For-Profit Colleges Slump Converges With Debtors

[marmar]

Dec. 28 (Bloomberg) -- Ronnie Franklin borrowed to pay his tuition at a for-profit college that advertised its success in preparing graduates for better jobs. That decision haunts him.

Frustrated that his degree didn’t lead to work in electronics, Franklin -- now a $12-an-hour housepainter -- decided to go to a community college this year. He can’t qualify for a federal grant that would have paid the cost because he defaulted on $20,000 of his earlier U.S. student loans.

Debt from a for-profit college education also shadows Christina Bergschneider and Michael DiGiacomo. Landlords rejected Bergschneider’s apartment applications more than 20 times because of her unpaid student loans. DiGiacomo, who works in a copy shop, forfeits 15 percent of his after-tax income when the U.S. Education Department garnishees his paycheck to collect on $30,000 in federal loans for two different for-profits.

Students seeking to move up in life by getting a degree from a for-profit college are being trapped in a growing underclass of education debtors. Under U.S. law, their loan obligations can rarely be discharged in bankruptcy, making them more onerous than credit-card debt or subprime mortgages taken out before the housing bubble burst. Along with blocking students from further education and access to housing, defaults can subject them to government confiscation of tax refunds and Social Security payments, as well as paychecks. ............(more)

The complete piece is at: http://noir.bloomberg.com/apps/news?pid=20601109&sid=aax191BfhSio&pos=11

[Systematic Chaos]

1. Some fuckwit unrecced this.

I had it to +2. Should be +200. Now it's back to +1.

[Lorien]

17. K & R

To counter the fuckwits.

[KansDem]

2. "Under U.S. law, their loan obligations can rarely be discharged in bankruptcy"

I often wonder why this is. If you can discharge credit card debt and mortgages in bankruptcy, why not student loans?

[Hannah Bell]

4. because that would spoil the ruling class plan to entangle the bottom 50% in debt &

send them off to debtors prisons for use as slave labor.

[valerief]

5. Where the ruling class can make MORE money off them. nt

[DCKit]

12. You have to admit, they do pay the prison workforce as well as the average Somali. nt

[valerief]

21. Ha!!! nt

[SoCalDem]

6. A friend of my son told him that once he and his sister were through college,

his parents declared bankruptcy...after having carefully used credit cards to get them though college. The upside, is that they ended up with no debt, but the downside is that their 50-something parents have a bankruptcy on their record. The house they live in is owned by Grandma ( another strategic decision they made).

Technically, they "gamed" the system, but is it much different from corporations who routinely "game" the system for megabucks & plumped up bonuses?

When Grandma passes on, the parent's home will pass directly to the grandkids (who would have gotten it anyway), with Mom & Dad living there as long as they live.

[NNN0LHI]

13. ... with Mom & Dad living there as long as they live ... Maybe?

I have seen kids toss their parents right out of their own houses and sell it in situations like this before.

Mom and dad were living too damn long. I am pretty sure it wasn't the first time that has happened.

Don

[aikoaiko]

7. Because a lot of students would graduate, hang out at the their parents house unemployed, and then .

...file for bankruptcy.

[Hannah Bell]

8. yes, that must be it.

[Confusious]

9. You can't discharge credit card debt that easily anymore. nt

[Travelman]

11. That has been the law for ages

Because the student loans are backed by Sallie Mae, a federal entity, the loans are guaranteed. However, you can't declare bankruptcy against the federal government. You can't, say, not pay your taxes and then just have the IRS slate wiped clean by a Chapter 7. As such, you can't declare bankruptcy against Sallie Mae.

IIRC, this law was put in place back in the '30s.

[valerief]

14. And the 2005 bankruptcy law says you gotta repay your debt. nt

[Travelman]

15. Right, but this was the case with student loans

long before 2005. I remember an uncle back in the '70s who wound up in a bankruptcy, and the same thing applied then: he could not just obliterate his student loans. He could re-structure it some, but he couldn't do away with it.

[valerief]

16. I wonder if student loan debt is bundled and sold on the derivatives market.

The more people can't repay, the richer the investors get.

[Hannah Bell]

3. The wonderful results of the free market in education. The poor get useless degrees and endless

debt, for which they can now be imprisoned.

ah, brave new world that has such wonders in it.

[cottonseed]

10. Common sense says this is wrong and should be stopped. Money will allow it to continue.

After years and years of watching our government do things I find completely nonsensical, I've found that when the money is found, things start to make complete sense. There is too much damn corruption in all facets of our government entities.

[Rex]

18. Hey why not combine check cashing places with 'Hallmark' colleges?

They have to find some way to pay for all those thousands of commercials lying about a great paying job if you get their degree. Almost as bad as email scams imo.

[ck4829]

19. K&R

[newtothegame]

20. Take out "for-profit' at the beginning because this applies to ALL colleges.

For too many years, higher education and our culture as a whole has convinced kids that 1) they have to go to college and 2) study what you love!

What we've got from this is a whole bunch of philosophy, art history, and modern dance graduates serving us coffee at Starbucks.

[sarcasmo]

22. I tried to explain this to my niece who will have 60,000 in student loans to repay.

This country pisses me off on a regular basis.