You can find all the student loan statistics online, and they are at crisis level. Plus, they keep changing (for the worse) all the time, especially considering the U.S. Department of Education can’t seem to get them right.
It’s a big time bubble, we’re just waiting for it to really hit. What I don’t get is why the federal government decided to “take over” almost the entire private student loan market back in the day, thereby making We, the Taxpayers, guarantors and backers of all these loans. We, the Taxpayers, stand behind that lovely phrase “the full faith and credit” of the United States. When student loan borrowers don’t pay, that is just one less dollar not paid back to our federal government, which desperately needs every penny it can get its hands on.
On one of the last days before the new Trump Administration took office, the CFPB filed a 66-page complaint against Navient (formerly known as Sallie Mae, Inc.) and its wholly owned subsidiary Pioneer Credit. Navient and Pioneer basically control the vast majority of the student loan work-out and collection efforts, as “servicers” for the loans and any repayment modification discussions with the student loan borrowers.
Here’s a description of one of the “unlawful acts and practices” found by the CFPB:
“Navient also misreported information to consumer reporting agencies about thousands of borrowers who were totally and permanently disabled, including veterans whose total and permanent disability was connected to their military service, by making it appear as if those borrowers had defaulted on their student loans when they had not, damaging their credit…”
Here is a copy of the Complaint. It’s a fascinating read!
The phrase “Robbing Peter to pay Paul” is something I have seen with almost every struggling person or company that has ever come into our offices. When there is not enough money to go around, then priorities crystallize. Those creditors who are left out usually yell, quite loudly. While on the surface, struggling student borrowers may have been duped or overextended themselves when they borrowed this money, this is just one piece of a big messy puzzle called our federal budget and our federal deficit spending. Let’s all demand that our leadership look at everything as a whole, not continue to just talk about single pieces of the pie.
By: Laura Day DelCotto, Esq.