Student Loan Crisis, Part II
Activity #2: What We Leave Behind……
Video #2 – same family
Key Vocabulary
Predatory Lending
Clue: Alligators are predators. They could chew your arm off if you are caught by them.
Sallie Mae is a lending agency that is accused of predatory lending because they loan students lots of money and after the students graduate, the interest is very high. (Example: Original loan: 45,000 / Outstanding balance (after graduation) – 60,000)
Predatory lending is very common in Asia because there are issues with gambling and lenders take advantage of people who lose money.
Private Loan vs. Federal Aid Loan (FAFSA)
FAFSA = Government; Income based; If you die, the loan is forgiven/discharged.
Example: Jack Nicholson film of a guy with a terminal illness who takes advantage of loans.
Private Loans = Easier to borrow lots of money. If you die, the people who co-sign the loan will have to pay it back.
Co-sign – Officially assuming responsibility for repaying a loan
A young lady’s father cosigned a $50,000 loan for her college education, but he passed away when he was serving our country in Afghanistan. Now she is stuck paying everything by herself and is in big trouble.
Deceased = dead
Liver Failure = liver has shut down
(body part) failure = body part has shut down.
balance = amount of money you have or owe
When Timothy first took out $30,000 loan, his balance was $30,000. But now that he has graduated and has not been able to make regular payments because he is unemployed, his outstanding balance is now $45,000
because of high interest.
outstanding balance
Discharge (a loan)
Forgive (a loan)
Interest (noun)
garnish wages
David is a graduate teaching assistant and a PhD candidate at a major university in the US. He was paid $4,000 for teaching two classes for one semester. However, the payroll office called him and said that they paid him $1,000 too much. He really should have gotten $3,000. They told him that he has to pay $1,000 back, but he can’t. So, they said that they will garnish his wages until they get that $1,000 back.
If you owe a lot of money and you haven’t paid back the money in a satisfactory amount of time for the lender, then they might garnish your wages.
bankruptcy = You have nothing and most loans are forgiven
With some private lending companies, you can’t file for bankruptcy if you still owe them money. They will still call and ask you to pay.
How old was the woman when she passed away and what did she die from?
After the daughter’s death, what kind of problem has her parents had with the loan companies?
How many children did the woman who died leave behind?
Why do the parents of the deceased woman now owe $200,000?
Discussion Question:
Why do you think some of those private lending companies have been harrassing the young woman’s parents, even though their daughter was dead?
2. What kind of requirements do you think co-signers should have in order to co-sign a loan with someone?
3. What other kinds of “predatory lending” situations have you heard of?
Life Insurance
If a college student’s parents want to co-sign a loan, the parents can take out their life insurance policy for extra money.
Default: Student Loan Documentary
Other Predatory Lending Situations
Example: Ukraine – home owners and different types of currency with loans (dollars) and pay (another form of currency)
A young lady took out a loan in dollars, but she is paid in another form of currency and now she owes the same amount in dollars, but the exchange rate between the dollar and her currency have changed, so she owes a lot of money.
Payday loan/Title loan/Reverse Mortgage
Pawn Shop
Collections Agency – If you owe an outstanding balance, they will buy your loan from the company you loan from and then will call you and ask you to pay. Sometimes, they will yell at you.
Homework: p. 169. Next week, we will talk about how to overcome objections – this is a wonderful life skill to possess because we are ALWAYS selling ourselves.