Posts Tagged ‘SLM’

Reminder to Law Graduates: Student Loans Are Not Dischargeable

Early last year I posted about recent law graduates who filed bankruptcy due to student loans: 
‘Breaking News (02/03/2012): Law grads go to Court for Bankruptcy Protection’
https://lifesmockery.wordpress.com/2012/02/03/breaking-news-02032012-law-grads-go-to-court-for-bankruptcy-protection/

This is to remind law graduates and those who plan to attend law school and estimate that if their law career doesn’t hold muster that they can seek relief from the U.S. Bankruptcy Court. This is not the case, you do not have the protection of the law on your side, it is all for big business and corporate greed. As other bloggers continue to emphasize: student loans are non-dischargable debt.

The following TIME magazine article, also from last year explains the same: Why Can’t You Discharge Student Loans in Bankruptcy, TIME Magazine, February 09, 2012:
http://business.time.com/2012/02/09/why-cant-you-discharge-student-loans-in-bankruptcy/

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.

$10,000 First Year Associate Salary-Boston

No,this is not a joke. The article begins with:

Say No to Law School
Protect Your Sanity and Your
Financial Future

By now, most people know a law degree hardly guarantees law school graduates will snag a good job, let alone a high-paying BigLaw position.

But it may be even tougher than you think to get a high-paying legal job just out of law school. Hiring law firms, if you thought you were low-balling new grads, think again. (Boston Business Journal 06/01/2012): Legal job market hits new low: BC Law lists job below minimum wage 

Yahoo’s version: (06/01/2012)  Attention Lawyers: Get Your … $10,000 a Year Salary: 

The beginning of the article states: Attention college students applying to law school: put down the LSAT prep book. You might want to consider another line of work.

How can this be legal, it reminds me of how waitresses are paid poorly on an hourly basis then make most of their money on commission, maybe this is the same scheme. For shame, BELOW MINIMUM WAGE. Sallie Mae, SLM, Access, Nelnet does not care: All they say is _________ , you better have my money with a financial, back-handed slap known as late charges, additional finance charges, interests and other ‘costs.’

This has been going on for decades. Mainstream media is just late to the party; I would dare say ‘fashionably late.’ The kind of oh I was going to get there, so when I (mainstream media) arrive I appear to expose this dying legal market.

The Mainstream Media Harks the Trumpet: Overburden Law Graduates with Usurious Student Loans (NYT)

The New York Times

So, at this point the mainstream media gets it? Why you may ask. Because the Housing bubble put the nation and the world economy on notice that the old way of financially devastating working/middle class persons who took a chance on higher education will not only destroy their way of living but burden the world economies. Interestingly, the author suggest more accountability in accredidation (not likely to happen, if Sallie Mae lobbied Congress to privatized and obliterate “fresh start” by discharging student loans through bankruptcy; I’m sure these for profit institutions will lobby (pay) Congress to keep out of ABA’s ‘free market enterprise’ of exploitation–ironically in the legal field.

He also suggests stripping away tenure track positions. Hmmm maybe professors will be forced to teach with integrity and on merit not based on race, personality conflict or whether the student is the child of a local judge. Doubt the latter, but support the author’s recommendation. Here’s an excerpt:

Two factors have combined to produce this situation: the federal loan system and the American Bar Association-imposed accreditation standards for law schools. Both need to be reformed.

First, consider the loan system. For more than three decades, law schools have steadily increased tuition because large numbers of students have been willing and able to pay whatever price the schools demanded. Annual tuition at many law schools in just over a decade surpassed $30,000, then $40,000 and is now more than $50,000 at a few. The reason that students have been able to pay such astronomical sums is that the federal government guaranteed student loans from private lenders, and now it supplies the loans itself with virtually no limits.

To restore some economic rationality, the federal loan system needs to demand greater accountability from law schools: those with a high proportion of recent graduates in financial trouble should lose their eligibility to receive money from federal loans. (A similar requirement is currently applied to for-profit colleges.)

The full article can be found at:

How to Make Law School Affordable – NYTimes.com (05/31/2012)

Sallie Mae Gets Downsized

NEW YORK (Dow Jones)–SLM Corp. (SLM) will still shed thousands of jobs company-wide despite agreeing to make local hires as it moves its headquarters to Delaware. I have no sympathy for all of you customer service representatives as you literally laughed at the

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amount of my student loans when I called to reinstate any qualifying forbearances or deferments. Now you are unemployed and will look for sympathy from Congress to extend the unemployment benefits, fighting for benefit packages and had you attended university, you’ll really know what it’s like to be on the other end of a Sallie Mae phone call. Karma is wonderful. 

 The student lender, commonly known as Sallie Mae, announced Thursday it will relocate its home base to near Newark, Del., from Reston, Va. It will receive financial incentives based in part on how many jobs it adds. So Sallie Mae found a way to make a profit while walking over its (now former) employees. Those locals who decide to work for Sallie Mae are now aware of what’s in store for them as the student loan giant continues to maneuver amidst its lost of revenue.

“We’re growing in some areas and shrinking in others,” Chief Executive Albert Lord said on a conference call Friday morning. He said the company will be “net down” even after it hires new employees in Delaware. 

Yes, remember how it was “saving” jobs by selling one of its facilities? Sallie Mae sells center to Aegis, saving jobs – BusinessWeek, May 18, 2010. It appears that Sallie Mae is robbing Peter to pay Paul–what alot of average Americans do with their monthly bills. 

Sallie Mae warned this spring it could cut more than 2,500 of its 8,600 jobs as it faces significant upheaval in the federal student loan market. The U.S. government took over originations of federally guaranteed student loans Thursday, stripping the company–previously the largest originator of federal loans–of a major revenue source. Sallie Mae is expected to focus more on its private loan operation and other fee-based businesses.  Sallie Mae is playing the corporate blame game, with the billions of dollars of recurring revenue from student loan interest payments I think she’ll be fine, unless the federal government decides to implement a law protecting consumers like it did with the credit card industry…. 

Sallie Mae shares were inactive premarket. The company’s stock has fallen 8.4% so far this year.  Don’t worry, you’re not likely to go bankrupt, your assets are built on the communal burden of others. You’ll likely be considered “too big to fail” as well. The average American, well they’re just not that important.

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