If you take out a student loan in the US today, you are walking the edge of a volcano.

If you slip (and it doesn't take much to slip), you could end up little more than an indentured servant, owing 2x or 4x or more what you originally borrowed. Your wages, tax refunds, social security payments, even disability payments will be garnished from now until the end of time. Chances are slim you'll ever be able to pay it off, because the allowable fees and penalties on a student loan are impossibly huge. At the whim of the student loan companies, you can have your professional license yanked or be forced out of public employment. Did I mention debt collectors don't need to follow fair collection practices because it's a student loan? Oh and forget about discharging it through bankruptcy... it's a student loan... not allowed.

Every page of this book reveals jaw-dropping, horrifying facts of how the student loan industry put Congress in their pocket and began a massive wealth transfer (from student loan borrower to them) that has resulted in some student loan executives earning 500 million dollar salaries. The saddest part of this is not only the individuals who suffer due to this; it's all of society because we need a well-educated workforce to prosper, and the student loan industry is making that more and more impossible.

I highly recommend this book and think it would be a very good choice for a discussion group.

This book is so on-point with the student loan business that its scary. Although, I'm not in default on any student loans, this was a "head-up" to what could happen to me if I do. So for me, the book served as a warning to just pay the money b/c it could be VERY messy if I don't.

the book also confirmed, i'm doing something right. Anyone getting a student loan, I highly recommend you stay on top of the amounts you are actually requesting, the amounts being certified by the school and the amounts the lender is sending to your school. Depending on how "slick" the schools are, the numbers can be different. So watch it. Also, keep every single peice of paper (E-mail) the school, lender, Dept of Ed, etc. sends you so you can have a paper trail when it comes time to start paying back.

I'm so glad he wrote this book.

First a disclaimer: I do not own this book, this review is based on the content on the product page and on content mentioned in other reviews. It saddens me when people do not do their own research on such an important subject as student loans and accept as truth a very slanted account.
My personal experience with student loans was one where I took a year off during my education to have a child, the lender expected payments to begin since I was no longer in school. By CONTACTING the lender and explaining the situation I was able to have the loan payments postponed until I went back to school and finished my degree. After graduation I was not able to work immediately and the payments were postponed again. When the payments were to begin my income was still low and a special payment arrangement was set up where I paid the interest only for several years and then bumped up to higher payments until the loan was paid off. It took over 10 years but my loans never went into default.
Now to current information. Recently new legislation was passed that makes it even harder for a loan to fall into default and the interest rates on government backed student loans (which is almost every student loan offered)-- current and in default has been slashed.

Some basic advice-

Try to avoid a student loan in the first place but with the deferments and low interest available it is very perferable to credit cards or private loans.

If at all possible DO NOT take out a parent student loan so your child can go to school. YOU are responsible for that loan. Do not take on this burden and risk. You are healthy and working now but you do not want to fall on hard times and have this loan go into default. The final stage for a student loan in default is with the US government. They can and often do garnish your disability or social security. Even 20 years later. The same spirit of generosity and sacrifice that urges you to take out that loan will be the same one that keeps you from "bothering" your child with the fact you are being called by collectors and 15-25% of your social security is taken right off the top.

The simple basic hard truth about DEFAULTED student loans is they do not go away. They are almost never discharged through bankruptcy. The interest accrues daily just like a credit card and collection costs are added every time a government backed student loan is assigned to another agency.

Another truth about defaulted government backed student loans is they are easy to get out of default. Most people who are in default also owe other debts; they are hounded by so many collectors they don't know what to do and simply refuse to deal with any of them. Student loans are different: there are programs and options that will get the loan out of default, mark it as paid or erase it from your credit report, and give you a brand new shiny not-in-default loan with payments you can afford that looks nice on your credit report. In some cases with up to 30 years to repay.
Do yourself a favor and go to the sallie mae loan locator website. Find where your defaulted loans are. Call the company listed. You can take care of this and have one less burden to carry around.

And if your parents took out loans to help you with college make sure they have paid them off. Get proof. By law none of the collection companies can give you that information without your parent's permission. Have your parents visit the website with you and if loans show up on their social security numbers then step up, do the right thing, have your parents call and give the company permission to let you help and help your parents pay these. Don't let them sacrifice even a small portion of their peace of mind with a defaulted loan.

I'm going to get off my soap box now. People need to be responsible for their debts. You fall on hard times you call the lender and make arrangements. If you are in default you take care of it before that hole gets deeper.

Do some research, don't listen to fearmongers and rabble rousers. Don't be rabble.

The Student Loan Scam is an excellent look at the conflicts of interest, corruption, and exploitive practices within the student loan industry. It is a must read for anyone contemplating using student loans to fund their education (especially if they plan to take out high amounts of loans), as well as for folks saddled with a heavy debt burden.

The author, among other things, makes a compelling argument to return basic consumer protections to student loans. Stories in the industry of taking disability payments from the sick or disabled or raiding an elderly person's meager finances to pay for student loans is criminal.

The bottom line is that students are told that they should "follow their bliss" and that higher education will open doors for them and provide them with good jobs and financial security. They are told either directly or it is strongly implied, that taking out student loans for higher education is "good debt."

Nothing could be further from the truth. Tens of thousands of graduates now pay whopping sums of their meager paychecks to pay debts that never actually go down, but keep rising.

Frankly, one would be safer paying for their education on credit cards if they had to, for at least if they ran into financial or medical problems that prevented payback, they would be afforded chapter 7 bankruptcy as an option.

Anyway, the last two paragraphs are my opinion based on what I have seen from dozens of graduate school graduates who are struggling to just get by, including some that can't even land $10 grocery store jobs with master's degrees because they are "over qualified," but can't find jobs in their field.

If you plan to go to school, live cheap, work as much as you can, and find any way you can to fund your education without "the debt that keeps on giving."

This book is a must read for everyone planning to borrow money to go to college. The information is important, and the book could save many people a lot of pain in the future. It is also a quick read.

//The Student Loan Scam// reveals shortcomings throughout the student loan system. Collinge writes from painful personal experience, having earned his degrees only by using student loans that eventually buried him in debt. He cites the staggering statistic that "U.S. citizens borrow about $90 billion a year to attend college." Collinge describes an unholy union between the federal government, lenders, collectors, and universities. He asserts that federal law allows lenders of student loans to avoid competition and use draconian collection techniques. He tells how universities receive financial incentives from lenders to promote loans. We learn how lenders position themselves to benefit from penalties and interest that can double or triple the size of the original loan. He gives emotional examples of students abused by the current system.

But beyond just exposing the problem, Collinge proposes standard consumer protections for student loans. The soul of the book is the call for Americans "to reconsider the whole notion of allowing our youth to assume more than token amounts of debt for their educations."

Collinge could have attained greater balance with a bit more examination of personal responsibility and less repetition of the same lender sins. This book contains useful information and suggestions for college students or anyone interested in avoiding the despair of excessive debt. It is this reviewer's opinion that the current system of student debt cannot be maintained and will be an additional drag on our economy. A timely book!

Reviewed by
Grady Jones

What American dream has not turned into a nightmare? Homeowners face foreclosure, their houses worth less than what they owe on them. Middle class breadwinners, their computer programming jobs shipped to India, are driving Airborne Express trucks. And, according to Alan Collinge's THE STUDENT LOAN SCAM: THE MOST OPPRESSIVE DEBT IN U.S. HISTORY - AND HOW WE CAN FIGHT BACK, college graduates are one missed student loan payment away from financial liability so great even bankruptcy law won't protect them.

Incredibly, loan shark operations such as Sallie Mae bribed Congress into exempting student loans from bankruptcy protection, THE STUDENT LOAN SCAM explains. Immoral interest rates and penalties resulted in author Collinge facing over $100,000.00 in debt on a $38,000.00 loan. Other stories in the book indicate his story is too common. Higher learning institutions are in on it, too, THE STUDENT LOAN SCAM says, taking kickbacks for steering incoming students to "preferred lenders" who prefer to see them default on their loans so they can charge even more money.

As college graduates toss their caps in the air on commencement day, little do many realize that, signing off on their student loan agreements four years earlier, they fell for a scheme that makes Three-Card Monte look like a sure thing. Read THE STUDENT LOAN SCAM.

Collinge argues that student loans have become the most profitable, uncompetitive, and oppressive type of debt in American history. This has occurred in large part due to legislation passed since the mid-1990s that removed stand consumer protections from student loans, and allowed for massive penalties and draconian mechanisms to collect these inflated debts.

Americans borrow almost $90 billion/year to attend college. About 2/3 of college students require loans to make it through, and typical undergraduate borrows leave school with over $20,000 in student loan debt, $42,000 for graduate students. Student-loan holders can garnish a borrower's wages, tax returns, Social Security, and disability incomes - without a court order. Defaulted loans do not qualify for forgiveness for eg. teaching in under-served areas.

Federal loan limits, with protections, are $8,500/year for graduate students.

Fortune magazine called Sallie Mae the second most profitable company in 2005, and its CEO topped the list of highest paid CEOs in D.C. Sallie Mae's (major student loan provider) fee income increased 228% between 2000 and 2005, while its loan portfolio rose only 82% - the difference was penalties and fees from defaulted loans. As of 2007, Sallie Mae's top two executives together made more than 500 million. Universities often have "preferred-lender" arrangements with the universities and receive kickbacks. In 1999 Sallie Mae purchased Nellie Mae, followed by USAGroup and Southwest Student Services (nonprofit student loan companies and guarantors).

The national average interest rate is 12% for private student loans. Student loans are the only type of loan in U.S. history to be non-dischargeable in bankruptcy. They are also exempt from statutes of limitations for collection, usury laws, Truth in Lending, and Fair Debt and Collections. Borrowers wanting to consolidate their loans must use the original lender, if there only was one, giving them an iron grip. Further, only one consolidation is allowed, even if other firms are willing to take over.

Lenders are also allowed to take up to 25% as collection fees on defaulted loans. Loan guarantors and collection agencies can also seize tax refunds, suspend state-issued professional licenses, and even terminate public employment.

The Bush II administration strangled the Federal Direct Loan Program to about 19% of the market.

Important Point: A loan cannot be considered in default unless NO payment, even insignificant, is made for 270 days. Send registered mail!

There are now about 5 million defaulted loans, with penalties and extra interest running 2X and more than the original loan.

Alan Collingie has made a career out of not paying his student loan debt then whine to anyone who will listen how the student loan industry is the devil incarnate. Rather than using his energy to focus on paying his bills, he has chosen to blame his own irresponsibility everything from Sallie Mae to Congress to everything in between. He then writes a book filled with falsehoods, personal opinion and misinformation, probably to somehow make money to avoid getting his car repo'ed or something because they found out where he was hiding it. Mr. Collinger loves to blame his student loan problem on everyone but the one who caused the problem in the first place: himself.

It's true. If one defaults on a student loan debt it is very difficult to get away from the debt. However, after spending years in SEVERAL different areas of this industry and someone who has her own student loan debt (Not one single problem! But then again, I pay my bills), one thing Mr. Collinger fails to point out is it is very difficult to default on a student loan debt. One really has to NOT want to pay back the debt in order to achieve that goal.

It's really pretty simple; pay them back before they default. Interest rates remain fixed, payments remain low, there will be no collection costs, and the borrower remains eligible for several deferments and hardship delays. One can literally defer their loan, interest free, for several years rather than default. Even if payments are not made, it still takes NINE MONTHS of not making payments before default is actually achieved and payment options are no longer available. Gosh, gee. What do you suppose would happen if you didn't make nine car payments? Nine house payments? Nine months of non-payment of a debt seems pretty generous. Bottom line is, if you don't want a defaulted student loan hanging over your head the rest of your life, don't default.

If a borrower stays diligent and puts in the required leg work, the only reason to default on a student loan debt is refusal to pay it back. And trust me, there are millions of them out there. Mr. Collinge prefers to see this as another of the nauseating pseudo victimhoods the rest of us who actually pay our bills have to put up with.

But Mr. Collinger would much rather blame the industry as a whole and demonize it rather than looking in the mirror. All I can say is, I wonder how many other bills Mr. Collinger has tried and failed to weasel out of. Makes me pretty happy I didn't actually have to pay for this turd of a denial of responsibility. Allow me to save you some bucks in these troubled times and read my book instead. Here it is in its entirety: Don't default on your student loan - The End.

Alan Collinge's "The Student Loan Scam" is a remarkable book, in part because it took so long for such a book to appear. Under our nation's recent policies, millions of Americans who seek personal improvement through student loans are faced with financial difficulty repaying the loans, if not outright financial ruin. The default rates of some populations approach forty percent over the life of the loan. These percentages do not bother bad actors in the student loan industry, who make money either way, but should we not expect more from our higher education institutions and from Congress?

Yes, we should, but don't count on change: Collinge's book explains the intertwining interests that place profits and politics above the needs of student and parent borrowers.

The book, finished last year, recommends actions Congress could take to give borrowers better odds, but does not explore how the new administration could take matters into its own hands. It has been many years since there was a Secretary of Education -- only one in the past twenty years, by my count (Dick Riley) -- who was willing to use powers in the federal Higher Education Act to benefit borrowers. The necessary provisions are already on the books waiting for a Secretary to come to the rescue.

The new Secretary could issue emergency regulations to protect borrowers against the worst abuses; he could put teeth into the Student Right to Know Act; he could start a process through which borrowers in trouble would agree to pay principal, interest, and reasonable fees on the original loans to straighten out their lives, and for their debts to be written down in cases of fraud and abuse by schools and lenders; he could discipline the student loan industry through his powers of limitation, suspension, and termination; he could exercise more authority over private loans in students' financial aid packages.

The book is already a success in stirring up anger. Its ultimate success will be measured in terms of how much action will be taken to correct our nation's misguided course in providing higher education opportunity, and to reduce cases of financial misfortune and ruin among the millions of students and families who need to borrow.

Alan Michael Collinge has written a shocking indictment of the student loan industry. He exposes the lack of standard consumer protections that have created debtor's prison for hundreds of thousands of students who borrowed money with the hope of a better future. I literally could not put this book down.

Anyone who is struggling with student loans should read this book. Parents who are sending their children off to college should read this book before they allow them to sign a single loan document. And most importantly, legislators should be reading this book.

I am recommending The Student Loan Scam at every opportunity.

This book is a real eye-opener. Anyone considering financing higher education should read this book and save yourselves a LOT of grief. Our government should be absolutely ashamed to let this kind of BS occur.
My son did have a Sallie Mae loan which he managed to get paid off ahead of time; he was able to save himself thousands of dollars by doubling payments and using his income tax refund to make sizeable payments. Of course, to do this he has had to live with us, does not have his own car, and hasn't had a vacation in five years. But, he's still young enough to do all these things and debt free, too. I'm glad some people have stuck it to Sallie Mae! By managing to pay off his loan early, Sallie Mae lost thousands in interest and fees.

Readers may already be familiar with Alan Collinge from his website [...] or his appearance on "60 Minutes" two years ago in a piece about the student lender Sallie Mae and the way that it has destroyed the lives of many college graduates by burdening them with exorbitant fees and finance charges on their student loan debts. College is the riskiest and perhaps the most foolhardy investment anybody can make, as student loan debts can NEVER be erased with bankruptcy. Warning to parents: NEVER cosign on a student loan. Many parents are facing financial ruin because they cosigned on a student loan for a child. This 150 page book examines the huge student loan industry and how it derives colossal profits by destroying peoples' lives.

Chapter 1 - "The Rise of Sallie Mae and the Fall of Consumer Protections" -How Sallie Mae became a vertical corporation with control of all aspects of student loans: issuing loans, guarantees, and collections. In 2002 it purchased Pioneer Credit Recovery, a student loan collection company. It lobbied Congress for laws that permitted huge penalties and fees for defaulted debt.

Chapter 2 - "Who Benefited" - The huge salaries of Albert Lord, CEO of Sallie Mae, and other executives in the industry. Reveals that Edfund, a "guarantor"--is just another entity that relentlessly extracts money from debtors.

Chapter 3 - "Collection Abuses" and Chapter 4 "The Borrowers" - Readers may have already heard some of these stories from[...]. One particularly sad story is a graduate of Illinois State University who committed suicide after completing his master's in chemistry because his student loans had grown to $100,000. Many student debtors report being called several times every day by Sallie Mae loan shark collectors.

Chapter 5 - "The Oversight Fiasco" and Chapter 6 "Corruption of the Universities" - The most shocking part of the book. Describes how numerous personnel of the Dept. of Education are actually former Sallie Mae officers, and instances where university financial aid officials hold stock in student loan companies such as Student Loan Xpress. Also describes kickbacks, donations, luncheons, and gifts paid by student lenders to universities in return for steering their incoming freshmen to those lenders (such as putting them on "preferred lender lists"). These universities include the University of Nebraska, Johns Hopkins, the University of Texas at Austin, and many others. For example, one financial aid director of Johns Hopkins received $93,000 from American Express and Student Loan Xpress. On many occasions, students who called their universities' student loan hotlines didn't know they were really talking to representatives of student loan companies.

Chapters 6-8 "The Grass Roots Awaken" ," Solutions", "Practical Advice for Students" Collinge offers little hope for current debtors --at this time legislation to allow student loans to be discharged in bankruptcy is nowhere close to being passed. However, perhaps the groundwork is being laid for the next generation of lawmakers to revise the laws concerning student loan debt.

This book about student loans is extremely relevant and timely. We are in the Depression of 2009 and it is obvious that college graduates may not find gainful employment. Sallie Mae and other student lenders don't care about your problems with unemployment, sickness, a death in the family, or anything else. They will hound you until your debts are paid or until you are resting in your grave.

This is a very informative book that people should read. student loans are more insidious than the subprime loans that caused the mortgage meltdown and our current recession. Everyone should know the truth about the usery methods of these loan companies, all in the name of "helping" people get an education!

Alan Collinge of www.studentloanjustice.org has been a tireless crusader against the student loan industry and it shows in this work. He is fighting hard to bring about consumer protections in the one area that we all need to use at some time in our lives...student loans. Unlike any other loan one can not file for bankruptcy protection if one should happen to run into financial difficulty. As a result the student loan industry is strong arming those who do have trouble. Interest gets capitalized and debt grows exponentially. One can never get out of debt....the result is many have left the country or committed suicide. This is shameful in the wealthiest country on Earth.

Mr. Collinge de-mystifies many of the policies surrounding the student loan industry. The book examines the intricate relationship between the university, various student loan entities as well as other stakeholders such as financial aid administrators. The author does an excellent job of providing a historical backdrop for the case against unscrupulous lending practices. A reader who lacks any prior knowledge can easily be brought up to speed on the current trends. The best part is that you won't get lost in any technical jargon. His case studies represent a diverse pool of graduates whose lives have been ruined by attempting to pursue a better lot in life. This book covers a lot of territory and is an excellent read for anyone who is swimming in student loan debt or anyone who might be searching for a practical approach.

If you are considering taking out a student loan, read Chapter One. If you are considering co-signing one, read Chapter One. You will not find the same information written so plain in any other source.
If you care about economic issues, start with the Epilogue. Turns out the first bailout wasn't the $700 billion one, it was the student lending one.
The rest is hard reading due to naming names and dates, and it will make you mad.

My daughter is in her senior year in high school and I am trying to learn as much about the various mechanisms available to finance her education as I can. I was really stunned to read about all the problems with student loans and how Congress has given the banks and loan guaranty organizations a free ticket to extract as much money from students as possible.

Some of the actions of our government include making student loans the only loans available that cannot be discharged through bankruptcy, allowing the loan companies and guarantee companies to own the collection agencies, which provides to them an incentive to allow (and push) the student to default, being able to attach Social Security retirement and disability income for repayment, allowing interest rates to be as high as 29.9% and a host of other goodies.

The stories in this book will cause you to cringe. The author does name names and lets you know who has been a friend to student's and their families and who has been bought by the loan companies PACs. In addition, you will learn about the various pitfalls and tricks used by the loan companies to increase the profit margin on these loans.

While the writing is a little redundant, it generally is a well written book that contains crucial information for anyone who has a student loan or for the families of anyone considering taking out a loan. Read this book and learn the pitfalls that are waiting for you!