By: Darrell Castle
Around 7 million student loan borrowers are currently in default for a total of $99 billion.
You “default” on your student loans when you don’t make a payment on them for at least 9 months. And this is happening at an alarming rate because of many different college affordability issues. And that’s something US Senator Lamar Alexander is preparing for this Fall in the reauthorization of the Higher Education Act.
An idea Alexander is strongly considering is to make colleges and universities share some of the risk when their students default on their loans.
“If colleges and universities have this incentive, it may not only help students make wiser decisions about borrowing, it could help reduce the cost of college,” Alexander said.
I like this idea.
$99 billion in defaulted student loans is crazy. People are told by society that they need to go to college to be successful, but it’s so expensive that they’re forced to take out student loans.
And taking out loans is fine — there’s plenty of people who are able to pay them back without any trouble and would say it was completely worth it — but schools aren’t doing enough counseling on taking out loans responsibly. While at the same time, loan applications are placed right in front of their face.
Sure, there needs to be some personal responsibly for these defaults. But the schools should share some liability for allowing it.
Colleges can be penalized now for high student loan defaults. But critics say it’s not effective.
I’m looking forward to hearing more details on the topic.
Student Loans & Bankruptcy
At some point, I personally think student loans will be dischargeable through bankruptcy. And I talk about it in this video.
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