Students loans fail usury test

[xchrom]

http://www.atimes.com/atimes/Global_Economy/NE16Dj03.html


The Social Security program ... represents our commitment as a society to the belief that workers should not live in dread that a disability, death, or old age could leave them or their families destitute.
- President Jimmy Carter, December 20, 1977.

[This law] assures the elderly that America will always keep the promises made in troubled times a half century ago ... [The Social Security Amendments of 1983 are] a monument to the spirit of compassion and commitment that unites us as a people. - President Ronald Reagan, April 20, 1983

So said presidents Carter and Reagan, but that was before 1996, when the US Congress voted to allow federal agencies to offset portions of Social Security payments to collect debts owed to those agencies. (31 USC ง3716). Now we read of horror stories like this:
I'm a 68-year-old grandma of 2 young grandchildren. I went to college to upgrade my employment status in 1998 or 1999. I finished in 2000 and at that time had a student loan balance of about 3,500.00.

Could not find a job and had to request forbearance to carry me. Over the years I forgot about the loan, dealt with poor health, had brain surgery in 2006 and the collection agents decided to collect for the loan in 2008.

At no time during the 6-7 year gap did anyone remind me or let me know that I could make a minimum payment on the loan. Now that I am on Social Security (have been since I was 62), they have decided to garnishee my SS check to the tune of 15%.

I have not been employed since 2004 and have the two dependents ... I don't dispute that I owed them the $3,500.00 but am wondering why they let it build up to somewhere around $17,000/20,000 before they attempted to collect.
Her debt went from $3,500 to over $17,000 in 10 years! How could that be?

It seems that congress has removed nearly every consumer protection from student loans, including not only standard bankruptcy protections, statutes of limitations, and truth in lending requirements, but protection from usury (excessive interest).

[mike_c]

1. I have paid about $800 per month for almost 15 years...

...and my $75K loan balance (for ten years of higher ed, baccalaureate and grad degrees) has diminished by-- drum roll!-- $5K. I have actually repaid over $50,000, but been credited only about $5,000 in principle reduction. I expect to be homeless in retirement because of garnishment-- I cannot work long enough to repay those student loans. At this rate I'd need to work a couple of lifetimes, at least.

Student loans are criminal. If someone starts hunting down bankers and burying them alive, head down in fire ant infested pits full of broken glass, I won't shed a tear. Rat bastards, every one of them.

[xchrom]

2. sorry, dude -- it really sucks.

for your sake and others -- i hope america comes back to her senses.

[Maven]

3. The stripping of consumer protections from student loans is absolutely unconscionable.

It amounts to a system of indentured servitude to the banking system in which even private lenders can garnish your wages without even going to court. And that's not to mention the other protections that have been taken away, which are listed in the last paragraph of the OP.

What makes student loans so different from other types of lending that we are willing to remove statutes of limitations and truth in lending requirements? At what point do we admit that this debt is a burden that few people laboring under it can hope to repay, given the "new normal" of scarce jobs and reduced wages?

Eisenhower warned of the military-industrial complex. Today, the real "complex" to worry about is the banking/financial "services"/collections industry that has silently enslaved an entire generation of young people.

[fasttense]

4. Student loans as they are now are horrific.

I got interest free loans for college. Why do we think banksters should be making money off the futures of our children?

This is such a huge moral failing it is stunning