What you should do instead.Update: Before, I had suggested to take out credit cards or personal loans not for school and use them for school. However, you should not do this.
Whereas it is better to have credit card debt (or ANY debt) than student loan debt, there is something you should know. If a creditor learns that you used the money for college, it does not matter what the loan is for, this is still considered a “student loan” and CANNOT be discharged in bankruptcy!
Moreover, if you would for example take out a credit card and max it off to pay for your student loans, and then file bankruptcy, two things will happen.
- 1) the debt will not be dischargeable in bankruptcy because it was used for education. And
- 2), you can be charged with fraud.
Here is why credit card debt is better than student loan debt: (but keep in mind that if you use credit cards for education, the below does not apply)
With credit cards and PERSONAL (NOT student) loans:
- Your monthly payment will be lower in the long run.
- They can’t garnish your wages to pay the credit balance if you default (in most cases).
- They can’t take part of your government benefits such as unemployment checks (if you receive them).
- It is illegal for them to charge unreasonable interest.
- It is illegal for them to raise your payment for no reason.
- It is illegal for them to raise your payment exorbitantly or charge exorbitant fees if you default.
- It is illegal for them to sell off your loans in a way that “does not benefit the borrower” and without any say from the borrower, which works out in the favor of the creditor but to the detriment of you (they can’t just decide to sell off your debt which is not in default to another lender or department or refinance which causes you more and higher fees and higher interest rates).
- They are not protected by the government. Meaning, they can’t use the government as their debt collector or “enforcer”.
- Your total payment will never be double or more even if you default.
- You can’t go to jail for failing to pay if you actually do have income and you withhold that income from them or do not disclose that income to them.
- If the credit company breaks the law, there are consumer protections that allow you to sue them and win.
- If all else fails, you can file bankruptcy and have the debt discharged permanently.
On the other hand, with “Student Loans”:
- Your monthly payment will be higher in the long run and there is no cap to how much they decide your monthly payment should be.
- If you default, in all cases they can and will garnish your wages and even your unemployment benefits and any other benefits issued by either the government or anyone else.
- They can charge you as much interest as they want, whenever they want, if you default. Even the fixed interest is higher than standard credit card interest for accounts which have never defaulted.
- They can raise your payment whenever they want, especially if you default, even for no reason.
- They regularly move around your loans selling to other lenders which charge higher interest rates and more and higher fees, without your permission and you have no say in the matter. If the bank wants to make more money, all they have to do is refinance your loan with higher rates, and there is nothing you can do about it.
- Not only are they protected and even financed by the government, but they use the government as their “enforcer”. You know how loan sharks will send a guy to break your legs to pay your debts? Well the banks can use the government to fiscally break your legs by getting the government to steal any and all money from you, and there’s nothing you can do about it. You have zero legal recourse.
- Your total payment has NO CAP WHATSOEVER. So you took out $15,000 for school? You defaulted? BOOM – $60,000 penalty, now your payment is $75,000 even though you only borrowed $15,000. You stopped paying for 10 years because you were homeless for 10 years? Now your payment is $250,000, even though you only borrowed $15,000 ten years ago.
- If you fail to disclose any income, even that $5 in your wallet, and they find out about it, BOOM – instant jail time. It’s the same money, but because it is a “student loan” then they can lock you up with rapists, murderers, and pedophiles because you earned income and didn’t give it to them.
- If they do unconstitutional collection practices (all of them do, to everyone), there is absolutely zero protection for you as a consumer. You can’t sue the government, because they are immune from you being allowed to sue them. There is absolutely nothing you can do and absolutely no legal recourse for you.
- If all else fails, YOU ARE SCREWED because you can’t even discharge a student loan in bankruptcy. You are SOL. The government made sure of it. Even if you have paid $20,000 so far and you only borrowed $15,000, well because of illegal interest and fees you still owe $100,000 that you never borrowed and there is nothing you can do about it, and you can’t even discharge it in bankruptcy. Your only solution is to move to another country. Sadly, since the government even steals your paychecks you can’t even save enough money to move to another country. Guess you’re going to have to try to jump the fence to Mexico.
Some other creative ideas to pay for college WITHOUT STUDENT LOANS:
- Borrow from a relative (and pay the school tuition with CASH)
- Sell your house (and pay the school tuition with CASH)
- Refinance your mortgage (and take out as CASH and pay the school tuition with CASH)
Take out a cash advance on your credit card (and pay the school tuition with CASH)
(Don’t do this because actually it will still be considered an educational debt aka “student loan” if they discover you used it for school.)
- Sell your car and take the bus to school (and pay the school tuition with CASH)
- Sell your car and go to a [Regionally Accredited] online college (and pay the school tuition with CASH)
- Sell Everything You Have (and pay the school tuition with CASH) – trust me you can buy 100 OF EVERYTHING YOU HAVE AGAIN with the money you will save!!!
- Panhandle by the highway (and pay the school tuition with CASH)
- Start a fundraiser and put signs everywhere (and pay the school tuition with CASH)
- Sell Girl Scout Cookies (and pay the school tuition with CASH)
- Have a bake sale every day for a year (and pay the school tuition with CASH)
- Beg (and pay the school tuition with CASH)
- Teach English classes to foreigners (and pay the school tuition with CASH)
- Write letters to your senators and government officials saying how the student loan industry is a scam and you want to pay for college without borrowing money, and ask for a personal grant so you can pay for college, explaining your situation (and pay the school tuition with CASH)
- BE CREATIVE!
p.s. A strong word of advice:If you opt for the online route,
- Make sure they are Regionally Accredited (“National Accredited” means NOTHING to employers)
- Unless it really matters if you went to a well-known or Ivy-league college for your career, only go to a college that costs under $200 per credit hour. Yes, it’s possible. I found two good ones, one is $145 per credit hour and one is $187 per credit hour, and both are officially Regionally Accredited.
- If they are not listed in the FAFSA database, then they are NOT Regionally accredited and your degree would be worthless! Do not go to any school not listed in the FAFSA database (no matter what they tell you)!
- AVOID THESE (listed as the worst online colleges):
- Western Governors University
- University of Phoenix
- Argosy University Online
- Grantham University
- Kaplan University
Good Luck And Happy Education!
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