Loans designed to fail?


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Eric Kim, Staff Writer

College is coming up for our seniors and money is most people’s main concern– and for a lot of people, it is the deciding factor.

About 44.2 million people are in debt from student loans right now and many are probably regretting taking these massive loans.  The current amount of student loans is $1.41 trillion it continues to grow everyday.  It is shown that graduates who received the Pell Grant, a federal aid that is awarded to students with lower income families, borrow an average of $31,200.

The problem with these private loan companies is that they are giving ridiculous amounts of money to students who cannot pay it back.  The system for loans is broken and state governments are starting to recognize it.

Attorneys general in Illinois, Washington, and 27 other states have filed law suits against Navient, one of America’s largest student loan company.  The company was already under fire for sloppy loan collection.

Two lawsuits filed by Illinois and Washington were against SLM Corporation, or Sallie Mae, for predatory lending.  The lawsuits cover subprime private loans made from 2000 to 2009.  Sallie Mae would make these subprime loans to students with bad credit to schools with high dropout rates, and this would help them build relationships with colleges which would allow Sallie Mae to lend more federal loans.  This was where they profited the most.  Federal loans are reimbursed by the government if the borrowers chooses to default.

The problem is that these companies seem to be working with colleges to prey on the american dream, which is apparently only achievable with a college degree–but that doesn’t even mean you’re guaranteed a decent job.