The Great Student Loan Debt Rip-off Continues
December 31, 2017
Chronicle news & opinion
Washington State Attorney General Bob Ferguson at recent news conference regarding Comcast.
(SEATTLE, WA.) -- On Dec. 28 the Sky Valley Chronicle published a very heavily read front page feature story by attorney Ellen Brown titled, "Student Debt Slavery: Bankrolling Financiers On The Backs Of America's Young People."
It told the story of slavery-by-debt . Not only is this not a new story and not a new way to enslave human beings, it continues to this day and is, "Particularly evident in the plight of students," according to the report. "Graduates leave college with a diploma and a massive debt on their backs, averaging over $37,000 in 2016. The government’s student loan portfolio now totals $1.37 trillion, making it the second highest consumer debt category behind only mortgage debt. Student debt has risen nearly 164% in 25 years, while median wages have increased only 1.6%."
And the kicker is this: unlike mortgage debt which you can walk away from in a bankruptcy or just by handing the keys to the place back to the bank, student debt must be paid.
That's right. Got to be paid. Students cannot just turn in their diplomas and walk away, as homeowners can in two ways.
And here's something else you may not know: Wages, unemployment benefits, tax refunds and even Social Security checks can be tapped to ensure repayment.
From that report again:
"In 1998, Sallie Mae (the Student Loan Marketing Association) was privatized, and Congress removed the dischargeabilility of federal student debt in bankruptcy, absent exceptional circumstances. In 2005, this lender protection was extended to private student loans. Because lenders know that their debts cannot be discharged, they have little incentive to consider a student borrower’s ability to repay. Most students are granted a nearly unlimited line of credit. This, in turn, has led to skyrocketing tuition rates, since universities know the money is available to pay them; and that has created the need for students to borrow even more."
What has happened here? Brown explains in detail that in America (only in America, some might say) higher education has been financialized, transformed from a public service into a lucrative cash cow for private investors.
If you're a college student taking out loans, that's what you are: a cash cow. And the financiers have got you by the short hairs because they know you're stuck with that debt as long as you're breathing and above ground. Maybe even until you're deader than dead.
You are a human slave to that debt until it is paid off -- unlike Donald Trump who could throw his corporation into bankruptcy several times to get out from under mountains of debt this (supposedly) "brilliant business man" got himself into.
Which bring us to a good thing that Washington State Attorney General Bob Ferguson wants to do (god bless his little pea-pickin' heart).
The $24 Billion time bomb
Right now in our state we have 800,000 Washington residents (one in every 7 adults in this state) who are debt slaves. They owe in student-loan money a whopping $24 Billion bucks.
That's billion with a B.
A Seattle Times story, published one day after the Chronicle ran its story on student debt, notes that "A report detailing student-loan indebtedness, released Thursday, forms the backdrop of a push by state Attorney General Bob Ferguson for legislation that would give college borrowers greater safeguards against deceptive loan practices. The bill, which died in the Senate after he requested it last year, would set new standards for student- loan servicers and give the state the authority to license and regulate those servicers."
Here here! A good, just and smart move by Ferguson.
From the Times story which you can find here , "The numbers are staggering,” Ferguson said. “We have a big problem, and it’s getting worse, at the highest level … the impact could be profound for our state and our country if this trend continues.”
Ferguson also noted that one of the most troubling figures in the report is the number of borrowers who are 60-years old and older.
Ouch. That group of borrowers has increased by more than 35 percent in the last five years in this state and they now hold student-loan debt of $2.1 billion.
We wonder how many of them know the Feds can garnish their Social Security checks, tax refunds and unemployment pay if they default.
What a nightmare awaits these people if some calamity should befall them and they can no longer make payments on that debt.