With all the recent eye-opening discussions concerning CDL schools and student loan scams, it made me take a hard look at one of my own college student loans that I have been paying on now for about 15 years. A $21,000 loan that to this day, is still at $21,000. Hard to believe, isn’t it? The reality of these student loans is simple: they are designed to keep you in debt forever.
This particular loan which is through the U. S. Department of Education, is so well designed, that even after nearly 10 years of payment, the balance is still the same as it was in the beginning. These types of student loans are the kind of loans a person can never pay off, based on the monthly payment agreement. The U. S. Department of Education will give a student a grace period before they have to start paying back the loan. During this grace period, the debt is collecting interest. Any unpaid interest is added to the capital . . . this is why a person can pay for 15 years and the capital never goes down. If a person falls behind in payments, the interest is compounded. Furthermore, if the student defaults on the loan, such as due to the poor economy, job loss, etc., the U. S. Department of Education will add thousands of dollars in interest, collection fees and compound interest. It is a student loan program designed to keep one in debt through out their lifetime, much like many CDL training loan scams.
The best course of action is to pay off the interest immediately, and better yet, take out a bank loan and pay off the student loan in the very beginning. After researching this U. S. Department of Education extensively, that will be my next step. My biggest mistake was spending 10 years making the monthly payment over and over, yet never stopping to look at what the loan balance was doing! I started with about $21,000 and it is still at $21,000 . . . RED FLAG! I also discovered that student loans are exempted from coverage under the Truth in Lending Act, basically making institutions nothing more than loan sharks.
I just happened to stumble upon a book called The Student Loan Scam, by Alan Michael Collinge, available at Amazon. So, I guess one of my New Year Resolutions for 2010 will be to secure a bank loan and bring this U. S. Department of Education scam loan to an end, once and for all . . . or, I could keep making the payments and it might be paid in full by my 162nd birthday . . . what do you think?
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