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Finaid.org's Mark Kantrowitz said "Student debt goes up and it doesn't ever go down. We're clearly heading in the direction of decreased college affordability." Lower income family students already are greatly impacted.
Kantrowitz estimates class of 2011 loans by students and parents at $34,000. Whether or not they graduate, many students have debt burdens approaching or exceeding $100,000. If repaid over 30 years, it's multiples higher, and defaulting brings no relief.
Once entrapped, escape is impossible. Bondage is permanent, and future lives and careers greatly impaired or ruined.
Congress ended bankruptcy protections, refinancing rights, statutes of limitations, truth in lending requirements, fair debt collection ones, and state usury laws when applied to federally guaranteed student loans.
As a result, lenders may garnish wages, income tax refunds, earned income tax credits, as well as Social Security and disability income to assure defaulted loan payments. In addition, defaulting may cause loss of professional licenses, making repayment harder or impossible.
Moreover, under Congress' default loan fee system, holders may keep 20% of all payments before any portion is applied to principle and interest. A borrower's only recourse is to request an onerous, expensive "loan rehabilitation" procedure.
It requires extended payments not applied to principle or interest. A new loan must then be arranged, incurring additional fees.
As a result, many former students face permanent debt bondage. In addition, no appeals process allows determinations of default challenges under a process letting lenders rip off borrowers, many in perpetuity.
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