Wednesday, February 5, 2014

"How Is This Constitutional?"

I had the opportunity to converse with this HESAA borrower not too long ago. This story shows clearly that the loan sharks behind HESAA really don't care about your life, just enslaving you to debt for as long as they can make a profit. Someday this is going to change when you and I and the rest of us are ready to do something about it.

Is it Constitutional? That's a broad question but in the main I don't think the people who wrote the Constitution or Declaration of Independence had this in mind when they wrote those documents. How do student loans fit into "life, liberty and the pursuit of happiness?" I suppose for the "bondholders" who fund HESAA they are happy as they lunch on caviar and champagne while we toil for pennies on the dollar. But enough from me, here's the email I received.
Thank you for your hard work helping students. It has seemed lately that those who were heading the fight against this injustice have gone quiet. I've begun to lose hope. 

We all have our student loan stories. Mine was that during college, a couple doctors prescribed antidepressants to me for about 4 years. Little did I know, two of the side effects were erratic behavior and memory loss. After finally getting off of the medication, I found that I had taken out $100,000 in private student loans and $30,000 in federal student loans to attend a state school. My degree? Sociology. I have no recollection of applying for or taking out the majority of these. 

I recall taking out the first $10,000 in private loans and I remember taking some kind of online class in order to be eligible for federal loans, but I do not remember taking out any more than this. Imagine how I felt when I found that I was $130,000.00 in undischargable-in-bankruptcy debt when I woke up from my medicine "coma" one day. Frankly, if I did take these loans, I do not believe I was of sound mind to do so. I think there is some kind of error though because I have nothing to show for any of this money besides my degree which did not cost $130,000 because I was an in-state student at a public university. Apparently I have no recourse for any of this. My life has never been the same. I'm almost 31 and I have no idea when or if I will ever be able to have children.

I really hope that we can expect some kind of restructuring or justice here. It is devastating that a teenager can make decisions in good faith that can destroy their future for the rest of their lives. How is this constitutional?


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    1. What should have been brought forth in this article is how these kids are being ripped off by the government. The approach taken in this article ended up being the same as every news outlet-just blame the student and the family and brush off the responsibilities of the lenders and the colleges. If anything, this article basically tells parents not to get married; keep all money out of the child's name, does nothing to address the real issues effecting hundreds and thousands of college graduates with student loan debt, a debt they will be buried under for many, many years to come; a debt that will forever effect their ability to move on; move out; start a family; buy a car; purchase a home; or even contribute to the economy in any meaningful way.

    2. It fails to address the fact that our government lent the banking industries billions of dollars at a 0.75% interest rate, but charges students 6, 7, 8, 9+% on student loans; or how the interest on student loans compounds daily, capitalizes and gets added to the principle balance and that every time they make a payment, the loan balance actually goes up rather than down. Nor did it discuss the inability for the student to refinance their loans at lower interest rates just as millions of homeowner's can; how homeowner's can write off ALL interest paid on their mortgage loans and how students are only limited to $2500, and that is if they make under $50K a year. And, more importantly, it failed to address the correlation of all of the above to how one's financial aid is calculated, which in turn creates all of the problems centered around student loan debt. The FAFSA assumes that parents MUST contribute to their child's post-secondary education. However, at 18 your child is considered an adult--enough of an adult to vote and join the military--however, they are only considered adults when it is convenient to the government. And, with regard to the FAFSA, it is obviously not convenient for an 18 year old to be an adult, so they mandate that parents income is included in the application--why? So they don't have to give out aid. Yet, they will gladly put a gun in their hand to go off and fight a war; or allow them to pull a lever or push a button at a voting poll. This article also fails to mention that the original amount borrowed was $89,000 in 2007. My son graduated in December 2011. By February 2012, that $89,000 grew to $118,000 due to compounded, capitalized interest. And despite the fact that he made over $11,000 in payments to HESAA NJCLASS last year, they defaulted the loan and their attorney conveniently added an additional $22,211 as a collection fee...Also, the mandate now set in place in which the student has to be counseled of the difference between private and federal student loans was nonexistent until mid 2010. So, in 2007 when the first private HESAA NJCLASS loan was taken out; a loan that was referred to us by the school's financial aid counselor; a loan administered through the Higher Education Student Assistance Authority (HESAA) NJCLASS, who would have imagined that this "State" loan was actually a "private" loan, offering NO flexible repayment plans. Their so-called "financial hardship deferment" did not defer the loan fully, but required quarterly payments of interest. And upon dealing with this agency, I have learned there is no regulatory or oversight agency except the governor. So, when I wrote to the governor seeking a full investigation into the "disservice" of my son's loans held by HESAA, requesting that he NOT refer the matter back to HESAA, I was quite shocked to get a "thank you" letter and a response that he referred my loan to HESAA's executive director for reply. That was 35 days ago and I have yet to receive a response. So, if HESAA fails to respond to a directive by the governor, can you imagine the lack of response I received? Unbelievable. Inform the parents/students to STAY away from private student loans. While I know many advisors advise against home equity loans, however, that would be the best way to go; plus you get to write off ALL of the interest you pay, not just $2500...