Higher education has become essential to the future of our nation as a whole, and to individual Americans who hope to enter or remain in the middle class. As family incomes, available grant aid, and state investments in higher education have failed to keep pace with college costs, students and families have increasingly turned to student loans to help bridge the growing affordability gap.
Default: The Student Loan Documentary chronicles the stories of borrowers from different backgrounds affected by the student lending industry and their struggles to change the system. In 2005 private student loans were exempted from most consumer protections. No matter when their loans were taken, many borrowers find themselves in a paralyzing predicament of repaying two, three or multiple times the original amount borrowed, with no bankruptcy protection, no cap on fees and penalties and no recourse to the law. The consequences are dire, with stories of borrowers in financial and emotional ruin.
Beyond these personal accounts, Default will explain the differences between federal and private student loans, will give detail on the power of the private lending industry and of college debt, examine the exponential rise in college tuition, and finally show the growing movement that has risen in opposition.
While the media has focused on the disaster of sub-prime mortgages, only superficial attention has been given to financial giants, most notably Sallie Mae, which has been profiting more than any other lender by approving loans to low-income students with variable interest rates up to 25%. As The National Consumer Law Center concluded in their March 2008 report titled “Paying The Price: The High Cost of Private Student Loans and the Dangers for Student Borrowers,” there are ominous signs that “the student loan market is headed for the same fate as the subprime mortgage industry .”
Whether borrowers fall into default or are paying every month, their student loans prevent them from having a successful career, owning a home, getting married and raising a family or even being financially independent. We have all heard stories of college students throwing away their student loan money on iPods and beer, but the reality is far different. Default will show real life stories of students, young and old, who made enormous sacrifices to better their lives through higher education and who, whether or not they graduated, found themselves in the impossible situation of having to make monthly payments that were sometimes higher than their gross income.