GIVE TO THE MAX DAY IS COMING!! SAVE the DATE and HELP US BRING YOU THESE IMPORTANT DISCUSSIONS OF COMMUNITY INTEREST – PLEASE DONATE HERE!

~~~~~~~~~~~~~~~~~~~~~~~~~

Maren Schroeder thought she was doing the right thing going after her college education with loans. She didn’t bargain for what life dealt her, including, perhaps, her better judgment at the time. She signed up for $25,000 in typical Stafford student loans, then another $35,000 through her school. Such loans are low interest rate education loans, Later, in a pinch and an abusive relationship, she borrowed $60,000 from a lender known as NextStudent to cover additional expenses, only to find herself in deep water, now paying more than half her income to her over $110,000 in student debts. Often such loans are labeled “financial aid.” Should they be?

NextStudent touts itself as one of the nation’s top private student lenders. It’s also a defendant in at least one federal class action lawsuit charging what Maren Schroeder already discovered are significantly higher interest rates and with none of the flexibility its loan officers had promised. Lack of adequate payment information is one of the negatives NextStudent receives in otherwise positive reviews of its lending practices.

Student debt, as we all know, is skyrocketing even as the pressure increases on all students to get themselves at least a 4-year degree if they’re to have the slightest chance of maintaining middle class status as workers and raising a family, if wanted. Graduating students are looking back on their years in college as expensive and riddled with high tuition, expensive textbooks and living costs that force them to borrow money at record rates, even when some of the interest rates are similar to mortgages. It is not uncommon for 21-year-olds to face their careers with well over $100,000 in student debt – debt that is often not dischargeable in a bankruptcy proceeding, depending on which state you live in. Minnesota is one of the states where you can’t get rid of student debt through bankruptcy.

The loans themselves are easily obtainable – perhaps too easily obtainable – and the payments are only deferred until after graduation – not until you’re earning enough to pay them back at a reasonable level. At this writing – over 30% of all student debt is owed by people over 40 years old, and people over 60 still account for 4% of student still owed.

From “The Student Loan “Debt Bomb”: America’s Next Mortgage-Style Economic Crisis”; Prepared for the National Association of Consumer Bankruptcy Attorneys (NACBA); February 7, 2012.
Unless you are saddled with student loan debt, you might not understand the severity of the issues presented. A study by the National Association of Consumer Bankruptcy Attorneys (“NACBA”) provides the following statistics on student debt.

  • 2010 college graduates held an average of $25,250 in student debt; this amount is up 5% from 2009.
  • In 2010, educational loans to parents rose 75% since the 2005-2006 school years.
  • Parents of college graduates average $34,000 in student debt, which will rise to over $50,000 in debt over the loan’s repayment period.
  • For the graduating class of 2005:
    • 25% were delinquent in their student loan payments;
    • 15% were in default on one or more student loans; and
    • Only 40% were making payments as agreed on their student loans.
  • In 2010 alone, student borrowing exceeded $100 billion.

In 2010, outstanding student debt exceeded $1 trillion dollars. This is higher than both consumer car loans and credit cards.

What are we doing to our children – pushing them into colleges and universities who know they have us by the short hairs because of we live under a cultural assumption that without a college degree, you’re likely to fail as a citizen and a person and putting little value on, let alone the resources and support for other education choices and types of work performed?

Maren Schroeder, now 26 and, ironically, a paralegal in a bankruptcy law office, tells her story on our next show, along with three attorneys who are involved in student finance and consumer law.

TTT’s ANDY DRISCOLL and MICHELLE ALIMORADI put the questions to those four: what to do about the student debt crisis – and how long can a nation of graduates saddled with education debts before they take their first steps into the working world?

Guests:

MAREN SCHROEDER – Student Loan Debtor from Rochester, MN

JAY BENANAV – Government Affairs Attorney for Augsburg College, Minneapolis; Agent forCollege Assistance Plus-Minnesota (CAPlus-MN), former St. Paul City Councilmember, and Attorney with Weinblatt and Gaylord, PLC, Law Offices

ROBERT APPLEBAUM – Attorney, Staten Is., NY; Founder and Director, StudentDebtCrisis.com(formerly ForgiveStudentLoanDebt.com.)

BRIAN ELLSWORTH – Bankruptcy Attorney, Vanderheyden Law Firm, Rochester, MN