View Full Version : Should I Default on My Student Loan?

08-01-08, 09:25 PM
Should I Default on My Student Loan? (http://www.peakoilblues.com/blog/?p=329)

Well worth reading

I’ve received letters from students asking this question, so I would like to make a definitive statement about this:

That is such a wicked bad idea at this point in time.

At least wait until you have all the facts, and complete the “assigned reading:”
The Student Loan Scam: The Most Oppressive Debt in U.S. History and How We Can Fight Back (http://www.amazon.com/Student-Loan-Scam-Oppressive-History/dp/0807042293)

by Alan Collinge of StudentLoanJustice.org. He documents why your credit card lender won’t negotiate with you for your current loan: It is more profitable to them if you DO default.

The 2005 Bankruptcy Abuse Prevention and Consumer Protection Act also held a special surprise for students: student loans NOT guaranteed by the federal government cannot be discharged in bankruptcy. This became law on October 17, 2005.

Amendments to the Higher Education Act eliminated all statutes of limitations for the collection of student loan debt, so if you have old unpaid student loans from the 70’s and 80’s? Surprise! It’s again a collectible debt!

Student loans are exempted from coverage under the Truth in Lending Act (TILA). They were also specifically exempted from state usury laws…lending money at an unreasonably high interest rate. Can you spell “l.o.a.n S.h.a.r.k?” Most student loan guarantors do not have to adhere to a 1988 Federal Trade Commission legislation requiring an adherence to Fair Debt Collection and Practices in pursuing defaulted borrowers.

And if you don’t like the lender you chose when you were in college, because they were on the Preferred Lender list, or you found another lender who will offer cheaper terms? Tough. Legislation was passed that requires borrowers to consolidate their loans with the original lender only (if there was only one original lender). Even the tiny loophole that once existed in federal law whereby a borrower could transfer his/her loans through the Direct Lending program, and into the FFELP program with a different lender, has been closed in 2005 by (you guessed it!) Sallie Mae and other large banks.
(contd (http://www.peakoilblues.com/blog/?p=329))

08-02-08, 03:59 PM
I do want to point out one little known new law. If you are in professions such as teaching or nursing, you could get your student loans forgiven after ten years. This is a brand new law and something you should be aware of.

08-02-08, 04:20 PM
How To Get Your Student Loan Forgiven (http://ezinearticles.com/?How-To-Get-Your-Student-Loan-Forgiven&id=1016392)

10-26-08, 05:51 PM
Never! You should no default in any loan. Remember that you did sign a promisory note that specify you will pay back your debt.

10-26-08, 06:09 PM
Never! You should no default in any loan. Remember that you did sign a promisory note that specify you will pay back your debt.
But, but ... they promised to keep inflation going so you actually could. Sorry I couldn't resist :)