I’ve got bad news and warnings if you’ve accumulated considerable student debt and don’t know how you’re going to pay it back.
First the bad news, then a snippet of partial relief and finally some warnings. Negotiation advice will follow tomorrow, but first you need to know what you’re up against.
In today’s New York Times, we learn that the $1 trillion in outstanding un-repaid student loans “have become a silver lining for the debt collection industry at a time when its once-thriving business of credit card collection has diminished and the unemployment rate has made collection a challenge.” Debt Collectors Cashing In On Student Loan Roundup.
Mergers and acquisition specialist Mark Russell has suggested that “student loans might be a new oil well for the accounts receivable management industry.”
Call me crazy, but I do not think we should build profit into people’s suffering. That’s why I wish we’d had the cajones as a country to go to a single payer health care system rather than making universal health care a profit center for the insurance industry – an industry whose interests I represented for nearly ten years in my own legal practice (Lloyds of London; AIG).
This goes in spades for student debt. The suffering of America’s young people should not be an “oil well” of opportunity for debt collectors.
This, then, is my own small contribution to providing some help to students whose debts are non-dischargeable in bankruptcy and cannot be barred by the running of a statute of limitations; and, for those who may have already learned that the feds possess “extraordinary tools for collection,” including the seizure of tax refunds and garnishment of Social Security payments.
These legal advantages for the collectors of student loan debt have resulted in an unprecedented 80% recoupment rate for every defaulting student loan default. To put that in context, the Times adds that “most lenders are lucky to recover 20 cents on the dollar on defaulted credit cards.”
The Limited Good News
When you’re making oil-strike profits off the suffering of the next generation, you don’t spend much time telling recent grads that there is at least one program that can help – an income-based repayment plan that permits students in default to ”pay 15 percent of their discretionary income for up to 25 years, after which the rest of their loan is forgiven.”
There’s your mortgage, kids. I guess you’ll be renting and eating Ramen while figuring out how to find a decent school for your own children as the GOP pursues its ultimate goal to drown public education in a bathtub.
Yes, your Presidential vote this year not only impacts the number of children the government wants you to have (lots) but also what public resources might continue to be available to provide them with the education and training necessary to become productive members of society once you’ve managed to pay off your student loans sometime in 2037.
Family planning; public education. Just sayin’
Warning: Debt settlement programs
If you don’t already know, among my many current occupations is that of a commercial mediator, meaning that I help businesses settle disputes that have entered the justice system. On one single occasion, I mediated the resolution of an action by a young married couple against their debt settlement company, after which I vowed never to take part in a system that appeared to me to be impossibly corrupt.
So I’m here to warn you about debt settlement companies before I go on to provide you with advice about negotiating your way around your crushing student indebtedness.
Victoria Pynchon, Contributor to Forbes