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How Much Student Debt Is Too Much?

June 23, 2009

The New York Times published this interesting debate about college costs and student debt last week.  Five authors contributed, including Anya Kamenetz, author of Generation Broke.  Comments are still coming in, so you can submit your thoughts about how much debt is too much over at their site (or here).

From the consumer finance perspective, these loans are troubling not just because students need more and more loans to get an education each year, but also because student lenders enjoy special anti-consumer privileges.  Student loans – both government issued and private – cannot be discharged in bankruptcy, for example.

President Obama supports eliminating the FFEL program, a quaisi public, quasi private program which enriches student lenders at no real benefit to students or anyone else.  We think this would be a great first step toward fixing some of the problems with student lending.  Putting private student lenders – who charge high rates and hide onerous terms in the fine print – out of business would be another.  See these reports from the National Consumer Law Center for more about problems with private student lending:

Paying the Price:  The High Cost of Private Student Loans and the Dangers for Student Borrowers (PDF)

Too Small to Help:  The Plight of Financially Distressed Private Student Loan Borrowers (PDF)

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