Listen to this – I’ve been doing some research on them and I did find out that it’s only been since the late 70’s that lenders have been protected from people discharging student loans in bankruptcies.
But get this – they’ll sell your loan off to a company that will do remediation. That’s nice but they also whack you an 18.5% fee on top of the balance. So if you owed say $70,000 you’d get whacked with a $12,950 fee, bringing your balance to $82,950!
It reminds me of the prohibitions on interest present in the Jewish, Christian, and Islamic texts.
In the Bible it’s Deuteronomy 15:1-7 —
15:1 At the end of every seven years thou shalt make a release.
15:2 And this is the manner of the release: Every creditor that lendeth ought unto his neighbour shall release it; he shall not exact it of his neighbour, or of his brother; because it is called the LORD’s release.
15:3 Of a foreigner thou mayest exact it again: but that which is thine with thy brother thine hand shall release;
15:4 Save when there shall be no poor among you; for the LORD shall greatly bless thee in the land which the LORD thy God giveth thee for an inheritance to possess it:
15:5 Only if thou carefully hearken unto the voice of the LORD thy God, to observe to do all these commandments which I command thee this day.
15:6 For the LORD thy God blesseth thee, as he promised thee: and thou shalt lend unto many nations, but thou shalt not borrow; and thou shalt reign over many nations, but they shall not reign over thee. (15:7-8) Cited by Associated Baptist Press in defense of the Affordable Care Act.
(15:7) “If there be among you a poor man … thou shalt not harden thine heart, nor shut thine hand from thy poor brother.”
I think the key areas here are 15:1-2 – every seven years there is a release that is God’s release. And when you think about it, U.S. Bankruptcy law is based on the Bible. So why aren’t student loan creditors?
If you read the entire seven verses you get the idea – there is to be forgiveness for debt. But by allowing the student loan industry to get away with this, we are violating Biblical principle.
Even though I’m not Christian or Muslim, there is some good, practical ways of doing things in the books. Our legislators would do well to look at the book from time to time.