $100,000+K of debt and you are underemployed. Funding higher education through a debt system has been an utter disaster. It just makes higher education more expensive. Every time they raise the debt limit, college raise prices; public and private alike. Money was/is handed out with no regard to what a person studying, and no assets are put up to secure loans totaling $130,000 and sometimes more. Madness. Total madness. ...But the rich got richer, so that’s nice.

Alessandro Machi

July 23, 2012, 2:44 p.m.

I think it’s really sad that so many people consider debt that has penalties, fees and interest rate charges attached on an ongoing basis as being no different than a debt that no longer has penalties, fees and interest rate charges being charged.

It makes me wonder, are so many people that stupid, or just narcissistic? I just don’t get it.

I’m the only person I have ever read on the internet that advocates for debt neutrality. I recall one person agreeing with me once.  Everyone else seems to be about total student loan forgiveness, or, “get a job”.

How lame.

No bank ever went to someone and made them take a loan.The people went to financial institutions looking for money instead of working 2 jobs or so and going to school or working period.
Why is it that people are not responsible for their actions.
Why do they get debt relief when the resposible ones who didn’t borrow do not get the money or the education.
It is so typical of our system. Do the right thing and the government treats you like the problem instead of the solution. Take less, pay more, the Obama way. Like Obama said, “if you have a sucessful business you did not do it”. He is an example of the system and the problem.
And many of these college degrees are “the emporers new clothes”. Worthless waset of time. Plus it costs hundreds of thousands of dollars to waste all that time.

Carola Von H.

July 23, 2012, 7:19 p.m.

Many lenders & dealers in securitized debt products are indeed hot to get people to borrow big. But the ultimate yes or no is said by borrowers. Only a few of whom are totally unable to understand loan terms. If masses of consumers would refuse to borrow more than they can afford, the debt pushers would be crippled.

Michael Krist

July 24, 2012, 1:39 a.m.

John:
Thanks for the input.  Between the grants and the funds we raised at comoinis, no checks from me this semester, and most importantly, NO LOANS!!!! 
The daughter is already getting ready for spring.  She is “pre-preparing” her info.  She plans to try to double her requested amount at comoinis.  Thinks the grants and such will be much harder to get, and smaller also.
Seems they are doing pretty good business over there now that the word is out.  Got an email from them that they hit $1,000,000 in requests their first month.
Really think this is going to have a big impact on the student loan market when the word gets out.  Too bad it was not around when my son was sending me tuition, rent, books, lab, parking, ... bills

Shay, I see what you’re saying, but it’s a bit inaccurate.  Banks have been aggressively pushing people into loans they can’t afford.  I work with people who are near the ends of their mortgages who get daily calls to refinance.  One apparently came with a hint that there might be a foreclosure involved if he didn’t refinance.  That’s awfully close to force, and would probably be illegal if my friend had evidence.

Now, you can argue that everybody should know better and can refuse, but that’s an “ivory tower” mentality, making the assumption that everybody has the time and education to make level-headed decisions.  College has become a stock part of “The American Dream,” and parents are told how bad they are if they aren’t pushing their kids, not just to a college, but to a BIG NAME college.

I also assume that you’re not interested in helping people “know better” other than to wag a disapproving finger.  Education only for the people who can afford it out of pocket, right?

Personally, I don’t support relief in a global sense.  I don’t think debt should vanish.  But, (a) I think that inexperienced consumers preyed on by an entire industry should have legal recourse and (b) the predatory practices need to stop.

I know, you want a “free market” solution, but surely you realize that only works when there isn’t anticompetitive behavior and market abuse from what amounts to a cartel.

Elizabeth Spahn

July 24, 2012, 8:56 a.m.

WORKING your way through college, as many of the boomers did, is no longer possible when tuition is $40,000 per year or more, and housing costs are inflated by university landlords. 
Too many universities are operating as taxpayer subsidized hedge funds, with lavish salaries for administrators and fund managers.  The educational part is incidental.

I add my “ditto” that debt neutrality is the obvious solution. It spreads responsibility to irresponsible lenders and irresponsible borrowers. Nobody gets off.

My family has generationally used the pay as you go approach. It takes longer to acquire a degree, but upon exit, we’ve all been debt free, and many of us have advanced degrees. We attend state institutions, starting at junior colleges where AA’s are acquired, then finish up at state colleges. This less urgent, less expensive approach also allows for more experimentation in course selection and flexibility in changing direction when new interests compel further exploration. Our current ability to acquire instant information via our fingertips further enhances and expands our reach in the effort to find a fit direction to join the workforce (hopefully as something other than the pizza delivery employee we were in the process of getting there).

The diploma is a piece of paper proving attendance, some degree of performance, and shows that the holder is someone who has some degree of determination and followthrough. It’s often needed to acquire a specific job. But the diploma is just the seed. Applied learning takes place after the job. It’s a necessary life-long process - especially now in our innovative, technology driven, rapidly changing economy.

Alessandro Machi

July 24, 2012, 12:41 p.m.

Hi Carolyn, thanks for the ditto about Debt Neutrality. I actually got another ditto about debt neutrality on a Matt Taibbi article about an eminent domain proposal in San Bernardino County.

Isn’t it amazing that americans could probably get themselves out of the financial mess caused by wall street if wall street would just step to the side!

Alessandro: Agree! And I suspect you would also agree that the prospect of wall street stepping aside is akin to asking for a more rational, flexible approach from the NRA.

We need intelligent informed voters to elect representatives in congress who haven’t been purchased by wall street and who will actually work for the best interests of their constituents. A tall order, given our current oligarchy and the collective level of education/concern in our voting population.

Alessandro Machi

July 24, 2012, 2:51 p.m.

Carolyn, I think rather than find uncorrupted politicians, maybe all of the present politicians “meetings” should be live streamed on the web. Politicians might feel braver about standing up to lobbyists if they knew someone was actually watching them.

As usual, the real issue has been obfuscated by banks, the media and sellout politicians. What’s the REAL ISSUE we should be discusing in the USA ?  FREE EDUCATION (College or trade school degree) for ALL who want it. We can sure as hell find enough money to keep our military all over the world, and support bankers who gamble and lose. Why can’t the richest nation in history educate its young people and enable them be competitive into the future?? Why do we insist on further enriching the banks and privitizing education for profit?? stupid americans.

Assesandro: Rather than conducting business in public meetings, I suspect most quid pro quo arrangements are made at lavish events held by lobbyists who ingratiate themselves by including their current targets into the heady realms of their exclusive clubs. I’ve conjured up an outrageous, impossible, and rather funny image that turns the Orwellian nightmare into its opposite. Allow “people” to observe the “leaders”: An un-removable 24/7 security mini video/sound cam forced to be worn on all government reps and officials for the purpose of deterring them from taking actions we don’t approve of. :)

We do currently do have some smart, un-bought representatives serving the needs of their constituents in congress who don’t rely on lobbyists or their largess in order to write up proposed legislation. We just need to turn that minority into a majority - which, unfortunately, requires well informed voters to accomplish.

Mike: Totally agree. Free education to invest in our own future as a country - with cost controls and monitoring put in place to prevent the kind of bureaucratic waste and fraud which always arises in most institutuions over time, profit or non-profit.  And we need to bring blue collar jobs back to our country so those graduates of trade schools can actually find work.

Alessandro Machi

July 24, 2012, 5:49 p.m.

How about free education for those who don’t drink or take drugs.  Oh wait, that will just make the amount of sex they have go up, leading to more unwanted pregnancies.

never mind.

YES,  The ‘Jackass’ Party buried the American middle class in yet another destructive - out of control spending scheme!!
Smiles and Lies!! - Just another day at the DNC.

What idiot thinks this debt was forced on anyone!  The lied to ‘useful idiots’ rushed right into - just like the ‘Jackasses’ anticipated. Another, trick to gain more control over citizen fools!! by the Totalitarian Party.

There is a big push to get kids to take out big loans to go to private universities because it is the next cash cow for corporations - no risks and big profits.

The United States has been in the student loan business since the 1950s. The student loan program was fine right up until the time Republicans sabotaged the program in 1995.  The Republicans took a good idea - low interest student loans, and deliberately altered it into a money-making venture for their corporate friends.

In 1995, the Republican-controlled 104th United States Congress privatized Sallie Mae. Sallie Mae became a corporation, “went rogue,” and started getting into the business of making unfair and deceptive loans to kids and their parents. Banks and loan companies also saw opportunities to easily double and triple their investments with no risk so they deviously started marketing student loans as something a “normal American” did along with buying a big house and leasing a big car.

Universities, particularly private universities, saw opportunities to enrich themselves and compete with prestigious Ivy League schools so they increased their fees because uninformed kids were getting easy money. Because many capitalist extremists did whatever they could to funnel taxpayer dollars to their corporate buddies who made trillions of dollars in war profits, bad loans, and deceptive financial deals, state schools saw their education budgets diminished which also forced them to increase fees to stay relevant.

Notwithstanding the money we lost because of wars and deceptive financial deals, had Republicans never privatized Sallie Mae and ensured that people had the same bankruptcy protection as other unsecured debt, banks would have considered the risk, tuition would not be as high, and we would not be worried about a trillion dollar student loan debt.

H.R.1501—Student Loan Privatization Act of 1995 (Introduced in House - IH).
S.1198—Student Loan Privatization Act of 1995 (Introduced in Senate - IS).
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Since 1995, college costs across the country have risen almost five times faster than median household income. As a result, students and their families are taking on more and more debt. Borrowing to pay for college used to be the exception; now it’s the rule. ~ Sec. Arne Duncan, U.S. Secretary of Education
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The average cost of tuition and fees at a public, four-year college has almost tripled since the 1995-1996 academic year. ~ Obama Presses on College Costs as Romney Vies for Youth Vote By Margaret Talev - Apr 25, 2012
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Adjusted for inflation, the total assistance provided to the nation’s college students has risen by 122 percent since 1995, according to the College Board. ~ When high college costs hit home, the pain is often palpable by Steve Giegerich
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Are State Universities Being Privatized? By: Richard Vedder 1/26/2012
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The Drive to ‘Privatize’ Community Colleges By Charlotte Allen. May 9, 2012

Alesandro Machi - Your concept of debt neutrality is very compelling and makes good sense.  It was not until studying the student loan program really hard and understanding that it is enormously, wildly profitable however,  that I began to feel that the most obvious solution, low interest or interest free student loans and giving the same benefit across the board to those who have already borrowed is never going to happen.  The federal government relies on student loan interest to entirely fund the Department of Education, the Pell grant program, federal grants to universities and countless other expenditures.  Private lenders, of course, have commodified and packaged student loans into securities valued according to what the loan, with interest, is worth.  You may be shocked to see how enormous and endless this profit is. 

Even if you disagree with loan forgiveness programs, you should join us on Facebook at Forgive Student Loan Debt where we discuss and post about possible solutions to the student loan repayment crisis.

Michael T., I choose to believe your views stem from a lack of personal knowledge rather than malice, so with respect, I want to explain how it was possible for me to work more than full time as an undergraduate and still require loans that totaled $45k to complete my education.

First, neither of my parents attended college. At age 18, and in the pre-Internet years we forget so easily, no one in my blue-collar Detroit neighborhood could provide me with any advice on college, financing included, nor could my parents afford to pay a single penny toward it. My parents received loan paperwork in the mail, said “Sign here, and here, or else you’re not going to college,” and I did. No, I did not even see much less read that loan paperwork; my parents, who really are wonderful, told me to sign it and I did, just like I’d filled out all that other paperwork (admissions essays, application materials, and so on) that my parents, teachers, and guidance counselors told me to.

My undergraduate tuition in 1995 was $18k/year. I worked three and sometimes more jobs to pay just half of it, jobs of the sort 18-year-olds can get: waiting tables, tending bar, cleaning houses, doing freelance database and web programming (or as work study for tuition), working at bookstores, etc.

According to my tax records from 1995-1998, I made $16k/year and paid $9k/year to my tuition. Yes, that’s right: I lived on about $7k year. It was awful. I lived in one bedroom in a five-bedroom house in a very dangerous (but affordable!) area of Detroit for $160/month, plus utilities. I often skipped meals. I owe many a kind line cook (as well as student clubs with free pizza to entice prospective members) an eternal debt of gratitude for making deliberate mistakes with restaurant orders so they could insist I take the “accidents” home.

In 1999, I got a full time tech support job that paid $9/hour plus overtime, and I worked 10-12 hours/day on Mon., Wed., Fri., Sat. and Sun., taking classes from 8 AM - 10 PM on Tues. and Thurs. That year, I made $20k year, an improvement because I was living on $11k/year (after tuition) instead of the usual $7k/year (after tuition). Remember, during this time I was solely responsible for my rent, tuition, books, car payment, insurance, gasoline, food, everything.

I “only” took loans for the half of tuition I truly could not pay, but that added up easily and quickly: $9k/year x 5 years = $45k in loan debt before interest. Before you tell me I should have graduated in four years, yes, I agree that would have been mighty nice, but college takes longer when you work 50-80 hours a week and you want to later re-take some classes you got Bs and Cs in because you were working so much, so you have a chance of getting into graduate school.

No one can tell me I should have, or could have, worked harder. I’ve never worked as hard in my life as I did then, and for so little. The hardest work is usually the worst paid.

I “learned my lesson” about student loan debt and attended graduate school part-time while working full time, so I did not incur more debt for graduate school. I paid in full as I went. Still, after interest (and I had far lower rates at 4% than most students get now, who are at 8-9% and often higher), that $45k had grown to $56k. I eventually paid my student loan debt off (in 12 years), but one key thing made graduate school and eventual debt payoff possible, and it’s something that most of today’s graduates do not and will not have: full time, steady, gainful employment. I have, knock on wood, not yet found myself unemployed, ever. If I had, this story would be very different.

I worked hard but that doesn’t count for everything. If I had worked hard but had slightly different luck at any point - due to my age and thus timing of attendance, and thus even higher tuition and interest rates; due to unemployment; or due to a health issue (I lived a total of five years without health care because the until-age-26 Obamacare law did not exist then, and a health problem could have landed me in more and worse debt) - this story would have a very different ending.

Not everyone has my luck, but I assure you, most people in this country work very, very hard, far harder than most professionals can fathom, and no student deliberately sets out at 18 to end up in permanent debt servitude. Truly, do you remember being 18, how little you knew, what your view of the world was? Try to remember that honestly, and see today’s young people the far more sympathetic light they deserve.

Alessandro Machi

July 25, 2012, 10:25 p.m.

Hi Alice, I don’t quite understand how you went from the government will never approve allowing students to pay off their loans with no more interest payments, penalties or fees, to debt forgiveness.

If the compromise solution won’t work, how can the debt forgiveness program work since it means even less money into government coffers.

I went ahead and started a change dot org petition about Debt Neutrality.

http://www.change.org/petitions/congress-create-debt-neutrality-rights-for-paying-down-credit-cards-student-loans

Alessandro Machi

July 25, 2012, 10:26 p.m.

Hi Alice, I don’t quite understand how you went from the government will never approve allowing students to pay off their loans with no more interest payments, penalties or fees, to debt forgiveness.

If the compromise solution won’t work, how can the debt forgiveness program work since it means even less money into government coffers.

I went ahead and started a change dot org petition about Debt Neutrality.

http://www.change.org/petitions/congress-create-debt-neutrality-rights-for-paying-down-credit-cards-student-loans

S. Wilkes: Your very thorough and compelling narrative should be required reading for everyone who has strong opinions on the issue of student loans. You’ve also articulated the added factors of timing and luck (good health and steady employment after graduation which can’t always be controlled), which are so vital to a fuller understanding of the huge risks involved.

I suspect many of those now saddled with impossible to repay crushing debt have simply given up any hopes for the future and gone underground to hide from relentless creditors.

This article is part of an ongoing investigation:
College Debt

College Debt

Total outstanding college debt is estimated at $1 trillion dollars – and with costs still soaring, the burden on students and their families shows no signs of abating. We're examining how the complicated system of college debt is putting the squeeze on families.

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