People who need student loan relief left out of programs to help

Millennials are suffering under the weight of their students loans, and why wouldn’t they be? The interest rates charged to student borrowers are much higher than most consumer loans and efforts to refinance are helping only those who don’t desperately need the help.

The Boston Globe reports today that the private lenders who have jumped into the refinancing market for student loans have left behind those who need the help most.

“The options are geared to people who have excellent income, and excellent credit history. It’s doctors and lawyers. Those are the people who are benefiting from the refinancing programs,” said Adam Minsky, a Boston lawyer specializing in student loan issues. “For borrowers who have larger loan balances, no cosigner, or are in financial distress, those people have no options. Nobody is going to refinance them.”

Interest rates for private student loans can run as high as 12.5 percent.

“The irony is that the highest earners, who could pay off their debt no matter the interest rate, are the ones who end up saving money and paying their loan off quicker with private loan refinancing,” said Fudge.

For Kelly Franco, 27, a Boston high school teacher, refinancing her private loans isn’t an option on her salary, expenses, and debt in the tens of thousands of dollars, from undergrad and graduate degrees. She received some relief with income-based repayment from the federal government and hopes to eventually qualify for some forgiveness working as a teacher, but her loans remain burdensome. Franco pays $600 a month in student loans and worries that she’ll have to keep paying for another 20 years and won’t be able to save enough to send her son to college.

“I wonder how other young families are dealing with this,” Franco said “It’s hard.”

Ten percent of all consumer debt in the country right now is student debt. The federal government has set the loan rate at twice the current market rate for other loans.

Writing in Money magazine, Leon Botstein, the president of Bard College suggests the next president should forgive all student loans.

Our public policy regarding the financing of higher education has to be changed with bold and courageous action. The cost of higher education will not be reduced by technological gimmicks or by savaging the structure of the American university. While new technology, from the book to the smartphone, has always helped higher learning, it has only done so when making the indispensable connection between student and teacher stronger.

We must underscore the fact that universities are not businesses, and that indeed the progress of knowledge thrives on research, speculation, apparent impracticality, and the inherent inefficiencies of human interaction. A fair bit of unpredictability in the way research and teaching operate is essential. Our amalgam of universities and colleges, for all its shortcomings, remains the finest higher education system in the world and a magnet for students across the globe. It is perhaps the only arena outside of military might in which America is the envy of the world. We should keep it that way.

The Center for Investigative Reporting revealed earlier this summer that by privatizing the system, the federal government can make as much as a 20-percent return on loans.

A booming loan collection business sprouted as Congress protected its campaign-contributing friends.

The measure’s practical effect was to put student debtors in the same category as drunken drivers, fraudsters and deadbeat dads and moms seeking debt relief. From then on, it was easier to go bankrupt if you were a playboy who’d run up credit card bills living large in the Caribbean than if you were a former student who’d gotten sick or lost your job.

The law gave lenders tremendous leverage over student debtors, no matter how dire their circumstances, said Daniel Austin, a bankruptcy law professor at Northeastern University.

“It’s really awful what we’ve done,” he said.

While the bankruptcy measure was pending, Sallie Mae spent about $14 million lobbying Congress, according to data from the Center for Responsive Politics. The company made about $2.2 million in campaign donations during that period, $16,000 of them to Graham, Federal Election Commission records show. Graham’s office didn’t respond to a request for comment.

Rep. Lindsey Graham had authored by the measure barring student loan debtors from declaring bankruptcy.

Minnesota, by the way, ranks fifth in the nation in the amount of student-loan debt, with the average outstanding loan amounting to $32,000.