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The Student Loan Scam: The Most Oppressive Debt in U.S. History and How We Can Fight Back

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Named one of CNNMoney’s financial heroes, Alan Michael Collinge argues that student loans have become the most profitable, uncompetitive, and oppressive type of debt in American history. In an unprecedented analysis of this -billion industry, Collinge covers the history of student loans, the rise of Sallie Mae, and how universities have profited at students’ expense while telling stories of people whose lives have been shattered as a result-including his own

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Question by Dat_1_Chiq: What Loan company will take over my federal student loans when the loans are in default?
What Loan company will take over my federal student loans when the loans are in default so I can go back to school?
My loans are government loans from Saillie Mae. I owe them under $ 5000.
I heard about this company that will take over your school loans from them but I don’t know the name of the company.

I am at the point where I can’t get a federal student loan until I pay this off.

Best answer:

Answer by NotAnyoneYouKnow
When your federal educational loans are in default, you have several options:

You can repay the loan in full.
You can negotiate a new payment plan with your lender.
You can “rehabilitate” your loan.
You can consolidate your loan.

Obviously option one is rarely attractive or possible for defaulted borrowers.

Option two (renegotiate) should be investigated fully – most borrowers skip this step, but it’s probably the best option for most people. Call your lender and ask to speak to someone in the “Workout” Department. Explain your situation to them (there’s nothing unusual about it) and ask what options are available to you for switching to a graduated, extended or income-sensitive repayment plan. If your lender will agree to change your repayment plan, a few regular payments will get your default status removed, and the new plan may be easier for you to keep up with.

Option three (rehabilitation) is really a specific form of a workout agreement. It probably won’t help you much in your situation, because it requires an agreement between you and the lender that will allow you to make 9 consecutive on-time payments of some agreed-upon amount.

Option four is everyone’s favorite, but you must absolutely understand what a consolidation loan will do. To keep this utterly simple – a consolidation loan is a brand new loan that will pay off your old, defaulted loan. A consolidation loan MAY lower your monthly payments, but understand how this works. A consolidation loan never lowers your payments by wiping away some of your debt – a consolidation loan lowers your payments by stretching out the length of your loan. If you pay less every month, you’ll make many additional monthly payments, and – in the end – you’ll pay far more back than you would have paid on the original loan.

As an example: Suppose I lent you $ 100 and you agreed to pay me back in 2 weeks by paying me $ 50 a week. You came back a few days later and explained that you weren’t going to be able to afford to pay me $ 50 – is there something else we could do? “Oh, absolutely,” I’d say, gallantly. “Instead of paying me $ 50 a week for 2 weeks, how about if you only pay me $ 10 a week for 17 weeks?”

See – in the end, you’ll pay me back $ 170 instead of $ 100 – that’s how a consolidation loan works. But remember – we’re not talking a $ 100 loan for a couple of weeks – by the time you pay that $ 5000 loan of yours back over many years, you’ll pay a few thousand more than you might have paid if you didn’t consolidate that loan.

I’ve attached some information about consolidating from the Department of Education – take a few minutes to read it over. If you do choose to go this route, be sure to consolidate with a reputable lender (or directly with the government) and not with some fly-by-night operation that you learn about from some pay-per-click site shilled on Yahoo! Answers.

Good luck to you!

What do you think? Answer below!

by Marc Wathieu

Question by simplykiss3s: If I apply for a student loan or a personal loan, does that affect my financial aid?
I’m thinking about getting a loan for personal issues, but was wondering if that will affect my financial aid award amount? Do I need to tell financial aid or it isn’t necessary?

Best answer:

Answer by financialaidguru
I’m assuming you are talking about private/alternative loans because any federal loans would go through your school.

More than likely your school will find out about it. Once that happens, the financial aid staff will check your financial need. If you don’t have any need, the school will not certify you for the loan. If you do have need, then chances are you will be certified for whatever need you have. There are still lenders out there that look for students who want to borrow money without the schools knowledge, but their rates and terms will not compare to a loan certified by the school.

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