Most Americans are not aware of the fact that a simple law gives the federal government complete lifetime control over each and every American who consumes any form of educational debt. That law is United States Code 20 Section 1091a. It removes all statue of limitations from federally guaranteed student loan debts. That law violates the 13th Amendment of the US Constitution because it establishes the foundation for the creation and sustaining of a force labor class aka “slave class” of citizens known as the student loan debtors.
A combination of other laws, including our nation’s bankruptcy laws, work to ensure that not only is the debt largely inescapable, that in over 50% of all cases it will establish a lifetime indenturement of forced labor benefiting private profiteers as well as the federal government for the unsuspecting student loan debtor.
In the disheartening but insightful and well documented research report, “Debtor’s Prison in the Neoliberal State: ‘Debtfare’and the Cultural Logics of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005” by Linda Coco (April 2012), we start to understand why Congress has sided with the upper 10% crowd to make consumers the “bad guys”.
…Under the 1978 Bankruptcy Code, the debtor was presumed a good faith actor and received a fresh start through bankruptcy [for all forms of student loan debts]. However, BAPCPA [2005 bankruptcy reform] presumes that the debtor is a bad actor until her or she proves otherwise…[and] forces the debtor to pay creditors a portion of the debtor’s income and live on a bread and water diet for years. [p.16]
Matters worse, “…under BAPCPA… debtors can no longer discharge private educational loans.” [p.24] “…BAPCPA functions to reduce lender and investor risk of default on a loan payment stream by transferring the entire responsibility of default onto the debtor.” [p.25]
“The 1998 Amendments to the Higher Education Act specifically exempts student loans from coverage under state usury Laws,” according to the student debtor advocacy group Student Justice. “This legislation provided for a 25% increase to the balance of defaulted student loans to be attached to the debt immediately upon default by the guarantors of the loans. In addition, this legislation provided for annual ‘collection rates’ to be attached to the debt. Borrowers who default on their loans are subject not only to a large increase in the debt upon default, but also face annual ‘collection rates’ of often up to 25% of the balance of the loan. This has led to usurious situations that prompted a Senate investigation in 2007.”
The result is that student loan debtors who are struggling to pay their loans will eventually default and spike up the costs of their loans so high that repayment will then become permanently impossible for nearly 100% of those who default. This means the entire remaining life of the student loan defaulter will then put into an effective forced labor situation because their wages and assets will be automatically garnished and confiscated by the government’s authorized agents in order to pay toward the perpetually growing student loan debt balance. It means the US has affected a new form of virtually inescapable slavery, Student Debt Slavery.
Unlike private lenders, the federal government has extraordinary tools for collection that it has extended to the collection firms… tax refund [ seizures, wage garnishments]… or Social Security payments garnisheed. Over all, the government recoups about 80 cents for every dollar that goes into default — an astounding rate, considering most lenders are lucky to recover 20 cents on the dollar on defaulted credit cards. —The New York Times, Sept 8, 2012 (1)
In a June 2012 Pro Publica article, “Grieving Father Struggles to Pay Dead Son’s Student Loans” we discover that even the parents of dead students will be put into permanent debt slavery.
It seems that Congress has removed nearly every consumer protection from student loans, including not only standard bankruptcy protections, statutes of limitations and truth in lending requirements, but protection from usury (excessive interest). Lenders can vary the interest rates and some borrowers are reporting rates as high as 18-20 percent. At 20 percent, debt doubles in just three and a half years; and in seven years, it quadruples. Congress has also given lenders draconian collection powers to extort not just the original principal and interest on student loans, but huge sums in penalties, fees and collection costs. —Alternet May 13, 2012 (2)
“You are going to pay it, or you are going to die with it,” said John Ulzheimer, president of consumer education at SmartCredit.com, a credit monitoring service in a 2012 New York Times article. (1)
If a consumer takes out a loan for a house, car or virtually anything, the expectation is always the same—the consumer will reap a benefit and repay the loan—and in most cases they will. However, the student loan is the only consumer loan that applies Medieval standards that says there will be no escape from this debt—either pay it or we will put you on the rack for the rest of your life and we will force you to pay us whether you like it or not because you are, in essence, now property of the federal government—our indentured servant!
This reality is made even more astonishing and disheartening when one realizes Blacks are 5 times more likely to go into default than Whites–5 times more likely to become Student Debt Slaves–especially given that we have the first Black president in US history sitting at the helm of this American slave ship–it’s simply too mind blowing to fathom that the First Lady is standing on deck, condoning it too!
(1) Debt Collectors Cashing in On Student Loans (http://www.nytimes.com/2012/09/09/business/once-a-student-now-dogged-by-collection-agencies.html?pagewanted=all&_r=0)
(2) Grandmothers’ Social Security Garnished for Student Loans? Time to Fix the Broken Student Debt System http://www.alternet.org/story/155408/grandmothers’_social_security_garnished_for_student_loans_time_to_fix_the_broken_student_debt_system/