As the nation plunges further into an economic crisis unheard of since 1929, most of the news headlines focus on lost homes, bank bailouts, and protests. But what about student loans default? This problem is also an epidemic sweeping the nation, and it isn’t the fault of graduates – it seems that banks and corporations may be to blame for this one, too.
First of all let’s look at how a student loan works. Universities often drive students toward a few “choice lenders” who are supposed to be the best deal for the kids. However, oftentimes those lenders are only featured because they paid the schools. Whether or not their loans are actually the best package are not really considered.
Then, over the past decade these lending companies successfully lobbies to push through changes in how student loans default is handled. For example, did you know that when you declare bankruptcy, you cannot be excused from your student loans? That is a new law, pushed through in 2005. It makes these student loans potentially a lifelong affliction no matter what your income is.
Then you have the face that many large corporations, often the same companies who refused to hire anyone unless they have a college degree in the first place, are no longer hiring – or don’t consider a four year degree good enough. Employers are increasingly choosy about who they hire, if they’re hiring at all.
The end result of this is a generation of graduates who can’t pay – but are still on the hook for their debt.
Tags: student loans default