Ivy League Schools Suing Students Over Loans
Yale, Penn among those seeing rise in defaults
By John Johnson, Newser Staff
Posted Feb 7, 2013 6:08 PM CST
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(Newser) – Another sign that the student debt problem is off the rails: Borrowers defaulted on nearly $1 billion in federal loans designated for low-income students in 2011, a jump of 20% from five years earlier, reports Bloomberg. Because these particular loans, called Perkins loans, are administered by the schools themselves, it means that former students are now facing lawsuits from their alma maters. Ivy Leaguers Yale and Penn, along with George Washington, are the three schools singled out in the story for filing such suits.

“If you borrow to go to school, it may not be just the government that ends up coming after you if you can’t pay,” says an attorney with the National Consumer Law Center. It's a double whammy of sorts: When borrowers pay back Perkins loans, schools redistribute the money to current students. More defaults, then, means less money to go around. That could change under a proposal by President Obama to significantly expand the pool of money available for Perkins loans and to have the feds administer them, notes Bloomberg.

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Showing 3 of 55 comments
dawnarun
Feb 8, 2013 3:16 AM CST
I had an issue with my Perkins loan when I first started paying off my loans. I didn't receive any emails or letters from the school until 90 days (or something) after I missed my first payment, at which point I got a phone call. After explaining that I hadn't been contacted in anyway the cleared my delinquency, but they told me I was supposed to have gone online and setup automated billing or notifications on their website. Problem is I never received a notice that I was supposed to. Turns out they had contacted me through my student email address... an email account which is terminated 6 months after you graduate. This was the only loan I ever went into delinquency with. Every other group I had a loan with was very communicative with me, sending me statements and bills by email and post. I wouldn't be surprised if the reason so many Perkins loans are in default is because the schools aren't managing them properly.
Ramsay_Bolton
Feb 8, 2013 12:23 AM CST
Obama logic: Students are defaulting too much on loans? Lets increase the money supply so even more will default. Make our students slaves to debt!
right2dave
Feb 8, 2013 12:05 AM CST
The Obama monies will be available for illegals. If you were born and raised in ths country you do not qualify.