Generation Debt

Nancy Fay of the Temecula Valley News asks, Are student loans a ticket to debtor's prison? Visions of a Dickens-era fate aside, it does seem more and more like this country punishes students for borrowing money to go to college and have a better life.

"Check the Web: More and more students are getting angrier and angrier about their student loans.

They don’t mind paying them back. They just don’t like it when people change the rules in the middle of the game.

'Congress enacted new rules that continue the so-called "Single Holder Rule," which says that once you take your student loans out from one lender, you cannot change that lender,' said Alan Collinge, founder of Student Loan Justice. 'And if you want to refinance to take advantage of historically low interest rates, you can only do that once, if at all. And you can no longer do it while in school. Imagine the outcry if America’s largest mortgage lenders tried to stifle competition by restricting the way we refinance our home loans.'

Yet America’s largest student loan banker did exactly that, and justified it by saying that competition for student loans would hurt its student loan portfolio."

Note also that when President Bush was recently questioned by a student at Kansas University about student loan cuts, he didn't seem to be familiar with her concerns:

"During a question-and-answer session with students at Kansas State University, sophomore Tiffany Cooper asked, 'Recently, $12.7 billion was cut from education, and I was just wondering, you know, how is that supposed to help our futures?'

'The education budget was cut?' Bush responded. 'Say it again. What was cut? At the federal level?'

She repeated the question and clarified that she was referring to student loans.

'Actually,' Bush finally said, 'I think what we did was reform the student-loan program.

'We're not cutting money out of it. In other words, people aren't going to be cut off the program. We're just making sure it works better.'

Becky Timmons, director of government relations for the American Council on Education, said the president had it half-right. 'When you take [$12.7 billion] out of the program, you can both hit the lenders and make students and parents pay a lot more when they repay their loans,' she said."

I believe that both of the above articles are referring to S 1932, Sec. 8009, which, after a (very) quick skim, seems to strengthen consolidation rules, including the single lender rule.