Sunday, June 10, 2007

Private Loans: "Indenture" "Crisis"

NYT on private loans.

While federal loans also allow borrowers myriad chances to reduce or defer payments for hardship, private loans typically do not. And many private loan agreements make it impossible for students to reduce the principal by paying extra each month unless they are paying off the entire loan. Officials say they are troubled by the amount of debt that loan companies and colleges are encouraging students to take on.

“It’s a huge problem,” said Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers. “When a student signs the paper for these loans, they are basically signing an indenture,” Mr. Nassirian said. “We’re indebting these kids for life.”

Dozens of students interviewed said that when they signed for their loans they were unclear on what interest rate they were getting and that financial aid counselors discussing repayment failed to include interest that students were compounding while in college


Anonymous said...

I've read bloggers blaming students for taking out these loans and attending pricey colleges in the first place. However, the professional college counselors and financial aid officers are responsible for failing to educate the young students about their options. I had lousy college counseling even at a $12K/year private high school.

I'm debt-saddled in my early 30s and have no clue how to afford to start a family or buy a home until about age 50, when it will be too late at least to start a family.

Looks like it's worse for those younger than myself.

Had I not pursued an expensive masters degree, I wouldn't have the job I have today. However, maybe I would have pursued less-glamorous administrative work--taking home far more money than I do now even though the salary may have been $10K less.

Extended education is becoming a joke for all but those in the most technical professions. Might as well work in the garden and forget about all these deluded ambitions.

It's too bad that so many people cannot afford to get jobs that help people. The world loses one more potential teacher and Peace Corps candidate.

Those rewarded financially are not the same people trudging from one degree to the next.

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