| Here's my question: Why is an unsecured loan for education any different than any other unsecured loan? Remember, these aren't backed by the federal government. These are variable rate loans, often with double digit interest rates, 10 year re-payment plans, and virtually no consumer protections (even bankruptcy.) I'm lucky that I can make my $1,400 monthly payments. When I left school, I thought that I would be able to pay my loans off in 20-30 years. A few weeks after leaving school I was floored when I found out that I had to repay my loan in just 10 years. No negotiation, no other options. Pay what they ask or they ruin your credit. Personally, I'm on the fence about including student loans in a bankruptcy. It's not an option for me, but should someone have to live their entire life in service to a bank because congress changed a law in 2005? Should a bank really be making $100,000 unsecured loans to 18-22 yo-s just because someone in their (future) field has the potential to repay it? OTOH: What are thinking going to schools that cost $40,000+ a year when we have no means. At least this taught me the value of unflinching frugality. Proposal to include private student loans in a bankruptcy: http://thomas.loc.gov/cgi-bin/query/z?c111:H.R.5043: Exceptions to Discharge: http://www.law.cornell.edu/uscode/html/uscode11/usc_sec_11_0... |
It is should be like insured deposit in a bank. The government guarantees up to $100k or so, but if you have more you run the risk your self. In this case if the banks lends more than let's say 40K, then they are on their own if borrower declares bankruptcy. (I may not be using the proper terminology. English is my second language)