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Sallie Mae, a company that has faced numerous lawsuits for predatory and discriminatory lending practices to students, has found a new target for school loan debt: students' parents. It's a smart ploy from the lender/debt-collector -- why saddle young, unproven, and possibly unemployed kids with debt when you can put it on older and employed versions that are more likely to pay it back?
So if you just got done paying off your student loans, and are feeling that empty nest melancholy double whammy of no kids in the house and no loans on the books, fear not. Sallie Mae has a way for you to continue paying off student debt for maybe your whole life.
Most students turn to the federal government for education loans, but the amount a student can borrow is capped. As tuition and the cost of attendance have skyrocketed, a gap has opened up between what a student by herself can borrow and what she must pay her school. And Sallie Mae is stepping in to fill that gap.
As Charles Rocha, executive vice president and chief marketing officer at Sallie Mae put it, "Most families see paying for college as a shared responsibility." And with "a broad enough product suite," families can share the responsibility of debt repayment in perpetuity. While interest rate for federal Plus loans (Sallie Mae's main competition in the gap loan market) is fixed, currently at 6.84 percent, the rate for Sallie Mae's parent loans varies dependant on a borrower's credit rating, anywhere from 5.74 to 12.87 percent.
Sallie Mae's expansion into the parent loan market comes at a time when college tuition costs and student loan burdens are ballooning. The New York Times reports that college affordability has "worsened in 45 states since 2008," and students are graduating with an average debt of $29,000. The total student loan debt across all borrowers is nearing $1.35 trillion dollars, ticking up by $2,726 every second.
Never fear, though. According to The Washington Post, parents (unlike students) won't have to wait until after graduation to start repaying the Sallie Mae loans: "People can either make monthly interest payments for up to four years while students are enrolled in school, or pay down the principal and interest during that time." So for parents who may miss a monthly loan deduction from their checking account, or are interested in sharing a usurial bond with their children, Sallie Mae is here to help.
For parents or former students having trouble repaying their students loans, an experienced bankruptcy attorney may be able to help.
Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.