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Sallie Mae is the Devil.
January 27, 2006 7:35 AM   Subscribe

Student Loan Justice. c/o Village Voice. (cf.)
posted by xowie (72 comments total)

 
Christ Jesus. Thanks for pointing this out.
posted by orthogonality at 8:03 AM on January 27, 2006


What's the issue, that they're making profit, or too much profit? No one forced anyone to get those loans on those terms. Even if the terms weren't understood, does that make a person less responsible for the loan?
posted by Brandon Blatcher at 8:10 AM on January 27, 2006


what the blatcher said..

I had student loans when I was a kid... my sons both took out student loans. I knew what the interest rate was when I took them out, I agreed to pay them back, had a plan to do so, and paid them back.

Too bad those folks were forced at gunpoint to sign something in a language they didn't understand.....oh, wait....

A contract is a contract, if you sign it, honor it without complaints.
posted by HuronBob at 8:12 AM on January 27, 2006


To clarify: I don't think the loanee is at total fault. But I don't wanna hear a bunch of whinning either and yes, I have student loans too. Not my brightest move, but live and learn.

The real problem is that the loan companies (seemingly) knowingly fleece people. Nothing wrong with making a profit from loaning money, but there is a point where it becomes morally wrong. Just because you can take advantage of someone doesn't mean you should.
posted by Brandon Blatcher at 8:20 AM on January 27, 2006


Brandon.. I guess I look at it the other way. The responsibility to not be "taken advantage of" falls on the consumer. Always has and always will.

When we start to make subjective judgements on what is "too much" profit, we get into a very difficult area full of politics, culture differences, philosophy, and probably religion.

Every time I make a purchase or take out a loan, it is MY responsibility to make sure I am satisfied with the terms. If, ten years later I decide it was a bad move, I only have myself to blame.

Let's not start down the road of allowing individuals to deny responsibility for the actions they take.
posted by HuronBob at 8:28 AM on January 27, 2006


Hrmm. I'm a bit ambivalent about this. On the one hand, nobody is forcing people at gunpoint to take these loans. On the other hand, they really don't have much other option if they want to go to college. And yeah, the loan companies (allegedly) used their muscle to get some legislation into effect that screws over most students. This is another one of those "OMG! Businesses are buying clout in Washington!!!1!" moments that I can't believe people still get angry about.

Of course, if people REALLY wanted to fight something, they would fight the ridiculously high tuition fees in the States so that people don't have to take out such insane loans in the FIRST place. But that's just my crazy socialist Canadian thinkin.

Oh, and also this site's interface really pisses me off. 8 different flash files, to display BUTTONS? Come *on* now...
posted by antifuse at 8:32 AM on January 27, 2006


Let's not start down the road of allowing individuals to deny responsibility for the actions they take.

No, of course not. Everyone who takes out the loan should be responsible. But the companies aren't innocent in this, particuarly with the way they stacked the deck (according to the linked site).

When we start to make subjective judgements on what is "too much" profit, we get into a very difficult area full of politics, culture differences, philosophy, and probably religion.

I have no problem with us getting into that area and making those calls. People borrow to go to school, not pay for it the rest of their lives. It would be better for America if people were able to go to school and afford it, without having their future options and credit ruined becauce they made a bad decision when they were young.
posted by Brandon Blatcher at 8:44 AM on January 27, 2006


What's the issue, that they're making profit, or too much profit? No one forced anyone to get those loans on those terms. Even if the terms weren't understood, does that make a person less responsible for the loan?

Does anyone RTFA anymore? The site explains exactly why these companies are among the scum of the earth. They had the laws changed so they could extract as much money as possible from people who default on their student loans. (Next you'll tell us it's clearly always their fault for defaulting.)
posted by wakko at 8:45 AM on January 27, 2006


They had the laws changed so they could extract as much money as possible from people who default on their student loans.

Right, they had the laws changed to maximize profit. Is this a godo thing? You clearly don't think so, and I tend to agree, but at what point is trying to maximize profit a bad thing?
posted by Brandon Blatcher at 8:55 AM on January 27, 2006


Given the sorry state of public education in the US, and the power that the site details these companies having over people carrying the debt, it's entirely justified to think that the whole system is scummy and deserves reform.
posted by OmieWise at 8:56 AM on January 27, 2006


Next you'll tell us it's clearly always their fault for defaulting

Not necessarily the case, but if you take out a loan and default on it, there had better be some pretty damn extenuating circumstances. It can't be the case that EVERY SINGLE PERSON defaulting on a student loan in the states is doing so because they fell on hard times. Does bankruptcy not void these loans? If you're so hard up that your'e defaulting on student loans, why isn't bankruptcy an option?

Also, from the Village Voice article, that I only just now read (I assumed that was a via link, not an entirely different article): "He can't find work in his chosen field because his credit rating is so poor" - I'm sorry, what? Employers in the states are doing CREDIT CHECKS now?
posted by antifuse at 9:01 AM on January 27, 2006


The responsibility to not be "taken advantage of" falls on the consumer. Always has and always will.

Caveat emptor may be good advice to give your kids, but it's a pretty shitty way to run a country. I'm always surprised to see people who aren't millionaires come out in favor of predatory lending practices.

The article lays it out: There were laws that used to prevent these sorts of practices, but those laws have been rolled back to benefit the lenders at the expense of the little guys.

Yeah, nobody is forcing people to take these loans at gunpoint, but it's pretty silly to expect a kid just out of high school to be able to neatly parse the intentionally obfuscated legalese of a loan agreement before they can go to college (or law school, for that matter).

Are you folks saying that if someone wants to go to college to better themselves, then they should pay for it for the rest of their lives? Or is it that only people that are financially independent should have access to higher education these days?

This just throws up one more big barrier for poor people to pull themselves out of poverty through getting an education and through their own hard work. That's a noble effort that I thought people (especially Rebublicans) were supposed to be so in favor of.
posted by Gamblor at 9:03 AM on January 27, 2006


hey man employers and lenders can do whatever they want it's a free country and if people don't want to work in salt mines for thirty cents an hour with no health benefits they can choose to starve to death what a bunch of fuckin idiots

and oh look at all those dumb people who go to payday loan places because their kids need to go to the doctor what a bunch of fuckin idiots

and fuck those other dummies who are doing stupid shit like going to school and expecting to be treated like human beings by lenders who appeared to be human beings what a bunch of fuckin idiots
posted by Optimus Chyme at 9:13 AM on January 27, 2006


Does bankruptcy not void these loans?

No. From the article, the Higher Education Act (HEA) was amended to "...take away bankruptcy protection for student borrowers".

Do you honestly think a seventeen year old kid should have to agree to a mountain of debt that will take them longer than they've been alive to pay off just to get an education and escape a future of minimum wage job hell?
posted by Gamblor at 9:14 AM on January 27, 2006


Put me in the No Sympathy column. When I got my first job out of law school, and my student loan repayment kicked in, the initial monthly payment was more than 50% of my paycheck. Even now, 16 years later, the number ($750 a month) seems a bit shocking. I consolidated as much as I could. When things got really tight I would request forbearance for a couple of months - I was never turned down for forbearance and my reasons were never questioned. (During forbearance, the interest is capitalized.)

Sallie Mae is just about the most lenient lender you'll find. I was 60 or 90 days past due for years at a time, and I would catch up only occasionally when I got a windfall. But as long as you're making *some* effort to make regular payments they'll cut you slack.

All of that leniency, as well as the ease with which student loans are granted, comes at a price. No surprises there.
posted by ereshkigal45 at 9:15 AM on January 27, 2006


"He can't find work in his chosen field because his credit rating is so poor" - I'm sorry, what? Employers in the states are doing CREDIT CHECKS now?

Yup. That's not unusual these days, I'm afraid. The ostensible reason is that if you have good credit, it means you're trustworthy and reliable.
posted by Faint of Butt at 9:18 AM on January 27, 2006


I dunno - I read their front page a few testimonials and what I got out of the site was this: "Boo hoo, I have lots of student loans and don't have the life I wanted to have at age 26 (27,28,29,30...). Woe is me, it's not my fault. Damn those executives who make large, obscene profits and damn Sallie Mae's practices for causing me to incur so much debt."

Folks, it's just like a home mortgage for crying out loud. Several of my clients are Foreclosure/Bankruptcy law firms and I hear stories on a daily basis of how people who default try to blame the banks for being unfair, or that they didn't understand the contract when they signed it.

If these were sub-prime lendors who are shady MoFos, I could understand that argument (to an extent). However, we're talking about top tier lenders who are generally beyond reproach, and mortgagors who simply didn't read the terms of their contract and/or bought more home than they could afford.

I understand the underlying argument this site is trying to make, but ferchrissakes, guys, quit yer bitchin' and if you don't like Sallie Mae's terms, figure out another way to go to school. You know, maybe save some money? Work a second job? Life ain't perfect and we have to make imperfect choices - this is one of them.

It's like the kid who goes through undergraduate and graduate school for a sociology degree, graduates with an MA in Sociology and $50,000+ in debt and then can only get a job with a starting salary of $25 to $30k/year. Probably not the wisest choice if you're not sure you can pay off that debt and life decently.

"But I really, really, really want a degree in sociology! I love it!" Great - go ahead and get that degree, but please don't cry to me later that you're drowning in debt. I really, really, really wanted a house that was about $10,000 more than the one I bought, but I knew I'd be in financial trouble if I did it. So I didn't.
posted by tgrundke at 9:20 AM on January 27, 2006


Optimus Chyme summed my sentiments up nicely (and more bluntly). Three cheers for fucking the poor some more.

All of that leniency, as well as the ease with which student loans are granted, comes at a price.

This is just a fundamental difference in outlook. Borrowing money for school is not like borrowing money to buy a new snowmobile. It's not some luxury you can do without, it's a fucking college degree, what you need to have a fighting chance at a decent career.

You're paying $750 a month 16 years later for schooling, and you've got no sympathy for someone struggling with debt?
posted by Gamblor at 9:27 AM on January 27, 2006


Do you honestly think a seventeen year old kid should have to agree to a mountain of debt that will take them longer than they've been alive to pay off just to get an education and escape a future of minimum wage job hell?

I have two responses to this:

1) It's not the fault of the lenders that university tuitions are so high.

2) If they're going to get a degree in psychology or general arts or sociology, and end up in minimum wage job hell ANYWAY, I really don't have too much sympathy. (Note: I am aware that not all psych/soc/arts majors end up with minimum wage jobs. However, MANY of them do. Or they end up with jobs that they didn't really need that degree for any way)

As for employers doing credit checks, that is absolutely insane. I also note, however, that the guy that started up this site managed to save up 20 grand to put on a down payment on a house. Did the article say why he didn't put that towards his debts and rent, instead? If so, I must've missed that.
posted by antifuse at 9:31 AM on January 27, 2006


Gamblor -

I don't think it's a matter of sympathy. I struggled like *hell* to get my debt under control, but I did do it through some very tough choices.

I understand what you are saying, though - that a college degree anymore is a 'requirement'. Herein we have a paradox: it's a requirement, and yet, it is less valuable today than it ever was. Increasingly, a Masters degree or some kind of specialized advanced degree is required to get ahead. Which means more debt.

I don't think that the system is 'rigged' at all, that we're purposely trying to piss on the poor or anything. So, here's where that good ole' American ingenuity comes to play: someone should develop a better way to finance schooling in this country. Clearly for a large number, it isn't working.
posted by tgrundke at 9:31 AM on January 27, 2006


You know, maybe save some money? Work a second job?

I worked three jobs in college to help pay my debts, thanks. And there is no doubt in my mind that my education suffered because of it.

The days when someone could "work their way through college" by lifeguarding over the summer or busing tables ended about three decades ago. Anyone here that was able to earn $50k while attending school, I'd like to party with you because you were selling drugs.
posted by Gamblor at 9:34 AM on January 27, 2006


I'm always surprised to see people who aren't millionaires come out in favor of predatory lending practices.

I'm not surprised at all.

It's a holier-than-thou attitude that a lot of people get, because they never had anything truly terrible happen in their life. Because of that, they like to think that they are superior.

It's an attitude that has nothing to do with how much money is in the speaker's bank account, and everything to do with their prejudices towards the financially unsuccessful.
posted by I Love Tacos at 9:34 AM on January 27, 2006


Wait a second. In the States, you get your student loans from private business? Wtf? Really?
posted by jokeefe at 9:35 AM on January 27, 2006


You're paying $750 a month 16 years later for schooling, and you've got no sympathy for someone struggling with debt?

I'm no longer paying $750 a month. My point was that I was paying 750 a month 16 years ago - but even now (when I'm earning considerably more) that number seems large. I consolidated as much as I could almost immediately after going into repayment, which brought my monthly payment down to about $400. I've since paid the bulk of the loans off, partially by using a HELOC.

So, yes. I guess I do have no sympathy. I've struggled with debt, but never defaulted or blamed someone else for the debt *I* assumed willingly.
posted by ereshkigal45 at 9:36 AM on January 27, 2006


Antifuse -

I'm with you on this one. University tuitions are so high in part because demand is so high for a college degree. And as I stated earlier, the irony is that as more students go to school, the overall value of that undergraduate degree declines. Ouch.

I look at most schools to be nothing more than "diploma factories" anyhow. Cranking out thousands of wide-eyed graudates every May to enter the workforce with little idea of what their actual skills or marketability are. And for the most part, I'd say that 75% of those graduates were just there to get the diploma anyhow so that they could slap that on a resume.

My girlfriend hardly needs the thousands in debt she has to do the work she's currently doing, and while I may be making very good money currently, it has little to do with the actual degree I took from my beloved Alma Mater, the College of Wooster.

Tuitions can go up because costs go up, but mainly because the demand is greater than supply for college educations.
posted by tgrundke at 9:36 AM on January 27, 2006


I think the larger issue at work here is that-- unlike with morgages or other types of loans-- Stafford loans and the like are guaranteed by the federal government...
posted by May Kasahara at 9:38 AM on January 27, 2006


Gamblor -

No doubt working three jobs was rough and your studies suffered as a result.

But as much of an asshole as it makes me sound, "so what?" I'm not directing that "so what" to you directly, but as a general commentary.

There are lots of parents who work two and three jobs and their family lives suffer. Their kids suffer. Their love lives suffer. I lost a previous girlfriend because I had obligations I had to fulfill and worked ridiculous hours to fulfill them. She got sick of it and left.

It was a choice. It was a horrible, painful, disgusting choice. But it was one that had to be made and I suffered the consequences of it. None of us has it perfect, Gamblor and sadly, we all have to accept that parts of what we want or have will suffer when we make other choices that affect it.
(sorry for that garbled last sentence, I'm in a rush).
posted by tgrundke at 9:41 AM on January 27, 2006


...everything to do with their prejudices towards the financially unsuccessful.

Yep, people have two initial responses when they see someone down on their luck: "There but for the grace of God go I" or "That loser got what he deserves".
posted by Gamblor at 9:43 AM on January 27, 2006


And the only thing that has left me feeling even more startled than the existence of the oh-so-sweetly named Sallie Mae (not the mention the naivety of "shit, I had no idea") are the attitudes of some of the posters here, some of which can be very simply paraphrased as "suck it, losers".

Education's a right, not a privilege. Man. The exploitation of the poor, and simply because they want to better themselves. What a disgrace. What's wrong with maximizing proft? someone asked. When it comes at the cost of human suffering and ruined lives, I'd say that it's wrong.
posted by jokeefe at 9:44 AM on January 27, 2006


I've struggled with debt, but never defaulted or blamed someone else for the debt *I* assumed willingly.

This is the sort of arrogance that can only be expressed by a person who has never had anything truly terrible happen to them. You're taking the absurd stance that you're morally superior to these people, simply because your life never got uncontrollably hard.

In my experience, both great fortune and great misfortune are more closely linked to luck than anything else.

Congratulations on having the type of life that most of us have the luxury to experience. Stop thinking that it makes you special, it doesn't.
posted by I Love Tacos at 9:45 AM on January 27, 2006


Jokeefe -

Umm, I don't know where you are from, but in the United States I wouldn't consider higher education to be a "right". The constitution doesn't say anything about a "right" to education. It says that the country was founded to ensure "Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare."

We can interpret "General Welfare" to include education, but then we'd have to include everything under the sun as well. But I digress...

Who says that the poor are being exploited here? And how do we make the causal link between profit and 'human suffering and ruined lives'? I agree that corporate malfeasance(sp?) and outright theft can lead to suffering and ruination (eg, Enron), but I fail to see how taking out student loans suddenly is a horrible thing.
posted by tgrundke at 9:48 AM on January 27, 2006


The "I suffered through it through it, so everybody else can too" argument is one that's used to justify broken systems; like fraternity hazing and medical interns working forty hour shifts.

The current education system is broken, that's my point. And people are profiting from it being broken and are working to make it worse. That's shameful.
posted by Gamblor at 9:49 AM on January 27, 2006


Umm, Tacos, I don't think it does make me special, thank you very little.

I guess my gripe with the line of argument around here on this topic is this: should we try to protect everyone from every conceivable form of hurt or 'uncontrollable circumstance' that we can imagine?

And Tacos, how arrogant of you to assume that I haven't had anything truly horrible happen to me. To quote every Jerry Springer guest: "you don' know me!"
posted by tgrundke at 9:55 AM on January 27, 2006


...but in the United States I wouldn't consider higher education to be a "right".

But in many countries higher education is a right. Australia, for example. Having that opinion isn't just some pie-in-the-sky idealism. Other countries do it, to their benefit.

Who says that the poor are being exploited here?

Me, for one. The person who wrote the article, for another.

...but I fail to see how taking out student loans suddenly is a horrible thing.

I haven't seen anyone in here argue that the idea of student loans are inherently horrible. It's the predatory lending practices of the the lenders that's the issue.
posted by Gamblor at 9:56 AM on January 27, 2006


Gamblor -

I'll agree with you that the system needs reform. So the ball is back in your court: what kind of reform are we talking about here, then?
posted by tgrundke at 9:58 AM on January 27, 2006


It's amazing how many of the "they deserved it" people clearly *didn't bother to read the articles*.

Let me summarize it for you. Sallie Mae was set up as a non-taxed, not-for-profit organization, designed to encourage students to go back to school. In return for their *fucking license to coin money for the last 35 years without paying a penny in taxes*:

"Under federal law, student loans are supposed to be easier on borrowers than other kinds of credit. Lenders must offer deferments and forbearance, both ways to safely postpone payment if you are unemployed or go back to school."

Under the Bush administration, Sallie Mae has become a huge cash cow for a small number of individuals who have taken *hundreds of millions of dollars* out of it and just stuffed it into their pockets, while grinding the very people the organization is trying to help.

In particular, since you can't ever get out from under student loans, Sallie Mae uses this feature to extract far, far greater penalties from people who get behind than "commercial" lenders would ever be able to get.

The argument that a few of you assholes, er, honoured people present is that people shouldn't have taken these loans in the first place.

Setting aside the fact that Sallie Mae unilaterally changed the spirit behind their taxpayer-funded selves, so the contracts were in essence broken, *what choice do you have in America* other than get student loans? We all know this country -- your hard work and dedication will get you a minimum wage job where you can't afford to have a family or buy a home, EVER -- unless you have a degree in something useful. And in America, that degree will typically run you north of $100,000.

I see you Mefi people heaping scorn on hard-working people who are unable to keep up with the crushing debt they had to assume in order to have any possible hope of having a middle-class life. I don't see ONE of you mentioning that two individuals alone extracted almost $400 million over the last 6 years from this erstwhile not-for-profit and put it in their pockets, and that the company has given out *almost $4 billion in options* to their employees during that period -- as a reward for grinding the very people they were chartered *at the taxpayer's expense* to help.

Tell me -- is this what you want from America? Bright young people make their very best try to succeed, fail, and are destroyed so that their money can be taken by a very small number of rich people who bend and break the rules to extract the maximum amount of profit through their government-sponsored monopoly?

You make me sick.
posted by lupus_yonderboy at 9:58 AM on January 27, 2006


should we try to protect everyone from every conceivable form of hurt or 'uncontrollable circumstance' that we can imagine?

Straw man. These are defined, quantifiable harms that we're talking about: Excessive rates, penalties, and fees, no refinancing, removing bankruptcy protections, punitive collections, etc. All these come at the expense of the student, and benefit the lenders.

On preview: tgrundke, getting rid of those practices mentioned above.
posted by Gamblor at 10:02 AM on January 27, 2006


The problem here is that the linked website is trying to connect what appears to me to be two unrelated issues:

1) Potential criminal activity by Sallie Mae officials, and
2) The stories of people unable to fulfill their payment agreements with student loan organizations, Sallie Mae in particualr.

It's no secret that Freddie Mac/Fannie Mae/Sallie Mae have been under investigation for years for dubious accounting and excessive executive perks for so-called "non-profits". That's a reflection on two items: 1) The Bush administration turning its head away from the problem and, 2) Excessively easy credit, as has been the case in the home mortgage business.
posted by tgrundke at 10:05 AM on January 27, 2006


Gamblor -

Granted, I agree with you on the predatory loan activities. But, what's to stop those seeking student loans from going to private banks? All of my loans came in the form of a Great Lakes Higher Education student loan and a student loan from National City Bank.

Is there anything explicit stopping people from skipping Sallie Mae and going to another lender, just as I did when I shopped my home mortgage? I ask this in seriousness, not to be snarky.
posted by tgrundke at 10:07 AM on January 27, 2006


Also, Gamblor, when I refer to protecting people from every conceivable harm, I am referencing the comment that some here obviously have never "had anything truly terribly happen to them" (ie, healthcare crisis, loss of job, etc.). How can the government possibly protect against that for everyone?

I understand the point that Sallie Mae's terms may be less than favorable for those who do have financial hardship, yes.
posted by tgrundke at 10:10 AM on January 27, 2006


Folks, it's just like a home mortgage for crying out loud.

I guess... except that 10 years into a 30 year loan, I can probably sell my house and make a fairly nice profit. If I could sell my eduaction and use the money to pay off my student loan and pocket the rest as profit, that would be pretty sweet.
posted by Witty at 10:20 AM on January 27, 2006


True, Witty, but the idea behind the student loan is to get you an education that will provide you with an asset that 'builds equity' over time. You should be able to use your education to earn more money over time.

Now that's the kicker - if you spend that money on an education and your income does not improve over time.
posted by tgrundke at 10:24 AM on January 27, 2006


"If I could sell my eduaction and use the money to pay off my student loan and pocket the rest as profit, that would be pretty sweet."

Isn't that exactly the point...get a loan, get an education, get a job, pay off the loan.... hopefully with a little left to live on if you planned right?

(and, doesn't it suck when you misspell "education"..heh)
posted by HuronBob at 10:33 AM on January 27, 2006


Here's an example for you. My wife and I both took out Stafford loans, from the government. Some subsidized, some not. A pretty big chunk of what we owe ended up in the hands of loan companies other than the government. I don't recall ever asking Sallie Mae for money, or signing anything with their name on it. My wife sure as hell never signed with Nelnet. We hadn't even heard of Nelnet until the day that a letter arrived telling us that a portion of her loans had been sold to Nelnet. She was now responsible for paying a company she had never entered an agreement with.

The banks, underwriters and companies buy and sell loans. They can add fees, change payment options, pretty much anything they want while they do this. As a student, all I could do was look at the incoming mail and wonder how this happened.

We're relatively lucky. Most of my loan debt stayed in federal hands, and didn't end up that big to begin with. My wife's 6 years of undergrad college will end up costing us close to three times as much as my education from undergrad to PhD. We think we can pay this off, and we managed to consolidate it all with the Department of Ed rather than the multiple fly-by-night loan sharks that were fighting over the prize before.

Now given this fact - the fact that Sallie Mae is pretty much the ONLY lender left in the business (they've bought out nearly everyone else) and the fact that the loan you sign can and will be bought and sold without your permission or agreement to add on additional fees, interest, and changes to the payback options you thought you had entered - is it still fair for you to sit there and say "tough shit, suck it up, stop whining"?

Look at the stock figure, for christs sake. How the fuck can this "non-profit" company have suddenly become a privately owned corporation with 1500% stock growth, outpacing Microsoft and the Dow? They're doing this by fucking over the people they are pretending to help. That's criminal.
posted by caution live frogs at 10:37 AM on January 27, 2006


I like this comment here. It points out what is the real shame here, that many people spend the majority of their adult years paying for their education. This is just plain wrong. Quality education should be free in a society as wealthy as ours, and a society that hopes to remain prosperous should invest in its future by educating the next generation at all costs.

Furthermore, imagine all current student loan prgrams suddenly became grant programs and if all outstanding federal student loans were suddenly forgiven or paid for with federal dollars using a fraction of the defense budget (eliminate fraud, waste and no-bid contracts from defense spending and we might not even notice the difference).

Can you imagine what a great stimulus that would be to the economy? If the millions of educated people out there who currently shove a large percentage of their monthly income into Sallie Mae payment envelopes were suddenly free of this burden? I'm one of those sorry joes and I'll tell you what I would do. I'd buy a house, a new car, a new computer, I'd start eating out more, I'd invest more in my retirement and in my child's future, I'd start svaing more money, and I'd be that much further away from the poor house and welfare. If everyone in my shoes were free to spend on their future rather than pay for their past, the economy would take off like never before.

This idea makes sense to me. That is why I will never be President.

Don't get me wrong. I borrowed tons of money to go to a school thayt costs more than most. I have no regrets. I knew what I was getting into even if at the time I believed, as I do now, that I was being forced to buy into a system that was flawed. I intend to honor my debts and pay every cent back. But I borrowed that money only because I had to if I wanted an education better than what my parents could afford for me. The system is set up that way. The system is wrong.
posted by mds35 at 10:40 AM on January 27, 2006


Hey Caution -

I was under the impression that when a loan is bought or sold, you are still only obligated to the original terms of the loan that you signed? Perhaps it is different for mortgages than for student loans, but I do believe that for home loans (which are bought and sold be companies at a dizzying pace), if your mortgage is bought by a 3rd party they cannot change the terms of the loans that you signed.
posted by tgrundke at 10:47 AM on January 27, 2006


I have some fair sympathy for people who lose their jobs, or who are for one reason or another struggling with actually high payments. And the fees described do seem rather out of proportion -- if they were criminal penalties for defaulting, they would seem unjustly high.

But most borrowers will face payments no more expensive than a payment on a boring new car. Payments at that level should be relatively easily economized around, barring actual unemployment, and I have to think that most people defaulting on these loans are simply planning badly or unwilling to economize by, say, driving a 6-year-old car until it dies.
posted by ROU_Xenophobe at 10:50 AM on January 27, 2006


And Tacos, how arrogant of you to assume that I haven't had anything truly horrible happen to me.

You're right, I incorrectly ruled out that you're just a sadistic fuckwit who enjoys watching other people suffer. I guess that's the other possibility.
posted by I Love Tacos at 11:06 AM on January 27, 2006


Tacos,

No need to be rude and personal.
posted by tgrundke at 11:26 AM on January 27, 2006


yeah.
posted by mds35 at 11:27 AM on January 27, 2006


Just wanted to lend another voice of support to tgrundke's comments (I happen to be in agreement with most of what you've said so far).

Tacos, your personal attacks are unbecoming and do nothing to elicit sympathy for your point of view.
posted by aberrant at 11:45 AM on January 27, 2006


MOHELA sale won’t hurt students

current loan-holding students, that is...

"Sallie Mae is a likely bidder for Missouri’s student loan agency" which is being put on the block.

Imaging being the CEO of MOHELA, writing a letter to the Pennsylvania Higher Education Assistance Authority in 2004 urging PHEAA to reject Sallie Mae's offer to buy PHEAA. Now imagine being fired Tuesday.
posted by badger_flammable at 11:52 AM on January 27, 2006


Folks, it's just like a home mortgage for crying out loud...or that they didn't understand the contract when they signed it.

Re the first part, it isn't like a home mortgage, because the bank can sell your house if you default on the loan -- if you default on a student loan, they have no recourse but to keep chasing you, garnishing your wages and whatnot.

Re the second part, the rules have changed -- someone may have signed a loan knowing that if the worst happened, they could always file for bankruptcy -- but now that is no longer the case.

The end result is this: potential students take out a loan on the terms in force at the time (eg bankruptcy protection), then the terms change (eg no more bankruptcy protection), so anyone who ends up defaulting on the loan has no "value" from their education that can be used to cover the bank's loss (like you would with a house) and so has to pay the loan back even though they cannot afford to do so.

It's all a bit bait and switch thanks to the changes in the bankruptcy protection laws, and when you tack on the additional regulatory changes that now (not when the loans were originally taken out) allow huge fees to be added when loans are sold...well, it's a pretty messed up situation, and I have tremendous sympathy for those caught up in it.

Full disclosure: I went to a cheap ($600 a semester) commuter college in a big city for two and a half years, paying for it with 2-3 part-time jobs at any given moment, AND an unpaid internship in the first half of my 3rd year. Then I lost my half-tuition non-academnic scholarship (funding cuts) and couldn't make my rent, car repairs, AND tuition -- so I dropped out and grabbed freelance work where I could in the industry I had been training to enter.

I'm doing great now (pulled myself up by my own bootstraps to six figures, just as my father pulled himself up from poverty to five figures) but I hit some hard times financially between then and now, and spent a lot of time working for no wage whatsoever in order to get here. If I had bought into the idea that a degree from a "decent" school was a must and taken out a loan to get it, I would have long since defaulted on that loan.

posted by davejay at 12:05 PM on January 27, 2006


I love the irony of I Love Tacos and lupus yonderboy telling me that I'm a sickening, morally superior, arrogant person, who feels special for repaying my loans.

I'm guessing - just guessing, mind you - that neither of them have actually had student loans.

I don't feel particularly superior to someone who is in default. I'm just not going to get outraged on their behalf. There are so many others who have been fucked over in far more egregious ways for whom I save my outrage.
posted by ereshkigal45 at 12:06 PM on January 27, 2006


It constantly amazes me how many people take the attitude "Hey, I got fucked up the ass, so bend over and take it!"

I don't think that the system is 'rigged' at all

Hahahahaha!

And yes, I had student loans and paid them off—thankfully, in an earlier time, before the assfucking began.
posted by languagehat at 12:56 PM on January 27, 2006


ereshkigal45 -- you are entitled to feel good about paying your student loans. In the interests of full disclosure, I worked my way through University but then I went to school in Canada where it's possible to do that. I got about $5K in scholarships over the whole five years -- my parents, who were not well-off, paid for my books the first year (but I owe them so much more than that, more than I could ever express).

I wasn't particularly addressing you, but if the shoe fits, wear it.

If you can't have any sympathy for people whose financial lives are destroyed *because rich people took over a government service and extracted billions of dollars out of it to put into their own pockets, unilaterally changing the rules to suit themselves*, then yes, you are a sickening, morally superior, arrogant person.
posted by lupus_yonderboy at 1:29 PM on January 27, 2006


lupus -

upon re-reading some of the "Victim" stories on the Sallie Mae website it appears to me that many of these "victims" weren't so much victims of Sallie Mae, as they were of themselves. A lot of the stories I read there were the typical 'hard luck' story such that: "I had $20,000 in student loans, I lost my job....my kid got sick, etc. etc. etc. and couldn't pay them back/needed an extension." A few of the stories mention that they contacted Sallie Mae and "never heard back from them" after that. They find out several months later that they're in trouble.

In trouble? When the bank contacts me and says "hey, you missed a payment", you damned well better believe I'm on the phone as long as it takes to get the issue cleared up. I don't wait several days weeks months or even years before a collection agency comes after me to clear up the problem.

I'm taking extreme cases here, I know - but my point is that a lot of these "victim" cases don't appear to have much to do with "extracting billions of dollars out of (Sallie Mae) to put into their own pockets, unilaterally changing the rules to suit themselves".

The extraction of billions is in itself a whooooole other topic for vitriol, but I think that this website we're linking to here is trying to highten these hard luck stories with the contrast tale of evil executives who profited illegally/immorally from Sallie Mae.

I haven't seen much of a connection between the taking of excessive profits at Sallie Mae and these victims. Take for example this story from the website. A sad tale, indeed - but I don't see anything here about how Sallie Mae illegally/immorally screwed this individual over. What I see is someone who came under hard times, couldn't pay her loan back and then had her tax refunds seized as payment. The same thing would happen if you couldn't pay your mortgage, but worse. You'd lose your house:

"About 16 years ago I went to a college that I saw advertised on TV. I called the phone number and the man came over to my house to give me an interview. At the time my husband had recently passed away and I was taking care of my three children. One of the things about the college was that they had day care on campus . My youngest was 6 months old and they said that she would be able to be in the day care. I started attending classes then they said that my daughter was too young for the day care on campus. I only went for about two months when they told me this I decided to withdraw from the school. I withdrew then moved away I did not hear from them for about 12 years when I received a letter telling me that I owe 25,000.000 dollars!! I couldnt believe it as the original loan was only about 4000.00 well to make a long story short they started taking my Federal Income Tax Refund. The situation at the present time is that I am recently unemployed and my son has been in the hospital and is disabled I have huge medical bills and I am seriously in debt and am about ready to lose my house and I dont even have any money for food. I wish that I could have gotten my refund this year for 2604.00 then I could have gotten out of this financial nightmare. The only way I will ever get out of this debt is when I die."
posted by tgrundke at 1:44 PM on January 27, 2006


Two more things, ereshkigal45: had you read the article, the point was that the rules that you got student loans under have completely changed in the last few years -- surprisingly, since they gave $4 billion away to rich people.

And, the fact that you think it's reasonable that 16 years later, 16 years!, you are still paying every year more than the average human being earns on your student loans... it boggles my mind.
posted by lupus_yonderboy at 1:45 PM on January 27, 2006


Some of you are insane. These lenders play games, and the system is built in their favor. I have a lot of student debt I am still paying, but suddenly they tell me that they have to adjust the payment and need all kinds of paperwork proving my income (AGAIN). I do the paperwork, send it in, they reject it for bullshit reasons (Illegible when it's TYPED?), jack up my monthly amount 100% and then because I allow them to take it out of my account monthly, crash my checking account before I even know what is happening. It took me months to clean up that mess and it cost me a LOT of money. GRRR.

There is nothing wrong with living up to a contract, but this is different.
posted by UseyurBrain at 1:49 PM on January 27, 2006


Another thing about this that erks me is that yes, the rules have changed, but they are rules that only apply to you if you actually *default* on your loan. I don't see anything on the site that mentions that terms of your actual loan, so far as repayment schedule, amounts, interest rates, etc. have changed.

It's much like how credit card companies will often send you membership agreement amendments where they basically tell you that you're screwed if you default on your debt.

So I guess what I'm seeing here is that if you have a student loan, are repaying that loan faithfully...you have nothing to worry about, correct?

Now, if Sallie Mae were smart, they would work with you to refinance the debt or reschedule it so that they would get some of the money back, instead of having to take a bath on it.

Taken from the site: "These amendments allow for huge penalties and fees to be attached to defaulted student loan debt, take away bankruptcy protection for student borrowers, dissallow refinancing of the debt, and also provide for draconian collection and punitive measures to be taken against student borrowers, including wage garnishment, tax garnishment, withholding of professional certifications, termination from employment , social security garnishment, and others."
posted by tgrundke at 1:52 PM on January 27, 2006


16 years!

For me it'll be closer to 30 when it's all said and done. Jeezus.

Don't feel sorry for me. I'll be fine, inshallah. But someone should think of the children!
posted by mds35 at 1:53 PM on January 27, 2006


UseyurBrain -

Would you elaborate more on the circumstances you found yourself under for why they adjusted the terms of the contract?
posted by tgrundke at 1:54 PM on January 27, 2006


I'm guessing - just guessing, mind you - that neither of them have actually had student loans.

What makes you think that? I'm legitimately curious.
posted by I Love Tacos at 2:05 PM on January 27, 2006


(oh, and yeah... I've been a total prick today.)
posted by I Love Tacos at 2:05 PM on January 27, 2006


"Would you elaborate more on the circumstances you found yourself under for why they adjusted the terms of the contract?"

My payments are adjusted for income and they seem to want to check this (and cause lots of paperwork for me) more and more. Each time, they have opportunity to screw up the paperwork on their end and make the payments skyrocket (and this has happened more than once). It can be fixed, but since they can take directly from my account (seemed easier and safer in terms of making the payments like clockwork), this can hurt quite a lot.
posted by UseyurBrain at 2:12 PM on January 27, 2006


UseyurBrain - that's interesting. I had never heard of having payments adjusted for income, but I can imagine the headaches involved with that.
posted by tgrundke at 2:38 PM on January 27, 2006


tgrundke, for repayment of federal student loans, there are usually several repayment options: standard, graduated, income-sensitive, etc. See here.

My name is Stafford, so I know these things all too well.
posted by mds35 at 2:51 PM on January 27, 2006


Gamblor: "But in many countries higher education is a right. Australia, for example."

When was that? Because it certainly wasn't the case 20-odd years ago when I left school and started working, and it sure as hell isn't now. It may have become a privelige that people think they need - but that's not the same thing as a "right".

BTW, Australia is suffering a bit because of this now - basically too many people are going to university because it's what's expected of them, and there's a lack of skilled tradesmen in many areas. I know plumbers of 15 years experience who make more than doctors with the same, purely because there's more demand for the former.

(Not that I have much sympathy for doctors - the AMA has de-facto control over med school positions, which they've manipulated in order to keep doctor numbers down and income high. Turns out this doesn't work terribly well in a semi-socialised medical system, but they've consistently refused to learn this lesson ;-)

In Australia "student loans" don't exist as such, at least not from lenders. Instead, the Government subsidises tertiary education - then, when you start earning more than a certain amount ($35k?), they start taking it back from you through the tax system.
posted by Pinback at 6:43 PM on January 27, 2006


Two more things, ereshkigal45: had you read the article[snip]

I read the whole fucking thing, asshole. Every last story. And as tgrundtke points out I was struck by how many of those stories included some version of "they told me I owed money but I blew it off until five years later when all of a sudden they found me again and told me I owed them twice as much money."

And you know? Why the fuck *can't* I feel superior for living up to my fucking responsibilities?
posted by ereshkigal45 at 9:58 PM on January 27, 2006


Yeah, and we should reinstitute debtor's prisons. Then they will really suffer because they are not as responsible as I am. I'm sure that the US will then be a better place.

</sarcasm>

Seriously though, is this sort of thing really the best social policy for the nation?
posted by dopeypanda at 10:20 PM on January 27, 2006


We all know this country -- your hard work and dedication will get you a minimum wage job where you can't afford to have a family or buy a home, EVER -- unless you have a degree in something useful. And in America, that degree will typically run you north of $100,000.

I also think that higher education needs to be more affordable in the U.S., but this particular statement isn't true. Quick googling found this article, which states that 80% of degrees in the U.S. come from public universities. In my experience, in-state tuition for 4 years will almost always run less than $80,000.
posted by gsteff at 10:35 PM on January 27, 2006


Doh. This article.
posted by gsteff at 10:36 PM on January 27, 2006


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