Student borrowers (of which I am one) have gotten the shaft:
Reacting to much-publicized stories of student-borrower bankruptcies and a default rate of 22% in the late 1970s, Congress mandated seven years of repayment before borrowers could declare bankruptcy on federal student loans. In 1998 — under an extremely business-friendly Congress — this qualifier was done away with, rendering all federal student loans non-dischargeable except in the most dire circumstances, such as total and permanent disability.
Big lenders, such as Sallie Mae, even persuaded Congress to remove bankruptcy protections for private loans in 2005 — these are the nongovernmental loans we’ve been hearing about lately, whose interest rates can exceed 18%. Credit card companies and payday lenders could only dream of this kind of congressional giveaway.
Student loan companies got draconian collection powers, including the right to garnish a borrower’s wages, tax refunds and Social Security or disability payments. Some states even got into the act, suspending professional licenses of student borrowers in default. No other lender has these kind of powers — not credit card companies, not payday lenders.
Not even loan-sharks.
The price of education in this country has gotten WAY out of hand. And realistically, most students have no choice but to take out loans. It’s really a serious problem. I’ll probably spend over a decade trying to repay mine, regardless of how well paying a job I get.
For more, see Studentloanjustice.org