Posts Tagged ‘default’

Why I don’t like Sallie Mae

Well, for the obvious reasons. They are oppressive and there seems to be no end in sight for their billing tactics. We all know that recently a lawsuit was filed against Sallie Mae, SLM and subsidiaries for violating federal law. One of the options for damages is to have your student loan balance reduced instead of receiving an actual monetary award. Let’s see all of the billions of dollars in student debt, billions of consumers/students’ whose privacy rights were violated, attorney fees, court costs. I think each student will have a calculable $100 (that’s being generous) deduction.

Anyway, I was behind on the private student loans of which I have two (2). Scrimping and sacrificing to make my account current. For some reason most of the customer service representatives are vindictive women who hate their lives and take joy in making you deal with them. The other day I set up an auto payment and made a sigh of relief. This rude and cantankerous woman chuckled, literally in my ear and said even with these payments you are [this amount of time] behind. She actually had joy that I was still a little late on the most current payment. These people are sick and I’m sure they train their staff to the lowest customer service representative to the CEO that student borrowers are commodities which can be bundled (consolidated), traded (sold) and mocked. I say do whatever you can to pay off any private loans you have and let them see a grand reduction in student loan debt. Let these customer service representatives lose their jobs and see how it feels to struggle with barely anything to try to do the right thing while this corporate monstrosity makes a mockery of your effort. That my dear, will be karma.

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A Dream Deferred: Student loans, Debt and Law Graduates

According to this article; Leaving College with a Degree and Thousands in Debt (02/17/2012) This is you trade off-a parchment declaring you’ve jumped through all of the sanctioned hoops to demonstrate you’re smart; an invoice showing that you have mortgaged your future

Debt: It's not going anywhere

OR work hard until blue collar companies, downsize, put you in miserable conditions with room for advancement for just a few and leave yourself uncultured, stuck but with a higher probability that you can purchase a home, start a family. I know for a while bloggers promote blue-collar jobs  are better than higher education but for people of color, even working jobs that require only a high school diploma you face blatant discrimination and the likelihood of being targeted for termination (Check out EEOC adjudicated complaints filed by Hipanics, Bi-racial persons and Blacks on www.eeoc.gov). Anyway, here’s an excerpt from the article:

Until they get rid of the debt, “it is inconceivable that they’ll ever be able to buy a home,” said Steven M. Dunne, a Philadelphia consumer-bankruptcy lawyer who last year paid $36,000 to chip away at his student loans, $5,000 of that interest.

“When I graduated from law school, I knew I couldn’t make the payments with one job,” said Dunne, “so I’ve had two for the last three years.

The life of a normal adult, purchasing a home, earning a decent wage to cover basic expenses and to have a family of your own becomes a distant dream. Sallie Mae’s a’knocking.

“The impact is that I can’t afford to buy a house or a car,” he said. Essentially, “I have two mortgages to pay every month, but I don’t have any real estate to show for it.”

More Law Schools See Surge in Law School Applications

On July 6, 2010 Life’s Mockery reported that UMass Law School had a surge in law school applications: https://lifesmockery.wordpress.com/2010/07/06/in-the-news-a-new-unaccredited-law-school-has-surge-in-applications-enrollment/ Well, the madness hasn’t ceased, the operative words are more and surge, sounds like legal-industry-gluttony at this point. Today the National Law Journal reports: (False) Hope drives rise in law school applications 

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Hope drives rise in law school applications: Despite grim job statistics in nearly every corner of the legal world, law school applications increased by 7% over last year.

 The grim job statistics in nearly every corner of the legal world are surely enough to make any aspiring lawyer think twice about diving into massive debt to attend law school. [emphasis mine]. Apparently not for many, hopefully for others. Even with this frank start to the article, people are so desparate as to believe that obligating themselves into more debt will resolve their personal financial woes in this turbulent economy. Does this make sense? No.

“How much do applicants know about the contraction of jobs in the legal industry? It’s hard to say,” said Brian Tamanaha, a professor at Washington University in St. Louis School of Law who has urged law schools to provide more accurate information about graduate employment. “People could be thinking, ‘Well, in a few years things will change.’ I think we’re seeing a structural change in the industry. Even if things do come back, it won’t be to the same degree we saw just a few years ago.” My word, we bloggers have been saying this for a while, but I guess it’s considered speculation unless a professor says it. The legal industry is forever changed, there are IVY leaguers who cannot even find decent paying jobs, work is outsourced overseas, student loan debt, $40,000-$50,000 average attorney pay, do not go to law school. O.k. I’m back.

“In a climate like this one, we’re seeing applicants who are conscientious shoppers looking to get the greatest value for their dollar,” said Aaron Latham, the interim director of law advancement at Alabama, which won the NCAA Bowl Championship Series football title last year.  Apparently they’re conscious in a parallel world to take on this type of debt in this contracting field, or they would not have decided to go to law school in the first place.

The idea of law school as “the great default” is hardly new. Law school has long been more attractive than business school or medical school to college graduates with vague career ambitions, Leipold said. He attributed that in part to the versatility of a law degree, which can translate into the corporate world, public policy or any number of other fields.  Of course not, but who continues to propagate that “you can do anything with a law degree” and prestige with it’ll work itself out. I will say that at this point it’s not all the legal industry faults, sure deans, professors, lawyers who graduated in prior generations are culpable but we have unwitting lay people who have this imagery no doubt fueled by the media and the entertainment industry of law being a fast-paced glamorous life with a fast track to financial success. One can see how bad it is when the article states that most 0Ls do not know the reality of the legal industry and therefore have no idea what they are getting themselves into.

However, the idea that law school is always a solid choice should be retired in light of the growing price of a legal education and the dimming jobs prospects, several critics said. He’s saying that idea does not hold true, step into the real world and there are no jobs. Drop out of law school while you can! Do you want to subject yourself to over $100,000 debt, putting off having a family, no available jobs, depression, psycho attorneys on projects who are mentally ill or became that way because of the mental-institution like environment encouraged by staff attorneys? (that’s if you get a contractual job). Or perhaps you will enjoy having a J.D. on your resume and being practially locked out of nearly every other field as being overqualified or your degree being to specialized or not considered a true doctorate where you won’t qualify for fellowships in the future unless, you guessed it you plan to go BACK to another graduate school after law school.

“People who haven’t done any investigation into what lawyers do are foolhardy to pursue law school,” said Zearfoss, the Michigan admissions dean. “Anyone using law school as a default should rethink that.” Oh my, I may have to take some of my previous words back, believe me this law school dean just called you a fool for attending law school at this point. The image of the bully Nelson pointing at you saying “ha-ha” popped in my head. No matter how raw the honesty, he doesn’t reflect the majority of law school academia, at least so far.

“In 15 years of teaching, I’ve known a lot of students who came here because they didn’t know what they wanted to do,” Tamanaha said. “A lot of this is about cyclical irrational decision-making. It’s based on a very human trait, which is overoptimism. For the people who have always wanted to be a lawyer, they should go to law school. For anyone else, it’s not a good decision.”

O.k., so you have been called a fool and irrational for attending law school, do not let your ego allow you to make likely one of the worst decisions in your life. 

“Just because you wish for something, doesn’t make it true.”  ●Disney’s The Princess and the Frog

People Were Right: The Next Round of Default Will Be Student Loans

 

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 I have had a few conversations with other ‘educated’ people in different fields regarding student loans. It’s pretty much the same: I’ve been paying for this amount of time, payments don’t make a dent, I am using up all of my deferments and forbearance and the balance keeps growing, and I or my spouse is unemployed. Looking at this article, it sounds like SLM operates its business identical to the housing market:  

Student Loan Corp. Plans to Issue $855 Million of Asset-Backed Securities – BloombergJune 29 (Bloomberg) — Student Loan Corp., the lender majority-owned by Citigroup Inc., plans to sell $855 million of asset-backed securities, according to a person familiar with the offering. 

The loans are guaranteed by the U.S. government, said the person, who declined to be identified because the terms aren’t public. Bank of America Corp. is also selling $1.23 billion of bonds backed by government-guaranteed student loans. SLM Corp., known as Sallie Mae, is marketing a $1.7 billion offering tied to private loans, or those that don’t carry the guarantee, a person familiar with that offering said. 

This year, $8 billion of asset-backed securities tied to student loans have been sold, compared with $10.4 billion during the same period in 2009, according to data compiled by Bloomberg. Sallie Mae hasn’t issued debt linked to private student loans, which is harder to sell because it lacks a government guarantee, since the Federal Reserve ended its program to thaw credit markets in March. 

It’s usual business practice to sell off high risk, potential bad debts or debts the lender perceives he won’t get payment on. It’s kind of like the sinking ship, when people are throwing off the heavy load, but as it’s still sinking they think throwing off ropes, socks and buckets will keep it afloat; it will for a short extended period of time. Unless the actual hole in the boat is fixed, it’s going under. OR… 

I wonder if SLM selling those securities to a company it will later buy? So if these are considered high risks, sell them to another company and let them have those debts as part of their assets, then buy them back or buy the actual company which is holding the debts. Similar to when debtor consolidate your loans with one company and leave SLM, SLM buys that company and though you have a consolidated loan, SLM has you back into her economic grip (I have personal knowledge of this) 

Look at the description of the bonds, sounds like securities sold with the promise that the individual will be in debt forever so whoever buys will have a recurring revenue stream upheld by the ‘educated’, unemployed who purchased a bad bill of goods. 

Also being marketed this week is a $650 million sale backed by auto loans from Richmond, Virginia-based CarMax Inc. World Financial Network Bank is issuing $450 million of bonds backed by credit-card payments, and a leasing unit of Sydney-based Macquarie Group Ltd. is selling $500 million of securities backed by auto leases from Australia. 

Whether it be mortgages, home equity loans, student loans, car loans or credit cards, these corporations are literally banking on the fact that the consumer is willing to incur debt with exhorbitant interest. While you struggle to make payments, your debt is repackaged into a new ‘product’ for others to “invest” and have a slice of the interest pie, with their second homes and yachts…this is very interesting. 

p.s.: Here’s some news about Sallie Mae from this past month:  

Starting this summer, Uncle Sam will be your banker for federal student loans: Families can expect a streamlined process and some other perks: May 30, 2010, http://articles.baltimoresun.com/2010-05-30/business/bs-bz-ambrose-student-loans-20100530_1_federal-student-loans-direct-lending-parent-loan 

Woohoo, it just gets better! This article was published in the New York Times on May 28, 2010: Placing the Blame as Students Are Buried in Debt [http://www.nytimes.com/2010/05/29/your-money/student-loans/29money.html?pagewanted=1&ref=business&src=me ] 

UPDATE:Sallie Mae ‘Interested In Exploring’ Citi’s Student Loan Ops, May 19, 2010, http://online.wsj.com/article/BT-CO-20100519-711314.html?mod=WSJ_latestheadlines 

Sallie Mae sells center to Aegis “saving jobs”: http://www.businessweek.com/ap/financialnews/D9FPF5H81.htm