Business Insider - Larry Doyle, Sense on Cents
Sep. 6, 2012, 7:42 AM
America is increasingly aware that the student loan bubble is a major problem for millions of students, families, and our nation as a whole. While far too many politicians from both sides of the aisle talk in platitudes about the need for education, few if any of these politicians are willing to pull back the cover and expose the ugly reality embedded in current data on the student loan bubble.
Yes, America knows that total student debt now exceeds all other forms of consumer debt. We also know that total student debt is now approaching $1 trillion dollars. I personally believe that the cost of education at public and private colleges and universities has to adjust downward but that reality does not appear imminent.
Read more: http://www.senseoncents.com/2012/09/student-loan-bubble-the-hidden-reality/#ixzz25oT0KHRP
Comments
It's the new housing crisis
When the housing bubble burst, the focus shifted to the student loans and rates went higher. They also changed the terms of payback plans. Students starting out today are paying so much more, borrowing much more, higher interest rates, and student loans are allowed to capitalize interest, so you pay interest on top of interest and the amount "owed" grows exponentially. You cannot go bankrupt, you cannot have payments lowered or put in forebearance without interest continuing to accrue. Even if you are unemployed and homeless the interest continues to grow. The only way out of debt is to be totally and permanently disabled, and even then it is a "conditional release" for three years before they finally forgive the debt. And I am not sure, but I believe the final loan forgiveness is taxable and adversely affects your credit rating. <I hope not.>
But of course, things might swirl away by then.
Blessings,
Astreia
I AM no expert
I AM no expert on this kind of thing but yes, "forgiven debt" is sometimes taxable and as far as I know, this sort of thing always affects your credit rating. In fact, that is a fear tactic commonly employed to keep people on the hook - by making it sound like a negative hit to your credit rating is the worst thing that could ever happen.
namaste