Showing posts with label Annie Nova. Show all posts
Showing posts with label Annie Nova. Show all posts

Saturday, June 1, 2019

Dude! Don't move to India to escape student loans!

Zero Hedge posted an article yesterday about people who fled the United States to escape their student loans. (Annie Nova wrote the original story for CNBC).  Chad Haag, for example, graduated from the University of Northern Colorado and emigrated to India to get away from $20,000 in college-loan debt.

Apparently, Haag is somewhat ambivalent about India. He gets to see elephants--a plus.  But Haag is not crazy about the plumbing. "Some toilets here are holes in the ground you squat over," he confided.

Zero Hedge went on to report on a woman who went to Japan to teach English and a guy who moved to China--also to teach English. Both said they were partly motivated to leave the U.S. by their student-loan debt.

Dudes! Don't move overseas to dodge your student loans. People who cannot find good jobs can enroll in one of the Department of Education's income-based repayment plans (IBRPs). If they are unemployed or living below the poverty line, their monthly loan payment will be zero. An IBRP is a terrible option, as I have often said. But for most people, it beats moving to Asia.

Frankly, I'm not buying the underlying premise of this story. Millions of people have defaulted on their student loans and hardly any of them have left the U.S.  Why would they? People can't dodge their student loans by moving overseas. The debt will be waiting for them when they return, along with accumulated interest and penalties.

My guess is that student-loan debtors who leave the United States have multiple motives. Mr. Haag, for example, married an Indian national, which must be the major reason he is living in a country that doesn't meet his hygiene standards. And thousands of people teach English overseas simply to experience another culture.

If we are looking for signs of suffering, we shouldn't focus on a handful of people who have left the country with student loans hanging over their heads. We should reflect on plummeting birth rates, declining homeownership, and inadequate savings for retirement.

The student-loan program is a catastrophe but publicizing a few outliers is a distraction. We need to relieve the suffering experienced by millions of people. In my mind that can best be accomplished in the bankruptcy courts. And then we need to find a better way to finance higher education.




Monday, May 7, 2018

College borrowers who see their student-loan debt triple will never pay off their loans: The tragic story of Rick Tallini

Pope Francis once said that a life prison sentence is essentially a death sentence, and of course he is right.

Something similar can be said about college borrowers who see their debt load double, triple, or even quadruple. They've received a life sentence of indebtedness, and a death sentence to any dreams they may have about retiring or purchasing a home.

Here's an example of what I'm talking about. Rick Tallini borrowed $55,000 to go to law school back in the 1990s.  Had he gotten a good job immediately after graduating, he would have been fine. But Tallini didn't find that good job, and so he put his loans in deferment for extended periods of time, while interest accrued at 8 or 9 percent.

Around ten years after he graduated (according to a CNBC story), Tallini's loans went into default, and his student-loan creditor tacked on additional fees. By the time Tallini consolidated his loans, he owed $150,000--nearly three times what he borrowed. Apparently, his debt continued to grow due to accruing interest, and now he owes $330,000--six times what he borrowed!

Will Tallini ever pay off this debt?  Of course not. The federal government sentenced him to a lifetime of indebtedness--an economic death sentence. Although the CNBC story did not say, Tallini probably does not own his own home, and he probably has inadequate savings toward his retirement.

Mr. Tallini, who is 61 years old, really has only two options: He can file for bankruptcy and attempt to discharge his debt in an adversary proceeding. If he goes that route, he could be in litigation for years because the U.S. Department of Education and its proxy debt collectors will overwhelm him with their teams of heartless attorneys.  And he might not prevail.

Alternatively, Tallini can sign up for a long-term income-based repayment plan that can last 20 or 25 years.  He could be dead before his repayment obligations are met. And if he is fortunate to still be above ground when his income-based repayment plan terminates, the IRS will send him a bill for the forgiven amount of his loan because the IRS considers forgiven debt to be income.

In my view, Mr. Tallini's case demonstrates irrefutably that America is no longer a just society and our colleges and universities are no longer working for the public good. Higher education (including legal education) is a racket financed by student loans owed by people like Rick Tallini, who went to law school more than 20 yeas ago hoping to build a good and satisfying life.

And look at what he got instead. Crushing debt he will never pay off.

Rick Tallini owes $330,000 in student debt. Photo credit: CNBC
References

Annnie Nova. He had $55,000 in student loans, now he owes $330,000 . . . Here's how it happened. CNBC.com, May 6, 2018.

Annie Nova. These are the ways student loans stop people from buying houses. CNBCcom. March 31, 2018.