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Archive for the ‘Private Student Loans’ Category

Americans Now Owe More on Student Loans than Credit Cards

Student loans now comprise a bigger chunk of American consumer debt than do credit card charges, according to recent data from Mark Kantrowitz, of FinAid.org and FastWeb.org, a somewhat unexpected finding considering the rough state of the economy. Kantrowitz asserts that as of June, Americans owe about $826.5 billion in revolving credit (most of which is credit card debt), while student loans, both federal and private, all together have now grown to $829.8 billion. This economic twist has apparently caught many by surprise. “The growth in education debt outstanding is like cooking a lobster,” Mr. Kantrowitz said as quoted on... more »

Hey College Students – Here’s Your Wake Up Call

A recent story from the New York Times comparing the student loan industry to the pre-collapse subprime mortgage market has raised quite a few feathers. A follow up article said there were over 600 comments in response to the story about a young woman who is struggling to pay off her $97,000 in student loans that she racked up in order to get a liberal arts degree at NYU. Courtney Munna, the feature of the story borrowed all the money she could under federal loan programs, got grants and did work study to pay for her schooling. Even all those... more »

Wells Fargo Introduces New Student Loan Options

In response to the new regulations signed into law by the Obama administration governing student loans, Wells Fargo is rolling out a new student loan program. Private Banks starting July first of this year will no longer be able to issue federal backed student loans. Instead, the federal government will now directly loan to students. Private Banks that have been in the student loan lending business are estimated to be out approximately 2 billion a year in profits. Private Banks are now scrambling to stay in the business by offering their own loans for students. Wells Fargo’s new loan... more »

Student Aid Bill: Will It Finally Pass?

The student loan bill is back in the news this week. The bill that would put the government in charge of dispersing student loans instead of commercial lenders passed by the House last year but has yet to pass in the Senate. Private lending lobbyists have been working overtime to stop the bill, and have succeeded in the very least by stalling it in the Senate. The bill was originally predicted to save the federal government around $87 billion over a ten year time period. New cost saving estimates show that the number may be closer to $61 billion. Currently... more »

Government May Nationalize Student Loans

There is a new bill being kicked around in Congress that would essentially exterminate the private student loan industry, paving the way for the government to make all loans directly to college students. It’s called the Student Aid and Fiscal Responsibility Act and it calls for the elimination of the Federal Family Education Loan (FFEL) program that has created millions of dollars of subsidized student loans each year. Here’s how subsidized loans work: The government encourages lenders to loan money to students at low rates by promising to make up any profit losses or to repay the money if a... more »

Should Bankruptcy Allow You to Shed Student Debt?

Traditionally, even if you file for bankruptcy, you will still be required to repay your students loans. Almost all of them are either provided or guaranteed by the United States government and the thinking is that if bankruptcy could wipe out all or even just a portion of one’s student loans, it would encourage graduates to file more often. This would in turn make lenders less willing to offer student loans. This issue is being heard and decided by the Supreme Court presently as it considers the case of Francisco Espinosa, a Phoenix airline ramp agent who had the interest... more »

Is That All She Wrote for Private Student Loan Lenders?

The Student Aid and Fiscal Responsibility Act, currently moving through Congress, would stop the FFELP (Federal Family Education Loan Program). The FFELP has allowed third party (private) lenders to issue student loans which are backed by the government. In 1992, the Federal Direct Student Loan Program began, which allowed parents and students to borrow directly from the U.S. Department of Education without a FFELP lender or involvement from a bank. If the Student Aid and Fiscal Responsibility Act is passed by Senate vote, critics of the act argue that it will put most private student loan lenders out of business... more »

Ten Percent of Community College Students Do Not Have Access to Federal Student Loans

According to the Project on Student Debt, there are about 900,000 students at community colleges in 31 states who do not have access to federal student loans because their colleges do not participate in federal loan programs. What’s more, 362,000 community college students (2 out of 3 students) who do have access to federal loan programs took out private student loans during the 2007-2008 school year, instead of using the more affordable and safer federal student loan options. This decision to fund education with private student loans may be due to deceptive marketing practices of some private lenders, as well... more »

Student Aid and Fiscal Responsibility Act Ends Government-Backed Private Student Loans

In the past, the federal government guaranteed student loans that were financed by private lenders. Recently, the U.S. House approved a money-saving move that will stop guaranteeing private lender loans and replace them with student loans that are financed through Treasury funds and that are therefore less expensive. This will save the government an estimated $80 billion over a 10 year period. How will the government use the $80 bill in savings? The savings are meant to provide larger grants and more grants to lower-income students for their college expenses, and to increase federal aid available to community college students.... more »

The Need for Student Loan Consumer Protections

The federal student loan system has become fundamentally predatory due to the Congressional removal of standard consumer protections, combined with Congressionally-sanctioned collection powers that are stronger than those associated with all other loan instruments in our nation’s history. These actions by Congress have, predictably, created an inherently predatory, state-sponsored lending and collection system where the motivations of the various functional elements of the system are fatally misdirected. The system promotes inefficiency in administration, unchecked inflation, bureaucratic malaise and conflicted oversight. Moreover, the resulting set up also promotes needless and expensive complexity and redundancies, fails to encourage academic excellence, and ultimately,... more »