Can somebody tell my why these people who took loans think they shouldn't have to pay them back?! I'm totally baffled by this mentality. Did they really think that a LOAN was just free money? They seem to think it should be anyway.
Just read an article where they interviewed some people with loan debt. Only ONE out of the six interviewees actually mentioned working to pay off the loan, the others just had some strange sense of entitlement that the loan debt they signed up for should just disappear.
Like THIS person:
"...other avenues to cancel student debt..."
Like maybe, I dunno, PAY IT OFF???
Oh, no; instead they want to put people in office who will pay their debt for them. Where do they think THAT money will come from?
Good lord. And these are people who went to college. We are in deep doo-doo if this is representative of the rest.
You're ignoring a lot of stuff here. Let's start with the fact that loaning 5 or 6 figures to people who mostly never managed more than their allowance is by definition predatory lending. If we're going to have student loans at all, it should be to the parents of the student, not the student. The parents would also be in a far better position to judge if the degree was really worth the money they would be borrowing. That in turn might keep college costs in check.
Next thing is the fact the terms you signed on for are rarely what you end up with. The lenders and Congress have altered the contract after you signed. For example, this is what happened to me:
1) When I signed my student loans they were dischargable in bankruptcy. While I intended to repay them, the fact I could declare bankruptcy if I was unable to gave me peace of mind. Congress made it virtually impossible to discharge student loans under bankruptcy a few years later.
2) My loans were originally subject to a 10 year statute of limitations. If I was unable to pay for 10 years, at that point they would no longer be legally collectible. Congress changed this after I signed. All other types of debt are still subject to a statute of limitations which varies from 2 to 10 years, depending upon the state and type of debt. No reason to treat student loans differently than other types of debt.
3) My promissory notes clearly capped collection fees at 20% of the original principal. Far more than this was added in fees when the loans went into default because I was unable to find work right out of college.
4) I was supposed to have been given a 9 month grace period after graduating before I had to start making payments. The bank started asking for payments right after I graduated.
In short, in many cases the terms of the contract are not adhered to by the lenders, as was the case with me. I never would have signed if I knew Congress would change things after the fact, or the lenders would add far more fees than stated in the promissory note.
Third, we have predatory collection fees. Again, this isn't what you signed up for according to the promissory note. If you default on your loan, it gets sold to another lender, and 20% to 40% gets tacked on to the balance as a "fee". If you default again, which is more likely given the higher balance and monthly payments, the process repeats. That's why people often owe 5 to 10 times what they originally borrowed despite decades of payments. These fees clearly violate usury laws, as well as promissory notes which typically cap total collection fees at 20% of the original principal. The system as it exists now makes it impossible to pay off your loans once they go into default. It's designed to keep you paying for life.
Note that the government doesn't see a dime of these fees. That's why student loan forgiveness will cost taxpayers a lot less than most people think. The only losers will be the collection agencies who until now have been making bank on student loans. Many of those who own collection agencies are heavy campaign contributors to the GOP. They have a vested interest in stopping any type of loan forgiveness because it would end their gravy train. Sadly, SCOTUS went along with them.
If any other type of loan were subject to the terms and fees of student loans the courts would have intervened long ago. Maybe it's time for a case challenging these illegal fees. They should all be refunded with interest.
Finally, other countries pay for higher education for those who merit it. This doesn't mean paying for a degree in underwater basket weaving while you party for 4 years. Usually, you need to maintain a certain GPA in order to continue to get your school fully paid for. We should do that here. Replace loans with grants, require colleges accepting financial aid students to take a $10K or $15K annual grant as payment in full for tuition, room, and board. No more student loans, no more parental loans. That fixes the student loan problem going forward. In the meantime, we still need to address the fact many people have loans which they can never repay due to the predatory nature of the system. That's where loan cancellation comes in.
There are still two avenues for having loans partially or fully forgiven. One is to use the
1965 Higher Education Act to enact loan forgiveness. This seems more likely to stand up to court challenges. The other is the new income driven repayment plan. Payments will be capped at 5% of discretionary income, and the loan will be forgiven after 20 years of payments (10 years if the original amount was $10K or less). Payments already made would be retroactively counted towards the total. This would wipe the slate clean for lots of borrowers, me included. No word on whether or not payments made in excess of 20 years (or 10 if you borrowed $10K or less) would be refunded but they should be. If so, I might have a large check coming to me.
