Professor, aren’t you a little hard on student debt. Someone once told me that student loans are “nice” loans. I mean, if the government gives you a loan, what are they going to do to you if you are late in making payments?
The penalties related to a substantial amount of debt and no professional-entry level job are excruciating. This applies to student loans that you receive directly from the government as well as private banks.
Envision this scenario: You graduate after four years of college with a debt of $50,000. You are unable to secure a job. You have no funds and you cannot pay it back. You are late with your debt payments and your file is sent to a collection agency (this applies as well to direct student loans from the government). In many if not most cases, the person at this agency who has your file receives an income based on the amount of money he can collect from you. It is this person’s job to find you and continually contact you. You are hounded day and/or night. You decide to declare bankruptcy but find that student loans are not dischargeable in bankruptcy. They are like IRS payments. They may be with you for most of your life.
Because you now have a bad credit file, you will be refused for a mortgage and cannot take out any more debt. You have graduated with a degree and you cannot make a life for yourself. Welcome to hell.
The collection agency representative will offer you a proposition: If you attend graduate school, your loan payments can be deferred. In most cases, they will still continue to accrue interest but at least the collection agency will be off your case. Now all you need to worry about is paying back your student loans in excess of $100,000 and starting your career in a couple of years. And very likely, you will find out that, even after you earn your graduate degree, you still can’t get a job.
Back to the collection agency and back to hell.