Here's your degree -- and a lawsuit

Some universities are suing students who can't or won't repay their school loans.

By Bruce Kennedy Feb 6, 2013 9:28AM
Image: Graduation cap (Stephen Wisbauer/Getty Images)Compared with earlier generations,  current college students face a very different world once they enter the workforce. Unemployment remains high, entry-level jobs are scarce, and many available jobs require skills that simply did not exist 20 and even 10 years ago.

Recent graduates are also having more trouble paying off their college loans, and many are being threatened with legal action from their alma maters for nonpayment of tuition and other bills.

The University of Pennsylvania filed six lawsuits against former students in November, demanding repayments from $13,000 to $27,000. A university spokeswoman told the Daily Pennsylvanian that students who graduate or leave the university with an outstanding balance will see their debt transferred to the school's collections office. Past-due balances, she said, are subject to a late-payment penalty of 1.5% per month.

And universities have other unique ways of pressuring students who can't or won't pay their bills. Kenya Shujaa, a former graduate student at Penn, faced a lawsuit and also saw the university withhold access to her transcript, which she said "limited the kinds of jobs that I could have." But Shujaa, who settled her debts last year, says she understands the university's actions. "That's the rule when you owe them money," she said.

Students who borrowed funds for college and earned bachelor's degrees in 2011 left school with an average of $26,600 in student loan debt, up 5% from 2010, according to a recent report by the Project on Student Debt, by The Institute for College Access and Success.

Last year, the Department of Education reported a 13.4% national student loan default rate -- with for-profit institutions having the highest average three-year default rate of 22.7%, public institutions at 11% and private, nonprofit schools at 7.5%.

"We continue to be concerned about default rates and want to ensure that all borrowers have the tools to manage their debt," U.S. Secretary of Education Arne Duncan said in a press release. "In addition to helping borrowers, we will also hold schools accountable for ensuring their students are not saddled with unmanageable student loan debt."

Not surprisingly, educators say getting a college degree increases a student's chances of finding a job that pays well. But some also stress that both students and parents need to educate themselves about the loan process.

"Students and parents need to know that, even at similar looking schools, debt levels can be wildly different," said Lauren Asher, the president of The Institute for College Access and Success. "And if they do need to borrow to get through school, federal student loans, with options like income-based repayment, are the safest way to go."

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Tags: Economy
142Comments
Feb 6, 2013 12:16PM
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My Grandfather was a fairly successful business man. He grew up during the depression. When I turned 18 and was about to graduate H.S. He had a long talk with me. He said, "what are your plans for your future." I told him, I was thinking I would like to go to college, but wasn't sure what I wanted to be. He paused a moment and said, "Son, college is great, and there is nothing wrong with wanting a higher education but, I want you to consider learning a trade as well."  He went on to explain that during the depression, there were a lot of unskilled people out of work, as well as most college level  "business" jobs"...However, plumbers, electricians, sanitation workers and people who knew how to build things were still working. He also said, anything in the medical field was good too. You see, when the economy tanks..........People still need their toilets to work, they still need lights to come on, they still need the garbage picked up and when they get sick, they still need care. What they don't need, are financial advisors, Stockbrokers, CFO's and Liberal  Art experts. I learned the L.P. and Nat. gas trade. Never went without a job.....never made millions, but I could always feed my family. Once I had those skills, THEN I went  to college...for myself.  

If you beging to think about a career, and possibly entering college....with no real idea of what you wish to be. Put it off for a few years, learn a trade so you can survive. Then, once you've established yourself.....and choose too,  Go to school. You'll always have "marketable skills" to fall back on....If we slide into another recession. 
Feb 6, 2013 11:34AM
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I can't believe the comments being thrown around in here. I am a recent graduate and needed to secure loans to pay for college. I have a large burden of debt, but that debt is mine and I own it. I knew exactly what I was doing and I have no issues with paying the loan back because I was responsible and took out only as much as I could afford to pay back (having researched the average starting salary in my profession). This supposed student debt crisis is the result of students and not of any university. Costs are increasing at institutions due to the demand for a degree. College enrollment rates are sky rocketing because parents brainwash their children into believing that a college degree will make you successful. That is a fallacy. Parents....teach your children that there is no such thing as a free ride and that loans and credit will have to be paid back regardless of your situation upon graduation.
Feb 6, 2013 10:21AM
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Maybe now colleges will drop ridiculous unmarketable majors.

 

Feb 6, 2013 10:29AM
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You can't get blood from a turnip. This is just the next shoe falling on tax payers. The responsible working tax paying middle class person is the "unwilling consumer" for all the deadbeats leaching off the government.

 

Same thing they did with housing......... O hey .. you can't afford a house here is a loan anyway we will let the tax payer pick up the tab as we save the bankers.

Feb 6, 2013 12:21PM
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College is expensive.  Don't major in something that is a "feel good" major.  Sure, that communications or art history degree allowed for some bodacious beer drinking while at school, but isn't paying you back post-graduation since you decided to spend $90k on the freaking thing. It is infuriating when people blame this, that, or the other thing for the ballooning student loan debt. I had over twice the average student debt and am almost done with repayment. It is my debt, I took it out and I am responsible for it. I have never missed a payment or been late with one.  I have not been able to visit Europe as much as I want, or buy a new Benz, and had to wait unitl I'm in my 30's to buy a house because of that debt, but I only blame myself. Take some responsiblity for crying out loud. Stop blaming everyone else for your financial woes and open your eyes to the big wide world. Sometimes it will kick your a$$.

Feb 6, 2013 10:49AM
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The cost of college is over-inflated anyways. That's what needs to happen, colleges need to reduce spending so that they can also offer at least a little more affordable tuition costs. As with anything else, greed is the issue.
Feb 6, 2013 12:08PM
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Wow.......  where does this "you owe me" mentality come from?

 

if i borrow money from you, and I don't pay it back, it's solely a problem between you and I and not anyone else.

If I am the kind of person who demands someone else gets involved, I am a leech,  and not a smart person.

If I am a group of people who supports and  demands others get involved because I can't handle my own affairs, I am a liberal who thinks "someone owes me because I don't have enough skill to manage my own life."

 

No wonder there are articles like this.

 

 

 

Feb 6, 2013 11:04AM
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This is not going to end well with colleges.  Count on it.
Feb 6, 2013 11:44AM
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Maybe the government should take a page out of this playbook and start going after all those deadbeats who owe federal student loans.  Secondly, not everyone is suited for college/university so stop the media hype that in order to succeed in life, a college degree is necessary.  This country was built by the hands and minds who were inventors, machinists, tradesmen etc. Maybe it's time we got back on track and quit handing out college loans like they were chiclets to those who aren't qualified.  Go after those who don't pay, make tuition rates and books etc more reasonable/affordable and quit the quotas.  Stop the student loans as they now are and rates will drop dramatically.
Feb 6, 2013 11:07AM
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Colleges have gotten a sweetheart deal for too long. These student loans are backed by the government so lenders are not concerned with your ability to repay, they will get their money back one way or the other. The schools are not encouraged to compete and charge unrealistic rates for classes and books, what do they care the loans will cover it. These loans cannot be set aside, you can't EVER get out of them, so the tudent is on the hook perpetually FOREVER.

 

The schools offer useless degrees or degrees that have very limited opportnities to make a living. I am not saying that music and art are not necessary but the market for most of these  students would be working as a pinter of houses or a clerk in a record store. There are many many other examples such as ethnic or gender or lifestyle specific degrees. While it is good to have these areas of study available it is unfair to charge $80,000 or more for a degree that virtually worthless in perparing a student for the job world. Most of the people that have jobs relating to these type of degree are the ones teaching the classes.

Feb 6, 2013 1:18PM
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I know this sounds completely nuts and generally I take a laissez-faire attitude toward most things economic but I honestly believe that the big driver in the skyrocketing tuition rates is the easy availability of student loans. There is no logical explanation for why tuition rates not only outstrip inflation but also healthcare. I haven't looked at the numbers but I seriously doubt there are appreciably more people attending institutions of higher learner as compared to say 20 or 30 years ago that would cause some sort of demand pull. Again I know this will sound totally insane to the vast majority of people but I honestly believe that if the student loan industry was completely eliminated universities and other like institutions would be forced to drastically slash their tuition prices for the simple fact that hardly anyone would be able to attend their institutions at current prices. That or make the availability of student loans determinant upon the type of degree a person is looking at getting and its overall relative economic value.
Feb 6, 2013 10:58AM
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Now the colleges should be prepared for being sued for promoting degrees that do not lead to sustainable incomes or jobs. They are guilty of fraud, manipulation, and misrepresentation. Contractually they have not provided a fair value in exchange for the student's (and parent's) investment.  When some attorneys figure out how to pursue a class action lawsuit against these bloted schools, then maybe the trustees will stop treating the country as its cash cow. 
Feb 6, 2013 10:40AM
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Good idea.  It's about time these liberal institutions start suing deadbeats.
Feb 6, 2013 10:47AM
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In my opinion, colleges are the next bubble. Tuition increases always seem to be double to triple

inflation. Student loan rates were very high in the last decade, and the coursework appears to

outdated. Job related skills can probably be learned somewhere else. Already our colleges have

significantly more foreign students just to fill up the classes.

 

Since so much funding comes from alumni, litigating against them seems to be biting the hand

that will eventually feed. If the colleges don't believe these students will be the next generation of donors, then they are in real trouble as the product that they are selling is overpriced.

 

Eventually, the college experience may be like Amazon, order your course DVD and go to kiosk for testing. College will be for liberal arts education, similar to what it was like in the past.

Feb 6, 2013 10:30AM
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If someone can't pay, what makes them think suing will get them money any faster.
Feb 6, 2013 11:13AM
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I have no sympathy for the college students on not paying off their loans. Most thought they would have a free ride with Obama in office and the majority voted that way. They face the consequence of a lousy job market and debt owed to the schools under this Pres failed economic policy. 
Feb 6, 2013 1:07PM
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College...Where over paid good for nothing sociologist spew their agenda instead of teaching the study of people in groups, as the sociology books dictate.  Spent $65 dollars on a book that was never opened.  I say don't pay them for the cost of your sociology classes.
Feb 6, 2013 1:31PM
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The sad story is American citizen students are burdened with heavy student loans. Eevery year 100,000 studetns come from India to go to Graduate schools in this country and 99% of them to  school for free.. They come with the  usual boiler plate sob story and once the professor signs off for a teaching or Research assistant position at teh school and they get a full fee wiaver  and on top of it they make a stipend of $ 800 to 1200.00 per year and when they Grdauate, especially in the engineering field the starting slalaries  are almost $ 60 k and above. My son Graduated with a bachelors in Political science and owes $ 75000.00 in student loans. The interest rate is 7.9% on the federal student loan. The student loan system sucks in this country. While Americans are burdened with  heavy student loans Foreigners know how to cheat the system. On top of it, now they are oging to increase tht H1-B  VISA's for foreign IT personnel  to 115,000    while there are still 1.5 million Amreican engineers unemployed. Go figure. Americian citizens are  f**cked from  the front and hte back. America is the only country that screws its onw citizens whlel foreigners are able to go for free educaiton and health care  and enjoy the fruits of Amreican labor. There is somethign wrong with this picture here.
Feb 6, 2013 11:48AM
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Once again the only making sense on this feed is .  Thank you for your insight.  American's are brainwashed.  The Capitalist structure doesn't work for education.  Furthermore, the endless taxes paid to the government, by lowest earners is an outrage to our society.  The Government has yet to get this right, and love to puni**** citizens.  

Frankly, I'm embarrassed to say I live in a country that is so entitled and yet, so not responsible for taking responsibility for their actions against their citizens.  Where are we going?  
Feb 6, 2013 11:58AM
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And the Wharton school should start suing graduates that break the law, like Rajaratnam, for damaging their reputation.
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