Tuesday, May 31, 2022

Student Loans

 A reader recounted this outrageous story and it deserves wider attention:

Incidentally none of this discussion addresses the real abusive practice regarding student loans. A few years ago, the government outsourced collection on student loans to private companies, and handed them a huge pile of badly organized records from many years ago. The collecting companies then issued repayment demands to anyone listed in these records as having had student loan debt, while making only cursory efforts to determine whether the loans had been repaid. The way the law is written, these demands may not be disputed, unless the alleged debtor can produce clear evidence of repayment. Many of these loans are thirty to fifty years old. Who has paperwork from that long ago? For ordinary debts, it wouldn't matter, because ordinary debts are discharged after a number of years of inaction. But not student loans. The collectors have no incentive to find any mislaid records. But they can garnish income tax refunds and Social Security payments. They can declare a loan as in default years ago, then impose retroactive penalties and interest. A debt of a few thousand can be multiplied several-fold. My sister took out about $3,000 in student loans around 1970. Around 1985, the debt was settled by our father. At that time she was having a breakdown, so she's unclear on the details, and no one said anything to me about it. The zombie debt reappeared a few years ago. She has already had to pay several thousand dollars, and her SSI is docked $200/month. And no lawyer will touch the matter.


  1. My debts started in 1989. I was in repayment periods for different times during that due to health issues. In 2000, my loans all went on an IDR plan. Life went sideways and I did not return to school. Earlier this year, I asked for an accounting of the time period I had been on the plan and how long I had left to go. I was sent a written notice telling me 15 years. They tracked nothing back past 2007, because they couldn't.
    I don't want a freebie. I just want them to correctly track my time in payment, which supposedly, they are going to go back and do. If they do, several of my loans may go away immediately. And several more will go away in the next few years. And there is no way to explain the stress that will unload from my life.

  2. And if you want an even bigger problem, how much interest was I, or other people, charged because of the inaccurate record keeping. Because my IDR plan was supposed to stop charging interest after 10 years of repayment. But I was charged interest on all the accounts until a few years ago. My amount due is now almost triple my original borrowed amount.

  3. That student loan debts can't be discharged by bankruptcy was enough for me to despise how they were implemented.