Debt Protection on Student Loans?

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I hate to say “I told you so”… No, that’s a lie, I love to say: “I told you so”. 🙂

I read in an article today on Yahoo News entitled: “Why federal student loans need new protections on debt collection” the following statement:

Democrats have roundly criticized President Trump for making aggressive use of his executive authority and to be sure, the President has repeatedly tested the limits of his constitutional powers. Yet in one area, they are one-upping the President, pressing Joe Biden, if elected, to cancel up to $50,000 of federal student loan debt for millions of borrowers.

Linked from Senator Warren’s website. Why am I not surprised? Here’s why. The student debt crisis is a direct fault of the government getting involved. Except fighting wars, they manage almost everything else poorly. Just look at the Post Office.

What they have done is allow millions of immature teenagers to extend their adolescence for another four, eight or more years. The only thing required for them to get a loan is to have a pulse. It doesn’t matter if the degree program they are contemplating has any possibility of generating enough salary in the future to pay it back.

No bank in their right mind would lend money to someone like that unless they have a “government guarantee”. This means that if the degree in “Womens Studies” doesn’t generate enough revenue to pay the tens of thousands of dollars borrowed to finance it, the government (well, us) will ultimately pay it back.

But there is this:

Consumer protections against abusive debt collection tactics do not apply to the government, nor do state statutes of limitations. The government regularly garnishes the wages of defaulting borrowers charging a whopping 20% per payment.

There you go. You make a deal with the devil, you generally come out on the losing end. The solution to this is to work three jobs, eating macaroni and cheese, never seeing the inside of a restaurant, movie house or theater until your debt is paid.

One way we’ve failed out children is to push college as the end-all, be-all for success. There is a lot of money in the trades. We’ll always need plumbers, electricians, undertakers, garbage collectors, etc. The more dangerous or dirty the job is, the better it will pay.

So the best way to avoid student debt:

  • Don’t pick a stupid major with no reasonable payback. Nursing and Information Technology have good payback for Associate’s or Bachelor’s degrees.
  • Think about self financing, or working while you are going to school.
  • Think about getting into one of the trades.