Low-interest student loans have been a boondoggle. Young people borrow money, often hundreds of thousands of dollars, to fund their education. The loans are structured so they cannot be wiped away by a bankruptcy court. Payments on the loans are staggering for young people who have been unable to find paying employment that is sufficient to cover both their living costs and loan payments. As a result defaults are rapidly increasing. The Obama administration ignored the problem, even to the point of making it harder for collectors to collect. But the Trump administration is giving teeth back to agencies charged with collecting payments from loan holders.
Colleges and universities have treated the student loans as a windfall. According to USA Today tuition increased 1,200% since 1978. Young people are paying ever more for an education, the institutions are reaping the benefits of the additional money, and the kids are on the hook. Schools and educators are getting rich and leaving the bills to others. In this they are not serving their students.
From the Washington Pos:
“Trump administration rolls back protections for people in default on student loans”
Days after a report on federal student loans revealed a double-digit rise in defaults, President Trump’s administration revoked federal guidance Thursday that barred student debt collectors from charging high fees on past-due loans.
The Education Department is ordering guarantee agencies that collect on defaulted debt to disregard a memo former President Barack Obama’s administration issued on the old bank-based federal lending program, known as the Federal Family Education Loan (FFEL) Program. That memo forbid the agencies from charging fees for up to 16 percent of the principal and accrued interest owed on the loans, if the borrower entered the government’s loan rehabilitation program within 60 days of default.”