By Bobbi Nicolai
Far too many Americans are being held hostage by banks, and their agents, collecting on student loans. If the U.S. government were to forgive student loans, all of those funds would be released back into the economy. People who are barely making ends meet would have hundreds of dollars more available each month. For every single person who is living with friends and family members, it would equal new home buyers and be a quick fix for the housing market.
Some rather shady practices have gone into the creation of student debt. For instance, when a loan leaves the holder and goes to a collection agency, exorbitant fees are added, literally in the range of five figures. Example: One college graduate asked the contacting collection agency what would happen if she paid the $55,000 she owed. They said she’d still owe the $25,000 they added when her account arrived on his desk.
In the years since her account went to collections around 2000, the former student saw $60,000 added in interest. The collectors who contacted her wanted her to pay $800 a month. The interest was accumulating faster than that. She couldn’t rectify that in her mind, and walked away from the loans.
Not only do these loans gobble up a significant amount of American dollars on a monthly basis, but they destroy the recipient’s credit rating, adversely affecting their ability to purchase a home. If student loan debt were forgiven on a nationwide basis, it would have a strong and immediate impact on the housing market and the greater economy.
Attorney Robert Applebaum started a grass roots effort to get student loan debt wiped out at ForgiveStudentLoanDebt.com. Applebaum’s proposal is based on holding banks accountable for the bailout monies they have received. Monies could be used to wipe the student loans from the books, thereby having a “one two punch” not only helping the banks, but also their customers to get out from under crippling debt.
“ Almost immediately upon posting the proposal, people from all walks of life began to join, sharing their stories of economic hardship and struggle as a result of their crushing student loan debts,” writes Applebaum on the home page of his website. “While the original proposal was intended as an alternative economic stimulus plan, the group quickly evolved as a vehicle for exposing the gross inequities and unfair practices inherent in the student lending industry.”
Applebaum questions why anybody would object to helping former students struggling to get out from under debt when to do so would be such a boon to the economy. In other words, why on earth is the U.S. government bailing out the banks and institutions that put our own peers face down over a barrel to begin with?
Nobody is asking for a free ride, or a free education. Even if this proposal just accomplished was to eradicate the usurious interest rates that have been tacked onto most defaulted loans, which would be a far cry better than just leaving these graduates at the mercy of the loan holders.