Stunning News About Student Loans

The other day, I came across a throw-away line that practically made me fall out of my chair.

I was reading an article that discussed the financial results of First Marblehead, a student loan company, according to its 10-Q.  The 10-Q is the quarterly report that publicly-traded companies must file with the Securities and Exchange Commission.  When I practiced law, I used to draft them.

Talk about tedious…

Anyhow, First Marblehead reported that half – 1 out of 2! – of it’s loans fell into its worst, most risky category!

In other words, 50% of First Marblehead’s loans are either in default or are likely to go into non-payment status!

Don’t think that it’s just First Marblehead loans, either -this is but a glimpse into how bad this problem really is.

What’s the fix?

I’ve seen many suggestions, including beefing up the new Consumer Financial Protection Bureau’s powers to regulate.

I don’t have much of a stomach for more burdensome, bureaucratic regulation. Kinda makes me throw up in my mouth
a little bit.

But I do think that the best defense is a good offense – learning how the financial aid system “game” really works – so
you can beat the system – and reduce or flat-out eliminate rip-off student loans all-together!

This way your child won’t fall into a death-spiral  like what First Marblehead described – default on his or her
loans and have ruined credit within months of graduating.

So do your research – identify the most financially generous colleges available – and the ones that offer more grants and scholarships than student loans!  Then, figure out how to get into them!

If you don’t roll up your sleeves and get serious about this, you will regret it in the not-so-distant future!