The country is reeling under the immense pressure of unpaid student loans. Each year the amount is increasing by leaps and bounds and has now even crossed the $1 trillion mark. The job market is dwindling at a similar rate and fresh graduates are finding it hard to get a job even to manage their day-to-day expenses. Therefore, it is not a surprise if they are unable to pay off their loans on time.
There have been innumerable discussions and conjectures as to the real reason behind this deplorable condition of the economy and the job market. Among the various causes that have been pointed out as the probable ones, the main blame has gone to the for-profit colleges which have been misinforming the students about the loans.
In a recent report, it has been pointed out that thousands of students in Connecticut will enroll in for-profit colleges in the coming academic session and a majority of them won’t qualify with a degree to their name. but, they will be charged for the course and this will be far more than what they would have to pay if they went to a public college. With no graduation degree, they would inevitably find it hard to get a job or be underpaid, at best, following which they would be served a notice for defaulting on their loans.
In spite of the deplorable performance of for-profit colleges, the percentage of student enrollment has increased magnificently. But many students are now turning towards online colleges instead of attending regular college courses. but the performance of the for-profit colleges in increasing their enrollment has been outstanding.
According to the Office of Higher Education, Connecticut, there is no such monitoring process in order to keep the college admission process in check except for the colleges that have campuses in the state. So, prospective students are asked to be on the lookout. They are being advised to check the graduation rates of the colleges that they enroll in and also compare the course fee in other colleges.
Another factor that has contributed to the enormous increase in the enrollment percentage is the high incentive given to the admission agents of these colleges who are able to reach their target of enrolling a certain number of students. They are making it a point to contact each and every visitor to their college website. Thus, they are enrolled in a college even before they know it. but most of them are not able to continue their studies and all they have as a reminder of the time they spent in college is a huge loan that needs to be paid off. The rosy castles in the air that they are shown at the time of admission vanish the moment they leave the college. They are told that their credits cannot be transferred.
The percentage of students who finally graduate from for-profit colleges is almost negligible compared to the number of students who have an immense loan burden at the end of their graduation term. About 3/4th of the students in the part-time course in the colleges are unable to qualify for the second-year course and only half of the full-time students can boast of crossing the freshman threshold. The report has also shown that a majority of the money that for-profit institutions are getting is from the government in the form of federal student loans.
According to the reports of the U.S. Department of Education, the rate at which the students of for-profit colleges default on their loans is much higher than the rate of default found among the students of other colleges. This is simply because the cost of getting a degree at a for-profit college is almost four times the cost of the same course from a public or a community college.
The consequences of a defaulted loan are severe. Unlike any other defaulted loan, there is no way one can get out of it through the bankruptcy filing. It has to be paid off. There are a number of repayment options, such as consolidation, extension, deferment, rehabilitation, etc that one can consider.
The only thing one has to keep in mind is that the lenders have to be informed on time. the repayment period usually starts from about a few months after the student graduates. If the student feels that the loan payment might become trouble then the lenders have to be notified immediately. The lenders might not seem to be the best person to be around, but it is always best to contact them as they will be able to help you out with a repayment plan.
The lenders are in the business and they will get their money back. what you can do is make the process easier by participating in the repayment plans or make it difficult by waiting for the collection agents to come after you. When a loan becomes defaulted and the lenders do not receive any communication on behalf of the borrower, the lenders transfer the account to the collection agents. The harassment of the collection agents is an added trouble that the defaulters have to face. But on top of that, they have to pay an additional amount of money as a collection agency charge.
The collection agents spell nothing but trouble. they will make sure that you pay up. the harassment that the consumers have had to put up has made the federal government issue the Fair Debt Collection Practices Act (FDCPA) outlining the code of conduct that the debt collectors have to conform to. In case there is any discrepancy in their conduct towards you, you can easily file a case against them. In fact, U.S. Army sergeant David Brash won $ 21 million in damages from PHH Mortgage after he filed a case against them for falsely claiming that he was “severely delinquent” on his loan.
There might be more such instances. But, it is always best to take damage control measures before the disaster strikes.