March 14, 2012
On the Hook for Student Loans: Joining the armed services is "one of the surest, if most dangerous, ways to discharge the financial burden of education"
Eric Pianin, Washington editor for The Fiscal Times, writes in Student loans seen as potential ‘next debt bomb’ for U.S. economy (Washington Post) that more than 80 percent of bankruptcy lawyers who responded to a recent National Association of Consumer Bankruptcy Attorneys survey report a substantial increase in the number of clients seeking relief from student loans.
In most cases, those clients could not meet the federal hardship standards that are necessary to discharge a student loan through bankruptcy proceedings. Instead, many of these parents or guardians who co-signed the student loans face the prospect of losing their life savings, cars or homes to collection agencies for aggressive private lenders.
The Consumer Financial Protection Bureau said it expects complaints about billing, confusing advertising and collection by private student lenders. It will relay complaints about federal student loans, such as Stafford and PLUS loans, to the Department of Education.
From the CFPB's March 5th blog post, Our student loan complaint system is open for business:
If you file a complaint, we’ll work with your lender or servicer to get a response. While we certainly can’t make your debt disappear, we can help bring your concern to your financial institution’s attention. If you don’t have a specific complaint or question, but want to tell us what is – or is not – working in the student loan market, we invite you to tell your story.
And while the Consumer Bureau has only been open for a short time, we’ve been hard at work to gather the facts and provide tools to help you make good decisions about student loans. We launched an online tool, the Student Debt Repayment Assistant, to help you navigate the maze of student loan repayment options. We also launched Know Before You Owe: student loans and worked with the Department of Education to develop a draft “financial aid shopping sheet” for schools to improve the student loan information they give to students.
Then there is this gem. Daniel Pereira (NASDAQ News) offers the following advice from a 1%-er perspective:
For U.S. debtors, the best short-term moves are to find relatively secure work and focus on paying down variable-rate and private loans before fixed-rate and government debt. Some forms of public service offer full forgiveness of federal loans after a certain period, and the armed services remain one of the surest, if most dangerous, ways to discharge the financial burden of education.
I think Pereira's latter suggestion gives new meaning to "Uncle Sam wants you." I doubt JAG needs the number of un- or under-employed attorneys who might consider joining the US armed services. [JH]