Meet Educational Credit Management Corporation, the arm-breakers of the student debt racket


#1

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#2

Frankly, I can't even fathom how anyone with a conscience can be debt collector of this type. The cognitive dissonance of bottom-feeding and accusing others of being lowlife scum must be incredibly confounding.


#3

"It's debt that you take on when you're a teenager, and it's the only debt that can be taken out of your Social Security check."

It's good to be a Canadian.


#4

Joy! Here in the UK student loans are already not killed by bankruptcy. But at least they're sort-of state issued. Initially they were 0 interest, then inflation, and now inflation plus a variable bit.

Should Poesy wish to go to uni, I worry what the system will be like then.


#5

What? Everyone SHOULD return the money that's borrowed.

Get to the cause than the symptoms: we should be complaining about overly high tuition which goes to the bloated administration/infrastructure costs (rather than good professors and research) than asking for an option of default on student loans. That's the real racket causing people to go bankrupt in the first place.

Lower the cost of education and teach the kids to avoid borrowing money without a good plan to benefit from it (in this case, higher salary). In other words, teach common sense - but we are failing badly.


#6

Part of the problem, lecti, is that we're telling them it's a good plan and they'll benefit from it. It's unreasonable to expect someone just out of high school, still in their teens, to be knowledgeable and experienced enough to stand up to adults with decades of real-world experience and say "No, you're wrong. And I know more and can come up with a better plan than you.". That is at least half the problem right there, that the adults who're supposed to be teaching the kids are flat-out lying to them.


#7

IMHO, making the system free-education-based -- instead of for-profit, is the most common sense.

Eliminate the profit motive, whether direct or by tax-evasion schemes, and there's less complaining from all sides.


#8

The other good thing about our system in the UK (if any system of student loans can be truly good) is that repayments are income linked – you pay nothing on all income under a certain threshold (about £16k in my case, but newer loans have higher ones), then 9% on income after that. So if you don't earn anything, you don't pay. The debt gets cancelled after a certain length of time, too.


#9

Given that this involves a certain element of risk, even for the 'common sense' actors (failure to secure work, shift in demand, illness precluding graduation, etc.) what would you propose to do with the losers?

Working on the basis of expected payoff on average is all well and good when you can diversify your portfolio; but student loans (even those taken to finance an education with an expected value greater than their cost) don't have an obvious mechanism for portfolio diversification. Averages provide useful information; but, unless the outcome spread for a given degree is vanishingly small, somebody has to be below average, possibly so much so that the loan would not have been a sensible move, even if it is on average.


#10

Hahah. Clearly not much of an investor, are you? "Everyone should repay money that's borrowed" is certainly a nice idea, but it's not how reasonable actors behave in reasonable situations. Contracts have escape clauses, bad investments are made and money is lost.

If we are going to ask students to be reasonable about borrowing, maybe we should educate lenders on being responsible about lending instead of letting them use the government as a tool to completely avoid responsibility for every horrendous mistake they make and the risks associated with investment in any other field ever?

No matter how responsible the students get, it won't make the behaviour of these loan companies any less despicable. You've got people who believe they are above the system, and a government that seems intent on helping them cement that belief, and that's never going to end well.

Complain about irresponsible borrowers once we've resolved the problem of irresponsible lenders and suddenly the whole "irresponsible borrower" thing won't seem nearly as bad. It's the mortgage bubble all over again, where a bunch of terrible people knowingly make terrible choices because they know they can hoist the consequences off on someone else.


#11

The Tories want to sell that off, too. To people like this.


#12

Actually I made plenty of money in investments, have advanced degrees and is well paid for it with absolutely no debt (including mortgage). Not much of a gambler, though.

What I'm saying is that university is asking too much for education (after all, all we are paying for is to talk to other educated people with papers to show for it) - we don't need a gigantic loan in the first place if the price is more reasonable. Very simple, right?


#13

True - it's definitely a problem on multiple fronts. But the reason they charge so much... is because they can get away with it. The Loans, which are for the most part poor investments with a big cudgel behind them, are what allow the sort of price inflation we've been seeing - It's not that we wouldn't need loans if the prices were reasonable, it's that what reasonable university would charge less when such huge loans are freely available and given out like candy to starry-eyed kids.

The rapid inflation of university costs is pretty much directly coupled with the special-casing and rise of the education loan industry - it's a symptom of the same problem.


#14

Agreed: that's the Mike Rowe approach. Frankly, MOST of the people who go to college would have been better served by going to a trade or business school.

Me, I'm a senior IT geek. And I'm increasingly convinced that the way forward is NOT college, but an apprenticeship system, much like that of the skilled trades.

That, of course, cuts most of the Educational-Industrial Complex out of the picture, and thus the student loan recovery thugs we're discussing.

My daughters have been learning this all along: my oldest, who just got certified in a trade, and starts later this month, has less than 10K of student debt. . . .and should have none by the end of the year.

MY undergrad student debt was gone 6 years after I graduated, and my grad school debt (got the degree 5 years ago) should be gone in two years. But nobody is pushing kids today into making RESPONSIBLE loan choices, and that's got us into the bubble that's going to pop Real Soon Now. . .


#15

It's not any better here; student loans always survive bankruptcy in Canada.


#16

There are no reliably high-paying jobs out there. Not for entry level employees, and certainly not for the vast majority of students who are below average. When I say "high paying" I mean jobs that cover more than a monthly minimum service payment that don't force you to also live with your parents. The idea that you can plan around the employment stats of today in hope for a better future tomorrow is a pipe dream. Ask anyone graduating from law school right now. You simply can't plan these things. My advice has been and continues to be: Do something you're good at, because jobs come and go. When I got student loans recently, I was forced to endure a degrading online session explaining how to make a budget. Though perhaps it was only degrading because I'm in my late twenties and have figured this particular aspect of life out, I think it stems from a fundamental error in reason: That people don't pay back loans because they make poor choices. I have a different, far more logical set of presumptions starting with: People don't pay back loans because they don't have the money.

People seem to think that's radical. It's radical to state openly that we didn't build any justice into this system. (Me? I'm more radical, I don't think college educations are really necessary for most jobs that require them.) Do you think there's some higher power who smiles down on you when you do "all the right things"? No. 1000 people doing the exact right thing changes nothing about the fact that there are only 500 jobs. Even in Lake Wobegone, "where all the students are above average" this reality crushes personal achievement. All debts should be dischargeable by bankruptcy. Bankruptcy serves at least one purpose: It punishes the lender for making bad loans and forces them to consider the market. Lending is a risky business, and removing that protection was a solution in search of a problem. Now it's a problem in itself.


#17

I can't disagree with that. However, saying that lendees are absolved of responsibility of paying loans makes no sense - if people do not want to borrow money from loans which one cannot default from, they are not forced to do so (there are other ways to borrow money other than student loans).

Having loans that you can't duck out of is a double edged sword - while we can't default, it also makes the money easy to get. It'd certainly be criminal if one is not informed of the conditions in which the money can be borrowed and tricked into getting the loans, but that is not the case here. In other words, people don't pay back loans just because they don't have the money, they have already made a poor choice in borrowing money that they have no money to pay back in case the education doesn't pay back as planned. The people who can't return the loan already bought a product that they cannot afford. A truly responsible person shouldn't be borrowing money that they don't already have or have no guarantee to return - it's probably not a radical thought outside of this country but tragically many people will consider me nuts to say this.

I know loans work differently for business, but my education and knowledge I gained from it is not a capital equipment nor a stock you can buy and sell. I get to keep my brain whether my career works out or not. And believe me, despite my education I've had my fair share of degrading experience with poverty, shit job and discrimination, and I don't expect my cushy job to last either. But I've already prepared for that. Maybe I'm misunderstanding how the world is intended to work in financial sense, and you are probably are a lot smarter about properly using loans, but simply avoiding debts are working out just fine for me.

And I do agree that college education is mostly unnecessary to perform many of the actual jobs out there. And if there are training that I got in college that I use at work, I've most likely paid WAY too much for it. Unfortunately, it's very difficult to get the job you want without going through this BS (and PhD), my line of work included.

Oh, and about law students - maybe they are not the best people to ask :stuck_out_tongue:


#18

Bankruptcy isn't fun. It's not a get out of jail free card. Bankruptcy hurts, it's a last resort, and it can be very expensive. This is not absolution.

So no one should spend money on an education. Period. You can't guarantee anything with an education except that you know things you might not have otherwise. It's not just another investment. It's a unique non-fungible barely economic asset.

I don't think you're nuts or radical. Your thinking here is very conventional, horizontal, and well within the box on this subject. There is no iconoclasm in anything that you said.

Avoiding debts is simply not an option for everyone. Scholarships and endowments are going down the tubes along with state funding. It's not enough to work hard any more. My GPA is 4.0. I can't pull it any higher than that, but because I'm a non-traditional student I'm not eligible for many scholarships designed for recent high school grads. Others I'm not eligible for because I haven't been a student long enough. I was fully and gainfully employed last year, a mistake it turns out, because my income disqualified me for a lot of need-based grants, based on arcane calculations that said I had thousands in disposable income when the reality is far from it. Here's the things though: I don't care about all that. It doesn't bother me. But if society is going coerce me by mandating a college or university level education as a form of job license to make even a decent living, and I end up spending a great deal of money on it only to find that the same society isn't prepared to offer me any opportunities- I'm sorry but I'm not grateful.


#19

I've been hearing about how bad everything is for years. I know how bad it is. It's bad. Can't the whole thing just collapse, we can live the shitshow, and then get to rebuilding it? Are we still in the "it'll get worse before it gets better stage?" I don't care anymore. Crash already!


#20

A percentage of your social security can also be garnished by child support.