Posted By LambChop
From AJA/Frieda Klotz:
"It just shows how student debt is a huge issue for our generation, and we’ve got to figure it out. It really is a symptom of a much broader problem." - Rory O'Sullivan, policy and research director at Young Invincibles
Federal Perkins loans are available at colleges and universities in all 50 states, created to “level the playing field.” Of course, this strategy has backfired as student debt skyrockets and loan defaults have risen from 8.32% in 2011 to 11.08% in 2012. Perkins loans did not receive any new federal funding in 2010-2011, and with defaults increasing new students will be unable to benefit from the Perkins loans.
Loan default has been seen at Ivy League private schools and community colleges. Colleges are under pressure to collect public money given the fact that it is taxpayer dollars funding the program and the Dept. of Education requires the universities to comply with collection regulations. .
AL Jazeera reported that Yale, the University of Pennsylvania and Temple University have all sued students according to public court records.
Upin defended pro bono a former student of the University of Pennsylvania, who owed the school $3,000 in a federal Perkins loan. The student, Ronnie C. Casanova, was an immigrant from Honduras and had gone to New York City as a boy. He was in his 60s when he embarked on his quest for higher education, pursuing a degree at Drexel University before getting accepted into the graduate program at UPenn. During college, Casanova suffered from bipolar disorder, diabetes and a constellation of other conditions. Shortly into his time at Penn, it became too much, and he dropped out. Says Upin, "His mistake was not really telling anyone what was going on. He just kind of stopped showing up to class." The school sued him for his Perkins loan, but Upin was able to get the case dismissed on the basis of Casanova’s medical conditions. Upin (who still has significant student loans from his own education) says he was "nauseated" by the fact that UPenn, with its sizable endowment, would pursue a former student like Casanova. In an emailed statement, Ron Ozio, the director of media relations at UPenn, points out that in 2008 the university introduced a no-loan policy for undergraduate degrees. Most Perkins loans are now awarded to graduate and professional students, he says.Having won the case, Upin says his former client continues to grapple with his mental health and is unable to work. "Really, the net benefit for him was kind of pedestrian. He was simply relieved to have this off his back. He's not living high on the hog as a result of having gotten out from underneath this thing."
Student loans are not attached to a collectable asset (like a car, boat or home). But they are still exempt from bankruptcy as a non-dischargeable debt. The consequences of default are serious:
- Your loans will be turned over to a collections agency.
- You can be sued for the amount of the loan.
- Your wages can be garnished.
- Your tax refunds can be intercepted.
- You'll lose social security benefits.
- Your credit will be damaged.
- You could be passed over for a position or promotion or have wages garnished if employed by the U.S. government
The existence of the loans caused a bubble in the rise of tuition, and as a result the cost of college increased. Meanwhile the value of the degree has been decimated in the job markets of today. Once again liberal intentions of leveling the playing field resulted in horrible consequences, destroying the very system they were trying to socially engineer.