Generation Debt

As the days cool off (at least where I am), and the leaves start to fall, the media buzz that's not completely focused on the presidential election (and I admit, most of it is focused there) turns to education. The kids are back in school, and the student borrowers are getting their student loan checks, while we grads write more checks to our lenders, and curse under our collective breath as we do it.

-The Higher Ed Watch Blog urges Congress to "come to the aid of financially distressed borrowers struggling with private loan debt" while it extends its bailout to lenders. Sallie Mae, for one is hoping for an extension of the bailout (and spent $640k lobbying the government in its second quarter). (Aside: What kind of a world do we live in where the banks get help from the government when the economy is bad, but the individual borrowers are told to suck it up?)

-While lenders are getting bailed out, they're also settling with NY Attorney General Andrew Cuomo, agreeing "to adopt broad new reforms of their direct marketing of student loans in order to protect students and their families nationwide."

-Hey there, lawyers, your student loan debt is some of the worst out there. According to the ABA Journal, 77% of midlevel associates have student loan balances. 16% owe more than $100,000, 44% said they owed $50,000 to $99,000, and 36% owe $10,000 to $49,000. (The article also notes the high salaries lawyers make at big law firms. But setting aside those salaries, many lawyers are making much less than BigLaw associates, and they are the ones who feel the pain most when writing out those checks to lenders each month.) Prosecutors and public defenders may get some help with their loans, though, as "[t]he John R. Justice Prosecutors and Defenders Act would repay up to $60,000 in law school loans for lawyers who agree to work for a district attorney or public defender office for at least three years."

-What happens when a loan cosigner dies? Apparently, "most student loans have a provision that states that the loan is discharged or cancelled in the event of the death of the original borrower. ... most loans have a provision that cancels or discharges your loans in the event of your total and permanent disability." So you've got that going for you.

-In more general student debt news, Laura Rowley for Yahoo Finance thinks "[i[t's time to banish the notion that all student loans are 'good' debt." We tend to agree. The LA Times notes that paying off student loans with low-interest credit card might not be such a good strategy in the long run. Diamondback Online laments student loan debt.

-Allan Collinge, of Student Loan Justice fame, gets a write up in the NYT, in an article that addresses what happens to borrowers when school is over: "But much less attention has been paid to what happens to students after they borrow. Lenders who make loans guaranteed by the federal government can more easily take steps against borrowers — like garnishing wages and benefits — than they can with other kinds of unsecured consumer debts. And all student loans, federally guaranteed or not, are extremely hard to get rid of in bankruptcy proceedings, more so than credit card or other debt."

-Finally, a story on Wells Fargo and its policy of apparently making borrowers pay off loans in the costliest possible way. A bank, trying to squeeze more cash out of a borrower? The hell you say!

Student loan debt clock: $548 billion.