Unpaid College Loans? Beware of Being Sued!

March 22, 2013
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Colleges get tough with graduates who default on student loans.

Colleges get tough with graduates who default on student loans.

According to a recent TODAY report, Americans currently owe more than $1 trillion in student loan debt.  Sometimes, students have difficulty paying back their loans or meeting the repayment schedules.  The average rate of default is 4-5%, which is nearly twice what is was before the recession.  Universities have been taking a harder position recently, and lawsuits against their former students are now more common.  TODAY mentioned University of Pennsylvania and George Washington University as two schools that have increased their efforts through legal action.  The schools maintain that lawsuits are only a last resort.  With the total annual costs of tuition, room, and board topping $60,000 at elite institutions, it is not surprising that student debt is a growing concern.  Reuters reported that some universities will not accept students who take out loans, while others have been able to increase their financial aid packages such that a family’s need is met with grants alone.  Yale University is an example of the latter, meeting financial need for accepted students with grants that are not repaid.  Other universities do not have the resources to match such programs, and student loans will therefore remain an important tool for students to use in their quest for a college education.

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