The Student Loan Fairness Act is not the same as HR 4170 (last year's bill from Hansen Clarke). I was lead to believe it was, but there is a new, extremely worrying trick in it. That makes it far, far worse than my previous postings describe it as.
The bill calls for the government to purchase private loans from the private lenders at full book value (which I have already said is disgustingly high). On top of this, however, the bill calls for the goverment to also pay an additional amount of money to the lenders based upon future interest that the lenders stood to make on the loans, but which had yet to accrue. This is a shameless trick, folks. And if you have private loans, the joke is squarely on you.
Here is the language in question:
(b) Determination of Price.--The price paid for a private
education loan under subsection (a) shall--
``(1) include the amount of outstanding principal on the
loan, the amount of accrued interest on the loan, and any fees
or other costs owed by the consumer on the loan; and
``(2) be adjusted to account for the time value of such
Let's say you owe $100,000. Under this proposal, the Government will pay the lender $100,000, PLUS a whopping amount over and above this...perhaps $50,000 or even higher. (these loans often have double digit interest rates). The government then "federalizes" the loan, and overnight, your loan balance jumps from $100k to $150k. This is bad.
The cruel punchline, however, is that a large majority of people getting tricked into this will wind up getting booted from the program before getting a dime of forgiveness, this will leave them owing far, far more than when they entered the program, all likelihood. So your $100,000 headache could well be a quarter million disaster in few short years (or more).
These loans wouldn't get 80 cents on the dollar if sold on "the street", but the banks feel that they can now demand not only 100 cents on the dollar, but perhaps as much as double that, even though they can and will make a new loan, and earn that "lost" interest anyhow. If I said stay away from this bill before, I am saying RUN AWAY now!
I have little respect for self-appointed grassroots activists misleading their fellow citizens to gain support. This, however, takes it to a new level.
And as an aside: If I was in that group, I'd be in all three of those people's faces, demanding some straight talk. But I've said my peace.
This is grassroots, folks. the people have a duty to keep the leaders honest. It is arrogance and tricks from leaders that puts us here today. We can't afford to allow it among us if we are to get anywhere. So don't be shy with me, them, or anyone in our positions. Grill us assuming we are crooks, and don't be worried about offending us. If there's no shame in our game, we will appreciate the tough questions. It really is the only way forward, folks.
I had other things to say, but this is important, so I will end it there.
Before I go, however, I have to bug you for donations. We are still $100 short for last month, and $800 off for this month (actually a bit more). So anything you can do here, however nominal, is appreciated.
More tomorrow...KEEP FIGHTING AND YOUR CHIN UP!!!