Student Loan Sharks

      What is your congressman doing about predatory lending practices. Nothing. They just keep passing laws enabling them to do more, like the Government Student loan protection for lenders, and in the meantime, students are winding up with staggering debt that they can't possibly pay back, sometimes double what it costs them to go to school.
If I were just graduating high school, I know what I'd say about college. It's not worth the hassle. You can't keep up with the compounding interest on the private loans and you're not able to secure a loan through another entity at a lower fixed rate, or consolidate your loans. You can't even file bankruptcy
No matter how you cut it, loan sharks like Sallie Mae, to name one, are protected no matter what happens, whether you pay them back or not, and Representative John Boehner is right at the top of the list of their government protagonists, and lies about it when confronted.

   “Student debt has become a life-changing issue, not just for students but also for the parents and grandparents who cosign for loans,” said Senator Durbin.  “My office often hears from students who have problems with their loans but have no idea where to turn for help.  When Congress reconvenes in September, I intend to introduce legislation to create a clearinghouse for student debt issues through the U.S. Department of Education which will facilitate student inquiries and refer them to the appropriate entity.  We need to ensure all students have a chance to gain a meaningful education without mortgaging their future.”

   "U.S. Senator Dick Durbin (D-IL) participated in a congressional field forum hosted by U.S. Representative Mike Quigley on the impact of student loan debt on families and our economy. In his opening statement at the forum, Durbin warned students to be especially wary of for-profit colleges, some of which provide unaccredited degrees while earning massive profits from student loans which can then burden borrowers for years."

     For profit colleges, as well as government officials get kickbacks in the form of pac money for procuring and securing these private loans to students. The loan shark always comes out the winner. Senator Durbin is not one of these government officials.

    A warning that is too little, too late for many borrowers.The following is a guideline taken from Lisa Madigan's website. Not many people would check this site for a problem with the lender after that lender was recommended by the financial office. However, when you contact her office, you get a lot of government red tape and bureaucratic nonsense.

Some good advice? 

      "If you or your parents apply for student loans, here are some basics to keep in mind and questions to ask of your school and lender. To apply for student financial assistance, students complete a Free Application for Federal Student Aid (FAFSA), which is limited. Students use this application to apply for federal student grants, work study aid and loans as well as most state and private aid. Facts to consider—some basics.

       If you have been awarded financial aid at your school, you will receive a financial aid award letter. This letter may contain a range of financial aid options, including grants (which you do not have to pay back), loans (which you do have to pay back) and work-study (employment at the school).  Among the loans that may be offered to you are Stafford loans (either subsidized or unsubsidized) and PLUS loans (usually taken out by either parents of undergraduates or by graduate students themselves). These loans are guaranteed by the federal government and are known as Title IV loans. In addition, your award letter, or your school’s financial aid office, may suggest that you finance a part of the cost of attendance with alternative loans from private lenders. These loans are neither subsidized nor guaranteed by the federal government.

      Under federal law, you have the right to use the lender of your choice. Many schools have so called “preferred lender” lists. These are lenders that the school has decided to recommend to their students. However, you should be aware that just because a lender is on the “preferred lender” list, that does not mean that the particular lender is the best one for you to use. A student loan is a serious commitment and you should do your own research to find the loan with the best terms for you. Ask your financial aid officer how they chose preferred lenders for the list. Ask

questions such as:

• How were the preferred lenders selected?

• What benefits do the preferred lenders offer the students?

• What benefits or payments do lenders offer the school?

      Remember, when completing a Master Promissory Note for a student loan, you are entitled to choose your letter. If the Note is pre-printed or has an electronic drop-down menu, you should be able to add a different lender. If you are not permitted to insert your chosen lender, please call the Attorney General’s consumer hotline at the telephone numbers below. The interest rates for Stafford and PLUS loans are set by federal law.

      Accordingly, many lenders compete on repayment benefits—on the “back-end” of the loans. For example, one lender will offer to cut your rate 1.5% if you make 24 on-time payments in a row, while another will offer to cut your rate 2% if you make 36 on-time payments in a row. Although this competition is legal, keep in mind that many lenders sell their loans on a secondary market. This means that even if you select Bank A as your lender, Bank A may turn around and sell your loan to Bank B. It is important to make sure that if your loan is sold, the “back-end” benefits will travel with the loan. In some instances, the sale of the loan will terminate the very benefits that caused you to take out that particular loan in the first place! To preserve these benefits, have your lender commit to them in writing. If your lender refuses, call the Attorney General’s consumer hotline. Keep advertisements/solicitations from your lender school.

      Make sure to keep copies of all the solicitation/advertising materials you receive from your lender or from your school, as well as your loan paperwork so that you will be able to document the promises made to you by your lender when it comes time to start repaying your loan years later. In many cases, the rates that are advertised to you do not appear in any of the actual loan documents that you sign. Therefore, it is important to keep the advertisements where these rates appear so that you will be able to document the promises made to you by your lender when it comes time to start repaying your loan years later."

      "Illinois Attorney General Lisa Madigan testified today on the increasingly high level of debt students are undertaking to obtain a degree in the for-profit schools industry in a hearing before the U.S. Senate Judiciary Committee’s Subcommittee on Administrative Oversight and the Courts.

“We’ve seen first-hand the damage done to the lives of students burdened with enormous debt from for-profit schools. These students wanted nothing more than to go to school and better their lives, but too many of them end up struggling to pay for an expensive education with few job prospects in their chosen field,” Madigan said. “The abuses in the for-profit schools industry are rampant. Left unchecked, I fear this troubling trend will produce a generation of students saddled with crushing debt and years of financial insecurity.”

   

      Madigan testified earlier today on Capitol Hill in a hearing called by Illinois Sen. Dick Durbin, “The Looming Student Debt Crisis: Providing Fairness for Struggling Students.”

The Attorney General warned committee members that student debt poses a large and growing threat to the stability of the economy. Madigan said that just as the housing crisis has trapped millions of borrowers in underwater mortgages, student debt could prevent millions of Americans from achieving financial security.

As part of her testimony, Madigan detailed a lawsuit she filed earlier this year against the national, for-profit Westwood College, which has campuses in the Chicago Loop, O’Hare, Woodridge and Calumet City. The lawsuit alleges Westwood used deceptive marketing that left students with thousands of dollars of debt and limited job opportunities. Madigan’s lawsuit alleges that, through marketing its criminal justice program, Westwood falsely convinced students they could pursue a law enforcement career with such agencies as the Illinois State Police and suburban police departments, even though those employers don’t recognize a Westwood degree due to its lack of regional accreditation."

     One of the problems here is when the financial office at the university recommends a predatory lender, people tend to take their word that the lender is honest. We don't need advice. What we need is action. College and advanced learning is too important to the nation as a whole to ignore and let things like this go on.