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Thursday, June 24, 2010

Just what is a private student loan?

Many people believe the new law eliminating private banks from administering student loans is a step in the right direction. If you care about the future of education and protecting student consumers, it is important to not take things at face value.

When I first heard about this law, I was encouraged that future students/debtors would have more protections. After all, it seemed so cruel and unfair to let private companies make money off of student loans. Really, what was the need for fees paid to private banks to act as intermediaries in providing FEDERAL loans to college students?

So let's cut out the middle man right? I mean, the rationale behind students NOT being able to discharge student loans via bankruptcy (sort of) makes sense when we are talking about federal tax payer money. And as we all know, it seems you can only walk away from your debt or get bailed out if you lose a stupid amount of money:

http://seekingalpha.com/article/184342-stuyvesant-town-owners-walk-away-top-of-market-deal-collapses

http://www.bearmarketinvestments.com/stuyvesant-town-in-effective-default-as-loan-moved-to-special-servicing-mezz-lenders-sl-green-and-fortress-wiped-out

Sorry students!

In the wake of all we have learned this decade, should private companies STILL be able to benefit from the non-dischargeability of student loans? Most people would agree the answer is a resounding no. So, we get a new law eliminating private lenders right? And future students can understand more simplified federal loans right?

I don't know the answer to these questions. But best to keep your eyes open in the meantime.........

2 comments:

  1. http://nalp.org/uploads/NatlSummaryChartClassof09.pdf

    There were 40,000 JDs from your - and my - graduating class. For how many jobs requiring bar passage? A mere 28,901 - and how many of those were in doc review, or working for daddy's firm? Non-dischargeable student loans are the lifeblood of this scam.

    When you get a moment, email me at nando9936@yahoo.com. Thanks!

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