ABA Asks US Government to Address Heavy Student Loan Debts

The US Government has decided that student loan debt has reached a point where action is needed.  For the first time in our nation’s history, student loan debt has risen past credit card debt.  At the current rate, a lot of people will be paying off their loans when their kids go to college.  Congress is making an effort to curtail higher education practices.  This action would hold law schools accountable for the information they provide to prospective students. 

Colleges have been accused of providing inflated numbers to prospective students for quite some time.  These numbers include inflating the income level of graduates, the percentage of graduates who are employed after graduation and a failing to disclose the total cost of education. 

The American Bar Association (ABA) is urging Congress to act by providing competitive and flexible terms for federal student loans.  Specifically, Resolution 111-A is calling for loan forgiveness programs for students who go into work for the private sector, and raising the federal income tax deduction for qualifying student loans.  At the same time, Resolution 111-B is asking law schools to revise their standards by, “requiring law schools to provide on their websites, and in other reasonable methods of communication, more data on employment and placement of graduates.”

Such action is critical; however, the action should come directly from state bar associations who are responsible for regulating the industry.  The decision to attend law school is a difficult one with a lot of pros and cons to weigh.  Action needs to be taken so that those who wish to make such a decision are armed with the correct information to base their decisions.

Information gathered from:  http://www.abajournal.com/news/article/aba_asks_u.s._govt_to_address_heavy_student_loan_debts/

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13 Responses to ABA Asks US Government to Address Heavy Student Loan Debts

  1. Welcome says:

    I came, I read this article, I conquered.

    • Jenay says:

      Ya learn something new eevryady. It’s true I guess!

      • Sabeshan says:

        Student Loan Debts Can be Considered the Same as Highway Robbery?Why can’t students debt loans be anaficinlly stabilized in regards to the amount owed, due, and paid back? Why should it continue to be legal for the interest rates of student loans to continuously be endlessly added to the principal amount of any student loan? For example: Even if you consolidate your loans another creditor automatically purchases your student loans and pays back your debt to the previously creditor and the new creditor who paid off your loan just adds more interests (their rates) to your loan and I am sure this is why the new creditor purchased your debts to pay the previously creditor in the first place. Throughout the lifetime of your student loans there seem to be more creditors. It is far worse than credit cards. If you are late making your payment the amount you have paid does not mean a thing because the amount you paid as payment will be attached to more penalties. Acquired student debt loans in the amount of $50,000 is now $80,000 over a 5 year period. Which means you are still not paying the student loan but the interests to the creditor. Why can’t the government stop this problem? It is a REAL PROBLEM, yet it is encouraged to attend college. In this case, this particular payback is for an Associates Degree from a Private College that was not completed. This should be illegal. There is no way to pay this off in a lifetime. The monthly installment amount is already a financial burden and not enough to pay towards a huge debt and who can pay more than required on their monthly statement. It is clearly unaffordable anaficinlly for anyone because of the economical low paying jobs in the U.S.A. jobless society even if you do finish your college education. There is no way out. Why can’t student loan debts be eliminated or at least forgiven by half the debt. Can SOMEONE PLEASE HELP !

      • Masako says:

        to the banks Watch out. She sometimes orrobws more than she can afford to pay. Legitimate lenders just can not afford to take on the risk that you’re asking of them.Here’s the thing a college education is SO expensive that even low cost educational loans cost an awful lot to repay. Getting involved with a sub-prime educational lender is tantamount to financial suicide. Even if you could get this type of loan, the interest rates will send your payments through the roof. Since your whole point in going back to school is to IMPROVE your economic circumstances, you surely can’t afford to make a borrowing mistake that will wind up making things worse.Make an appointment and sit down with a financial aid officer at your school. They’ll be able to tell you what you can and can’t qualify for, and you’ll be able to look ahead and see where you’ll be, financially, in 3 or 5 or 20 years if you make certain school-funding choices.Then you’ll be able to make an educated decision about the right path for you I’m afraid that it’s really unlikely that you’ll be able to give up work and go to school full time. You may need to take on the Herculean task of getting your education on nights and weekends, while balancing it all with work and caring for your daughter.I wish the news was better for you, but the idea that there are lots of educational loans available to students with bad credit just isn’t true. I’m sorry.Good luck to you I wish you all the best in your endeavors!

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    • Hamid says:

      Student loans are not amortized like mortgages. Student loans are more like car loans such that you pay the same amount of principal each month plus the total interest divided by the the number of months in the loan term. People can avoid paying the extra interest by paying more principal when they refinance the loan. If your student loans are allowed to be refinanced at a small expense, Dad might be right in his suggestion to use your profit from the sale of the house to pay down the principal of your private student loan. But you are idea is correct too, sort of. It would be best to get a second mortgage and use that money to pay off the student loans, because you can deduct that interest from your taxes. I just don’t suggest you wait until you have the house paid off before you do it.

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    • Daniel says:

      Pay extra on student loans or save for house?I’m ucrrently renting and paying $450 a month. With the house price range and location I am looking ($50,000 or less in the Cleveland, Ohio area. Very possible to find a nice starter house in that range), I would pay not too much more a month (say $550 total) for a house including mortgage, insurance, PMI, and taxes (The bank did the math, not me). I have found a program for the city I want to buy where they give you an $10,000 no payment interest free loan for as long as you live in the house you buy. That is used to cover the down payment. I’ve done all the leg work and I know I qualify, but now I have to save for closing costs and stuff.Here’s my problem. I have about $30,000 in student loans. Most of them are around 6.5% interest (kinda averaging them) but I have two Private loans with 9%+ and 11%+ interest. Those two total to about 5 grand of my debt. I had been sending about $400-$500 a month EXTRA to the highest rate loan trying to pay off my loans asap. My loans just went into repayment in August so I haven’t done this for too long. My goal was to pay off my loans in 5 years THEN start saving for a house (Thinking by the time I’m 30 I would buy a house). But now I’m feeling like renting for that long is not a wise option since I really am happy with my job and don’t plan to leave the area. So I am thinking of saving that $400+ a month for buying a house. I know the interest rates on my private loans are high and I’m wondering if it would be unwise to stop paying that extra. I guess my thinking was the $450 a month I spend on rent over the years is much worse than the interest I would rack up saving for a house, even if it took a year or so. I’ve been renting for about 3.5 years now so I’ve lived on my own for some time and I feel ready for the next step.What would you do or tell me if I were your daughter? I’m wondering is it at least ok to save the money just so I can have options? I mean, let’s say I saved 5 grand in a year. I could always decide not to buy and just throw that into student loans. But if I don’t save anything and pay extra on the loans, I’ll never be in a position to buy.BTW, student loans are my ONLY debt. I don’t use my credit card (athough I charged $3 to it the other day because I heard they might close it for inactivity) and I bought my car with cash.BTW, student loans are my ONLY debt. I don’t use my credit card (athough I charged $3 to it the other day because I heard they might close it for inactivity) and I bought my car with cash.Please don’t tell me to stick with my plan. I’ve thrown three different plans out there so I have no idea which one you are talking about.

    • Kinjal says:

      I’m very conflicted about this. I guess, no, there is no “good” debt. In an ideal world, we would all pay cash for etnvyrhieg. But for the vast, vast majority of people, this isn’t realistic. Real wages have been on the decline since the 1970s and the cost of college, healthcare, food, etc. have all continued to rise. What are middle class people supposed to do, not go to college because they have to take out a loan. Pass up a better job that’s farther away from home because they don’t want to take out a loan to get a car? I think that the best thing to do is borrow responsibly. What does that mean? Keep your credit score in good condition so that you get good interest rates. Borrow only what you need, no more. Keep expectations reasonable (i.e., if you need a car borrow for a reliable used car, not a new BMW). The thing that’s really tough about personal finance is that there is practically no rule that applies to everyone. It’s hard to say to everyone, “don’t go into debt, EVER!” But it’s also hard to say, “debt’s just fine, charge whatever you want!!” To be responsible financially, you have to use your head and evaluate every decision based on YOUR situation.

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    • Kartena says:

      Pulling equity out of your house does not sound like a good oipton to refinance your student loans. You said you are trying to pay your bills off, what you will actually be doing is trading out student loan debt for home equity debt, which is a bad trade off and is not paying off your bills since you won’t be reducing your debt. Most likely the student loans will carry a lower interest rate than the home equity loan, but more importantly, if you can’t afford to make student loan payments at some point in your life your lender will work with you because it is unsecured debt. If you fall on hard times and can’t pay your ORIGINAL purchase money mortgage, the lender can foreclose on your home since that was the collateral but (in most cases) can’t come after your other assets. When you refinance your home, pull equity out of your home, or accrue any non-purchase money debt against your home you are exposing the rest of your assets to your lender. If you elect to do what you suggest and you are unable to make payments at some point in your life, your lender can come after all of your assets as opposed to none, with the student loan.Also, student loan interest is tax deductible.

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    • Julianny says:

      You will still be able to get federal suetdnt loans as long as you are not defaulted on any past suetdnt loans. Private suetdnt loans are given based on your credit history and I doubt you would qualify for one with a bankruptcy on your credit report.That being said, filing bankruptcy does not effect current suetdnt loans at all you are required to pay them back even after you file bankruptcy. (even if you list them as debt in the bankruptcy you still have to pay them back) If they were in deferment before the bankruptcy, then you prob still are but eventually (or perhaps even now if you haven’t been paying on them since the bankruptcy) that deferment period will expire and you again will are required to pay on them.If you do not or have not been making the required payments since the deferment expired, you will eventually go into default and yes, not be eligible to receive additional suetdnt loans.Sorry.