Student Loan Debt not only hurts students, WARNING-Senior Americans are being impoverished, abused & distressed by this Congressional mandate.
- Seniors are fastest growing segment of Student Debt;
- Student Debt is 2nd largest American consumer debt market;
- Number of Seniors with Student Loan debt Quadrupled in 10 years;
- Amount of Student Debt per Senior Doubled in last decade;
- 40% federal Student Loan borrowers age 65 and older in Default;
- Abuses by servicers, lenders and debt collectors;
- Social Security benefits attached by collectors; and
- Major impact on retirement, health and financial security later in life.
WHY? Helping kids with education, cosigning for loans. 75% help young relatives. Super Charged collection devices. And, even bankruptcy won’t relieve the debt.
This note focuses on the effect of financial distress due to increased Student Loan Debt on older borrowers including health issues. I will note some of the legal aspects, although other notes deal directly with this and other issues.
Since 1983 I have practiced United States Bankruptcy law and have personal knowledge of actual cases and the individuals impacted by the Student Loan Debt laws, which are federal laws created and held in place by the United States Congress.
Shirley, who agreed to tell her story but only if I only use her first name; cosigned for her grandson to take classes at at a Community College in preparation for getting into an accredited University. Tom, Shirley’s grandson was unable to obtain an Associate’s degree and because the for-profit college credits he received were not transferable, he did not have enough credits to get into a College or University. The Student Loan debt was $9,780 and Tom was living at home with his single mom, and working for minimum wage. Tom defaulted on the loans.
Shirley didn’t know anything about this until her Social Security monies were garnished. When she contacted the Servicer handling the collection, she was told that the debt had risen to $14,567 due to the addition of interest (6.5%), and collection fees and costs. The debt was mounting because of “capitalization”, which is the addition of all the interest, fees and costs to the principal amount of the debt and then more interest and costs on top of that.
Shocked, Shirley’s blood pressure went into “stroke” range and she was hospitalized. She had a heart attack, but it did not completely incapacitate her. Medicare and Medicaid are helping with the medical bills, but Shirley and Tom can’t get a straight answer from the Servicer/Collector as to how to handle the problem.
The only way for Shirley to be relieved from the escalating Student Loan debt is if she is disabled. This is true for losing Social Security; or if she were to file bankruptcy. (More on the legal details in another note.)