US student loan write-offs hit $3 bn in 1st two months of year

[OhioChick]

Source: Reuters

26 Mar, 2013, 05.07AM IST, Reuters

WASHINGTON: US banks wrote off $3 billion of student loan debt in the first two months of 2013, up more than 36 per cent from the year-ago period, as many graduates remain jobless, underemployed or cash-strapped in a slow US economic recovery, an Equifax study showed.

The credit reporting agency also said Monday that student lending has grown from last year because more people are going back to school and the cost of higher education has risen.

"Continued weakness in labor markets is limiting work options once people graduate or quit their programs, leading to a steady rise in delinquencies and loan write-offs," Equifax Chief Economist Amy Crews Cutts said in a statement.

Equifax analyzes data from more than 500 million consumers to track financial trends.

US student loan debt reform has become a more pressing issue since the US Consumer Financial Protection Bureau (CFPB) reported in March 2012 that the total surpassed $1 trillion by the end of 2011 and as interest rates on subsidized Stafford loan rates are set to double in July.

Read more: http://economictimes.indiatimes.com/news/international-business/us-student-loan-write-offs-hit-3-bn-in-1st-two-months-of-year/articleshow/19207431.cms

[bobclark86]

1. I got a couple grand to write off...

I'm even working in my field, it just pays squat...

[OnlinePoker]

10. I'm curious

Did you know it paid squat before you took on the debt to go into that field? If you did, why should the debt be written off?

[Orrex]

2. The student loan catastrophe would largely disappear

If the interest, fees and penalties (or even just the fees and penalties) were made subject to bankruptcy. Let the principal balance stand; the fees and penalties account for a great deal of the crippling, inescapable debt.


I love DU threads about student loans because they always bring out a chorus of bootstrappers who can't wait to deride those whose circumstances have made it impossible for them to pay off their student loan debt.

[OhioChick]

3. Not a "bootstrapper" here

I love DU threads about student loans because they always bring out a chorus of bootstrappers who can't wait to deride those whose circumstances have made it impossible for them to pay off their student loan debt.

If the kids coming out of college had jobs available, this scenario wouldn't even be an issue.
(And I'm not talking McJobs)

[Orrex]

4. You're right, of course

I know extraordinarily few people who found jobs in their majors, unless we count a soil ecology microbiology grad who works under the table as a maintenance guy.

Alas, this likewise typically results in a lecture from the bootstrappers, who love to assert that liberal arts majors will provide the foundation for any number of hugely profitable careers, in defiance of all experience and statistical reality.


In any case, you're correct, in that the economy lacks sufficient well-paying jobs to support the tons of grads who are being dumped into the workforce with tens of thousands of dollars worth of inescapable debt just waiting to suffocate them.


Good times!

[naaman fletcher]

5. They wrote them off, but they are still trying to collect. nt

[AtheistCrusader]

7. Student loans cannot be discharged via bankruptcy.

Disability is about the only way out, I think.

[naaman fletcher]

8. my ex-wife is going through this

Yes, if its permenant disability combined with bankruptcy it can be done

[Orrex]

9. Maybe sometimes, but not always

Even if you're permantly disabled, you may not be able to discharge your student loans through bankrupcty if it can be demonstrated that you can--in principle--still work in some capacity.

My link to the original article no longer works, but there was a case of a single mother who was fully disabled but who was still required to pay back the full balance of her loans because it was determined that she could work something like 10 to 15 hours per week at a sit-down job. So she might be raking in around $200 per week, of which student loans would take about $30.


Student loans are indentured servitude.

[24601]

12. I am familiar with several other cases which discharged the debt. In one, the student was

deceased and his parents had not co-signed. In other, the "borrower" had been in jail and those records helped prove identity theft/fraud.

Still, no one is forced to borrow this money. And one of the reasons colleges can keep raising rates is because of the ease of borrowing.

[Orrex]

13. Boom--and there we have it

Still, no one is forced to borrow this money.

Nor is it made clear at the time of borrowing that the debt will be essentially inescapable until death. It's a predatory practice that is unlike any other legal lending scheme in the US, and it is badly in need of an overhaul.

The fact that some people have paid off their loans, or didn't need to take them out in the first place doesn't change this.

[blkmusclmachine]

6. Not savvy enough. ;-)

[In_The_Wind]

11. Some days, it's not even worth chewing through the restraints.

The photo that goes with your sig line is on the last page of my journal.