A Way to Reduce Student Loan Debt (In Some Cases)

Much has been said about the many college students
who are deep in debt re: the loans they obtained to
finance their educations, only to find that there are
precious few jobs in our present economy that they
can both start their careers with and start earning and
saving money to service their student loan debt as
well as establish their savings. Your favorite Peasant
is going to share with you a plan that, while it will
not solve this problem for all or most of these
bewildered students, it can help those who became
ensnared in this predicament via fraudulent
misrepresentation by some institutions of higher
learning.

I shall explain: there is an idea coming from
Washington in which federal student loans would
be forgiven if the applicants were bamboozled
into enrolling at colleges making false promises.
This idea, which was recently announced
by the White House, was developed to assist former
students of Corinthian Colleges Inc., a large for-
profit chain that underwent bankruptcy reorganization
this spring. This organization was accused last year
by federal officials of misleading prospective students
about its graduates' success in finding and excelling
at career-relevant jobs. Among the shenanigans
perpetrated by Corinthian was paying temp agencies
to hire its graduates for as little as two days' time (!)
just so they could count these grads as being
employed. One of Corinthian's campuses counted one
grad as being employed in her field major based on
her having worked in a fast-food restaurant, not as a
manager, but as one of the food preparers.

Federal government officials said that under this new plan
they would consider forgiving any loans made directly
by the government --- those held by a majority of the
43 million Americans with student debt --- provided that
the borrower can document that a school lured him to
apply for the loan under conditions which would violate
state laws. Now Washington has admitted that this plan
potentially would come with a very high price on its
sticker, a price that would certainly be in the billions of
dollars, although federal officials have declined to
estimate the potential total amount of loans that could
be eligible for forgiveness.

This plan was created in the wake of former Corinthian
students holding demonstrations. Some of these students
have organized a "debt strike" in which they are refusing
to make payments on their outstanding loans. Education
Department officials and the president have said that the
plan would relieve borrowers of mounting debts that were
the result of fraudulent representation by dishonest schools.
Critics of the plan, including some members of Congress,
state that the plan would punish taxpayers instead of the
fraud-perpetrating colleges. One related danger would be
false claims put out by dishonest borrowers who simply
don't want to repay their loans.

What might --- just might --- make this plan successful
would be verifiable documentation provided by the
recipients of said loans, so that fraud from the other end
of the equation would be greatly minimized. This would
help the real victims of these crooked colleges while
not further burdening the taxpayers with exorbitant costs.
In the meantime, no legislation to enact this plan
should even be considered at all without this proviso;
for it would distinguish said plan from other debt
forgiveness proposals that in recent months
have come out of Washington which have put taxpayers
on the hook for billions of dollars already. And it
potentially can reduce the total delinquent debt by
a considerable amount in the process.

This may seem like an iffy plan at best to some. But it is
a far better plan than many of, if not all, of the other
plans which have come before.


MEM