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A congressionally sanctioned conspiratorial alliance of lenders, guarantors, servicers, and collection companies enrich themselves hugely at borrowers' expense. They thrive from extortionist fees and related schemes. Millions end up scammed.
Moreover, lenders thrive on bad debts. They derive income from inflated service charges and collection fees. Today they're more than ever as default rates soar.
Lifetime rates now affect one-third of undergraduate loans, higher than for subprime mortgages. In fact, they exceed other lending instrument burdens and are rising.
Obama's new student loan repayment plan (unveiled in late October) is more scam than relief.
Since taking office, he created few jobs, did little for beleaguered homeowners under water on mortgages or facing foreclosure, and promises harder times head under planned austerity on top of cuts already made.
Few students will benefit from his new loan repayment plan, none facing default. Federal student loan repayment schedules will be modestly relaxed. Congress already approved them. Students who consolidate multiple loans may save half of 1% on interest charges.
Instead of mandated payments up to 15% of annual incomes over 25 years, indebted students will pay up to 10% over 20 years. Qualifying students will get debt forgiveness after 20 years.
Out of 36 million indebted current and former students, less than half a million choose repayment caps because of onerous terms. Expect fewer numbers to accept Obama's.
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