Jeb Bladine: Students handcuffed by predatory loans
McMinnville acupuncturist Lisa Pool, for a time, was silently ashamed for not fully understanding the pitfalls of student loans that financed her medical degree. But her voice returned when she learned millions of Americans, in her words, were duped into lives of indentured servitude.
Government, financial and educational institutions — consciously or not — have conspired to create financial handcuffs for student debt holders. Today, nearly 45 million Americans owe more than $1.5 trillion for student loans — more than credit cards or automobiles, and second only to home mortgages.
America’s student loan crisis is an epidemic of debt affecting men, woman and families of all ages and geographic areas. It’s a modern-day housing crisis, and many borrowers cannot even afford the interest costs.
Pool hopes U.S. Sen. Ron Wyden will lead her campaign for a “Responsible Student Loan Repayment Act.” It’s a long, pothole-filled road, but repairs are needed for well-intentioned programs that have become vehicles for predatory lending practices.
Millions of student loans, particularly older ones, have high, fixed interest rates and cannot be refinanced. The interest is compounded daily, and paying interest-on-interest can add tens of thousands of payback dollars. Policies make it difficult to discharge student loans in bankruptcy.
Banks, bolstered by such provisions, began loaning too much money to too many people. Meanwhile, competition for students to pay skyrocketing tuition costs caused some education institutions to overstate graduates’ earning potential compared to their debt repayment obligations.
Pool learned all that. She said a reputable acupuncture school endorsed anticipated earnings based on gross business revenue, not income. In the no-degree / no-job world of medicine, among other fields, mandated education can turn into a lifetime albatross.
“I borrowed $108,000 ten years ago,” said Pool. “I have paid more than $75,000, and I still owe $210,000. This does not work … we need fair terms.”
Among Pools’ “practical solutions” are proposals for capped interest rates, eligibility for refinancing and bankruptcy protections, elimination of compound interest, increased tax deductibility for loan interest, and retroactive treatment for all current loans.
Her bill will not change the problem of rising tuition, said Pool. “But it will drastically reduce our national student loan debt, improve repayment without forgiveness, and put money back into our economy.”
Millions of student debt holders feel embarrassed about their financial plights, but Lisa Pool has gone from silence to public advocacy. We will see if Sen. Wyden, and others, are listening.
Comments
CubFan
Lisa Pool's example is atrocious. Borrowing $108,000 ten years ago. Paying more that $75,000 since then. And now owing $210,000. There's something wrong with the system. Thank you Lisa for your hard work in advocating to fix the problem. Hopefully Sen. Wyden can make some headway.