by
Carl Hampton
08/04/2006
This is the time of year when every day
seems to bring new graduation invitations
for the class of 2006 in the mail. I began
to wonder what it must be like to finally
leave school with all that energy and
excitement only to find out that you are now
going to spend years paying off those
student loans that seemed like such a good
idea at the time.
The Centre for Economic and Policy Research
reported recently that almost 65% of all
students use loans to pay for their
education. With many students racking up
debts of $90,000 or more you start to wonder
what it must be like to live under that type
of pressure. How do they manage to pay off
these loans and still have a life? There are
many areas outside Southern California where
you could buy a very nice home for that
amount of money.
Do we really need to put the youth of today,
our future, under this type of pressure all
in the name of PROFIT. The laws governing
Student Loans are some of the most powerful
laws in the land. Our leaders have insured
that it is a MOST profitable business for
the lenders. These lenders have more power
than all other lenders. Credit card
companies and mortgage lenders cannot do
what Congress has allowed the student loan
providers to do.
Sallie Mae is the largest student loan
provider in the country. They employ over
10,000 people across a number of states.
Since they became a public company trading
on the stock markets, their shares have gone
through the roof. Let me outline why this is
such a wonderful business for the likes of
Sallie Mae. The loans they give out are all
guaranteed by the government (sorry
taxpayer), so whatever happens they get
their money. This means, unlike a normal
lender who has to calculate risk against
reward before agreeing to give out a loan,
for these providers there is NO risk, it's
all reward.
It does not end there. Should a student
default on a loan (almost 25% do), the
provider then gets paid by the government
(sorry taxpayer) and they are now allowed to
send that debt to a collection agency. It's
normal for the loan to double in size at
this point. Sallie Mae owns a number of
these collection agencies, the law allows
that too. They now have the power to garnish
your wages without having to go to court.
They can also garnish your social security
money, something no other lender can do.
Sallie Mae is allowed under these laws to
keep 25% of all the money recovered from the
collection agency (that they own, nice
business if you can get it). Where I come
from this would be called Legalized Mugging
or Jobs for the Boys.
Most of these students can forget about
getting married or buying a home. There main
concern is “where's next months payment
coming from”. Maybe it's time we showed a
little more compassion to these students,
after all they are our future.
Have an opinion or a question you would like
me to answer, then write me!
http://www.CarlHampton.com
