Student Loan Borrowers Don’t Know What They’re In For
Career College Central summary:
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Student loans from the federal government are generally easy to get. With the exception of PLUS loans, which are co-signed by parents or guardians, credit scores are not checked, because most borrowers are assumed to be just out of high school. Employment histories aren't checked for the same reason.
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So the New York Fed added some questions on the topic to its Survey of Consumer Expectations last July that were directed to heads of households as opposed to the students — referred to as "the child" — who got the loans. The result? The respondents, the report concluded didn't know what they were in for. For example, 1,029 respondents were asked:
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If a borrower is unable to repay her federal student loan, what steps can the government take to collect the debt?
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A. Report that the student debt is past due to the credit bureaus.
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B. Garnish wages until the debt, plus any interest fees, is repaid.
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C. Retain tax refunds and Social Security payments until the debt, plus any interest and fees, is repaid.
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The answer? All of the above.
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CNBC
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