Student Loan Debt Owed to Federal Government Up 463% Under Obama

Student Loan Debt Owed to Federal Government Up 463% Under Obama

The Health Care and Education Reconciliation Act, passed in 2010 apparently turned over complete control of student loans to the Federal Government.

Student loan balances in Jan 2009 were $119,803,000,000.

Now that balance is a whopping $674,580,000,000.

Well maybe this good if people are actually getting 'educated' and are able to enter good paying jobs to pay off the loans.

But it could also be a life-long bat over some people's heads.

And you can't file bankruptcy and get rid of the debt either.

I think many are 'over due' and that is alarming. And perhaps some lucky people are able to 're-finance' if and when possible.

Since President Barack Obama took office in 2009, the amount of outstanding federal student loan debt owed to the government has skyrocketed, increasing by 463 percent. The balance owed currently stands at $674,580,000,000.00 compared to $119,803,000,000.00, where it stood in January 2009, according to the Financial Management Service’s latest monthly treasury statement.

Direct federal student loan spending began to rise rapidly in fiscal year 2010, when the Health Care and Education Reconciliation Act – one of the two laws that make up Obamacare -- gave the federal government complete control over federal loans for education, the Direct Student Loan (DL) program. This aspect of HCERA became effective July 1, 2010, when the amount of outstanding loans stood at $178,806,000,000. Since then, the balance has increased by 277 percent.

“Under the DL program, the federal government essentially serves as the banker – it provides the loans to students and their families using federal capital (i.e., funds from the U.S. Treasury, and it owns the loans,” explained the Congressional Research Service.

Supporting links and data in the story;
Student Loan Debt Owed to Federal Government Up 463% Under Obama


Overdue Student Loans Reach Record as U.S. Graduates Seek Jobs

I say we put it on the Rothschild, Morgan, and Rockefellers' tab.


Remember you can always redeem your federal reserve notes into lawful money this will undo that continuous debt system they're putting you in. This will hurt the banks. Endorse your cheques that way. It's not income, it's compensation.

reply to post by xuenchen

Student loan balances in Jan 2009 were $119,803,000,000.

Now that balance is a whopping $674,580,000,000.

Holy cow!!!

As you stated, if they are being educated and able to find a job, that's wonderful.

However, if all it is doing is causing these young folks to start life off in debt with no decent job to look forward too, well that's not very promising at all.

xuenchen
And you can't file bankruptcy and get rid of the debt either.

Yes you can. You have to prove in bankruptcy court that you are locked into a cycle of poverty due to the debt. You also have to prove you have tried to pay it off and cannot. It is not as easy as getting rid of your other debts because of those two requirements but you can in fact discharge a student loan or loans via bankruptcy. It has been done.

People in the past have also filed lawsuits against the department of education and won for unfair practices. Now the student loans are handled by a company called Nelnet. Specifically because of that. The rising debt could also be related to consolidations. They will roll your original loans with collections and interest all into one. Then they raise the interest rate.

Lesson to be learned here people. Never, ever, under any circumstances, take out a student loan.

I would also like to point out a key point of this article.

Since President Barack Obama took office in 2009, the amount of outstanding federal student loan debt

This is outstanding. Which means they are in default. That means they simply haven't paid. It takes a couple of years to get to that point. This could be the horrible economy. This could be people who were already out of college when Obama took office and simply lost their jobs.

reply to post by xuenchen


What do you expect when people were losing their jobs? I know of a lot of people who were laid off and went back to college due to the Financial Crisis of 2007/8. They took their time to improve their education when the job market was not responding. Would it have been preferable if they had just, I don't know, moved to the streets because some did that, too?

Don't mind the snark in that. Just irritable today. It's not directed to you personally, xuenchen. Just saying that there is always a cause and an effect. Everything has its root and sometimes it's just like what starts out as a few bits of rock tumbling down that end up becoming a landslide.

reply to post by WhiteAlice


I think you're pretty spot on. People didn't have jobs and they heard certain individuals say things like "its a great time to get back into college" or things of that sort and they went in hopes that degrees would land them jobs. Combine that with other individuals making wild claims about "high tech jobs" and "demands for higher ed" and you have people enrolling right and left.

reply to post by Pimpintology


Actually, No. You cannot discharge a student loan through bankruptcy. It is among the ONLY debts you cannot discharge that way. There are ways to get rid of it, but they involve things you cannot fake. Like true disability or serious life changing illness that put you out of the work force in a real and not simply convenient way.

My wife is still paying hers while I'm accumulating mine. Perhaps there is some loophole buried very very deep that I've never heard a hint about, and I'd be mighty grateful to see that linked to read the fine print and details ...but Sallie Mae seems to be my roommate for now and many many moons after I depart school. She becomes my mistress then, I suppose. Always taking what I don't have and giving nothing in return later.

Story of my life.

* I just dug my notices and account info out to double check. The last is dated 9/13/13 and it's still SallieMae / US Dept of Education. Who is NelNet? I've never heard the name.

reply to post by xuenchen


The biggest problem is that college tuition has skyrocketed.

The CHART OF THE DAY shows college tuition and fees have surged 1,120 percent since records began in 1978, four times faster than the increase in the consumer price index. Medical expenses have climbed 601 percent, while the price of food has increased 244 percent over the same period.

source with chart

My wife and I are putting our niece through college right now and I've done a little reading on this. My first thoughts were that professors are probably getting paid too much, that there's too much wasteful spending, etc but from what I've read, this is not actually the case. While it's good to know that it's probably not the scam I had assumed, it also means the problem is harder to tackle.

What we need is a whole new approach to continuing education and while things like online degree programs have sprung up all over, they're still too expensive, they still take a considerable amount of time and there remains a certain stigma attached to degrees earned online.

We are in the midst of an information explosion and the average person has access to exponentially more information today than most people could have imagined only 20 years ago. I grew up in the late 80s, early 90s and I was around in the BBS days, teaching myself to program from text files and reverse engineering. I've seen the rise of the Internet autodidact. In my opinion, a widespread adoption of proficiency testing as a means of earning college credit is a logical first step. Even that's not enough. In the IT world for example, there are hundreds of certifications intended to well..certify a person's proficiency in a given area but unfortunately they don't really stack up too nearly as much as a 4 year degree for most potential employers. So I guess in addition to reforming continuing education, we need to progress beyond our outmoded view of alternative means of quantifying a person's knowledge.

One thing I've noticed is that unless you are a super conscientious focused student, colleges make it very difficult to graduate in 4 years.....

They have also found a way to make more money - for themselves and the government....things that make you go hhhmmmm.

When I started college you didn't have to declare a major until at least sophomore year. Now, in many cases, you have to decide before you even enter, which locks you into required courses for that major. How many 18 year olds really know what they want to do??

So, if you decide to change majors - which sooo many do, all those courses are wasted! As well as the money spent. And you have to spend more time and money (loans) to achieve your goal of ..... Unemployment.

Seems a bit artificially inflated.
Student loans will be the next bubble to burst i imagine.

I'm from canada, and student loans can be removed through bankruptcy after 5 years, and proof that you did attempt to pay it and were not able to. My own loans are in default, and i have a half decent job.

Dont worry, our student loan debt is through the roof too

reply to post by Maluhia


I have to agree with you here. It was only this year that my own 2 year community level college changed it's policy on entry level scoring. Until now, they would take anyone with a pulse and how low you scored on basic reading, comprehension and math made no difference. They actually had a class BELOW 040 for the really challenged. That would rate somewhere equivalent to 6th or 7th grade level (lower on reading) with a long HARD road ahead or no future at all in store for them. Yet most schools still take at that standard.\

Mine now has another set of classes established for them where they can attend, 100% free, for continuing education and GED (If needed). If they make it through that, they can retest for 040 or 050 level in those areas. If they don't complete the free stuff? They can keep at it or seek opportunity elsewhere. They won't be allowed in. That was 100% for their benefit and the school deciding it had enough of kids trying their heart out when the stats showed they had damn near 0 chance of making it, when they arrived that far behind for college level expectation.

Sadly, I've known several students now who also went to well known "technical" schools any American has heard the names of on TV commercials at one time or another. Those guys have had $20,000+ in loan debt before even getting to a real school...with paper from the tech schools they can hang on the wall as a conversation piece, but won't even be taken seriously on a resume who cares. No proper accreditation by a board/authority that matters, is the issue. (and no one seems to care about mentioning that little detail)

Wrabbit2000
reply to post by Pimpintology

 

Actually, No. You cannot discharge a student loan through bankruptcy. It is among the ONLY debts you cannot discharge that way.

Yes you can. All you had to do was Google it. I have also read the case law on it.

But the ability to discharge student loans in bankruptcy has been eroded over the years to the point where now the borrower has to prove that any student loan, even a privately issued one, would cause an “undue hardship” to them in order to get it discharged.

As I stated in my previous post there are two requirements for discharging a student loan via bankruptcy. It's not easy.

How bankruptcy could help solve the student loan crisis

Published: Friday, Aug. 23 2013 6:35 p.m. MDT

www.deseretnews.com...

How about another link?

Still, it is not completely impossible to get rid of student loans through bankruptcy. Though the process is lengthy and difficult, it can help relieve your debt when you are in the direst of situations.

www.debt.org...

Or the governments own website. Says "in rare cases" as I previously stated.

This is not an automatic process—you must prove to the bankruptcy court that repaying your student loan would cause undue hardship.

studentaid.ed.gov...

I think I have the ball.

reply to post by Pimpintology

Well, I'll be...and I stand corrected then. That's very interesting and I actually will pass that on to a couple people I know.

It appears to be exceptionally long odds the terms represent for meeting the standard to get it done. I now understand why it's simply never mentioned or talked about. (in fact, they do give precisely the opposite impression. I'll have some fun correcting the next financial aid person who implies that. Thanks.. )

Still, in reality.....

*If you are forced to repay the loan, you would not be able to maintain a minimal standard of living.

*There is evidence that this hardship will continue for a significant portion of the loan repayment period.

*You made good-faith efforts to repay the loan before filing bankruptcy (usually this means you have been in repayment for a minimum of five years).

One of those would be challenging to meet, I think. A Judge has a dozen ways to say no, and they probably did pay theirs off for law school. Not likely to be sympathetic. You have to meet all three though.

Your loan will not be discharged if you are unable to satisfy any one of the three requirements.

Your Last Link

I really am sincere in saying thank you for actually proving me wrong in this case and that I will have some enjoyment with precisely where and how I share that info down the road.

Wrabbit2000
reply to post by Pimpintology

 

* I just dug my notices and account info out to double check. The last is dated 9/13/13 and it's still SallieMae / US Dept of Education. Who is NelNet? I've never heard the name.

edit on 5-11-2013 by Wrabbit2000 because: (no reason given)

Nelnet is a Lincoln, Nebraska-based lending conglomerate that deals in the administration and repayment of student loans.

en.wikipedia.org...

Nelnet holds over $25 billion in student loans as of 2007, roughly one-third of all federally subsidized student loans currently held by students in the United States.

They just took over as of August of this year and they are doing a horrible job. As with all new call centers they need to get their act together. Used to work call centers so I know. They give some of those guys a week or two of training and throw them to the fire. We used to work with over 400 calls in cue all day long. These people have a larger staff though and what the department of education is doing (or so they say) is attempting to streamline the process.

IMHO they are just outsourcing to get rid of any future lawsuits against them. You should be able to take your paperwork and sign up through them to manage your loans online. Might help you a bit. There are other options available as well for repayment. There is one based on income. If you make next to nothing they will drop your payments to 50 dollars a month. Again that is shady to me. As if they are trying to get around anyone proving they have a financial hardship in court.

You can read up on Wiki about them.

Wrabbit2000
reply to post by Pimpintology

 

It appears to be exceptionally long odds the terms represent for meeting the standard to get it done. I now understand why it's simply never mentioned or talked about. (in fact, they do give precisely the opposite impression. I'll have some fun correcting the next financial aid person who implies that. Thanks.. )

Still, in reality.....

*If you are forced to repay the loan, you would not be able to maintain a minimal standard of living.

*There is evidence that this hardship will continue for a significant portion of the loan repayment period.

*You made good-faith efforts to repay the loan before filing bankruptcy (usually this means you have been in repayment for a minimum of five years).

One of those would be challenging to meet, I think. A Judge has a dozen ways to say no, and they probably did pay theirs off for law school. Not likely to be sympathetic. You have to meet all three though.

Your loan will not be discharged if you are unable to satisfy any one of the three requirements.

Your Last Link

Well don't forget it's not up to them. The reason I say their are two requirements is because of the decision by the judge in the case I read. The government does not get to decide. The judge does. In the judgement the judge clearly stated someone must prove "they are locked in a cycle of poverty they cannot escape from". They want to break this judgement down into multiple pieces to make you think it's harder to attain then it is. If you have a PHD and you can go be a medical doctor somewhere obviously you might be able to escape that poverty.

Like I said you have to prove you're locked into poverty and that you made a good faith attempt at repaying the debt. If you only received a partial education of course this will be a lot easier then someone who completed a degree. I cringe when I here about those people with 20,000 or more in student loans. Those people are in for a rude awakening. Those technical schools, yeah I looked into those before I went to college myself and found out they were maxing people out. I was like nope! I paid for my last semester as a matter of fact out of my own pocket.

I still attend college off and on but I will never use a student loan and I prefer only a few classes at a time. I have taken full loads and it's just not worth the tension headaches. Anyhow I hope I helped. There is more relief out there for you if you do the research and we can only hope more is coming down the pipeline. I know a couple of things I was told by an insider high up in Nelnet but it was word of mouth so I wont openly post it here. Needless to say he inferred changes were coming, might be a bit though.

reply to post by Pimpintology


Thanks..but I really never use Wikipedia as a source. For anything. You were right on the first point. Not so much, at all, on the second one.

I looked a bit into this and I'm certain on the facts as well as the SallieMae notice, and as I confirmed a few minutes ago, my SallieMae account in good standing for my full time student status. This is a bit of what I found though..

A few months ago, I logged onto the website for my student loan in order to check on my balance — when I found that I did not have one. Suddenly, the $12,000+ I owed had gone down to $0.

I’m suspicious by nature, so rather than celebrating that some secret patron had paid off the rest of my education, I started wondering how this obvious mistake could possibly mess up my financial plans. I put in a call to my federal loan-servicing center, and I was told that my loan had been transferred to MOHELA, a Missouri-based loan agency. The transfer went through a full two weeks before I was informed by mail that it would happen.

Oh goody.. So the transfers are not by choice.

Just as when a mortgage is sold, the transfer of a loan requires the new owner of the loan to honor the original terms. In theory, everything should go smoothly with these transfers, and you should be able to continue making your regular payments with your new loan administrator. However, no major transfer of the amount of information represented by this many loans will be completely seamless. Borrowers will need to stay on top of their own loan information to insure that their loan agreements are honored.

Soure: Why Did My Student Loan Get Transferred?

Yup... Exactly like my mortgage. No ones done more than drop me a letter to tell me the new address to send payments the two times that's been sold to different institutions.

-------------

Now, figuring that no mere blog would do in a story like this one, I spent a bit more time to get all the facts here. This was posted to the ifap.ed.gov site last month. Oh...I just can't express how thrilled I am. (not).

. . . . . we are re-starting our evaluation of borrowers whose accounts are assigned to two or more servicers. Our goal is to transfer the accounts as necessary to ensure that each affected borrower has only one servicer for all of his or her federally-owned loans.

The new transfer initiative has begun and will continue on an ongoing basis through March 2014. After we complete this initiative, we will monitor borrower account assignments on a regular basis and resolve situations in which accounts are assigned to two or more members of our federal loan servicer team.

(clipped for space at start)

and.... Do we get any choice in this matter? Oh... Naturally, not. After all, as the first link explained and I've read elsewhere as well, the whole point of the changes in Education loans is to get private business out and 'insure better terms and service' .. Yeah... "I'm with the Government, I'm here to help..." comes to mind.

Note: We will determine the servicer to which a borrower’s account (or accounts) will be transferred—FedLoan Servicing (PHEAA), Great Lakes Educational Loan Services, Inc., Nelnet, or Sallie Mae—based on the number of federally-owned loans each servicer services for the borrower or, if the number of loans is equal across servicers, the total dollar amount of the loans. The borrower’s accounts will be transferred to the servicer that services the most loans or the highest total dollar amount.

Source

...and the above is why I never use Wikipedia to source anything. In fact, they will literally fail a paper without further basis at the school in or out of the English Dept for citing it. It's almost a trained thing by now to not even think it for how strongly it's reinforced. As much or more than plagiarism issues every semester. (They have sources linked at the bottom of Wiki entries tho.... THAT is useful to explore)

* As for the bankruptcy? You have your interpretation of what the law is, and I have mine. You chose, from your source, NOT to post what the actual terms were, while I figured that really defined the entire relevancy of the issue. Meeting ALL 3 of those terms, and in the way they require the borrower to demonstrate the ongoing, long term nature of it will generally require a sympathetic Judge. I'd wish anyone the VERY best of luck on that. I really don't expect I'll be looking for ways to cheat my way out of what I signed the MPN to repay.

Interpretations do, often, vary though. We're each entitled to our own on that part.

reply to post by Wrabbit2000


It's likely to be harder to actually prove undue hardship in regards to a student loan as there have been ways to reduce one's student loan if its becoming an undue hardship. If your friends are being crippled by student loan debt, have them check their lending institution. They have a whole lot of options there to get the payments recalculated and more. I ended up having to do that because, being temporarily disabled, I couldn't afford my nearly $700 a month student loan payment. So they gave me a stay of a year to recover but promised to adjust it to a more affordable amount once that year ends. Even they know the payments are ridiculous.

Bankruptcy should always be the absolute last option.

reply to post by Nephalim


I recall that as well. While just because somebody in a high position of authority encourages you to do something doesn't mean one has to do it, for many, there wasn't a whole lot of options otherwise.

reply to post by WhiteAlice


I think we're in total agreement. I certainly have no intention of ever defaulting on my student loan, and as you note, they will adjust that all kinds of ways (for the court, too) which can make it payable to almost anyone. Their's generally runs a working lifetime, so they can afford to be nice with a forebearance or two along the way, or drastically reduced pay structure for awhile.

All kinds of ways bankruptcy on a student loan isn't really worth trying, outside how really dishonest it is in reality. I mean, there are plenty of people who get in trouble on credit cards or medical ..but a student load took years of daily building, knowing it, everyday. If one of the other conditions doesn't already naturally cover it?

We agree totally.

Wow you Americans seem to have a harsh student loan system.

Uk you can borrow what you like but dont have to pay a penny till you earn over £21k a year and even then the minimum is 10% a year of earnings over £21k.

Theres no being hounded for debt or pressure.

Im suprised any one bothers with uni in the USA as it seems so expensive

You know, the government could save a lot of money if it just had federal universities.

Government-run campuses, with government-run teachers, with government-mandated curriculae.

(oh lord, I just made myself ill writing this. . . . .)