#Predatory lending

[mostlysignssomeportents]

The tax sharks are back and they’re coming for your home

I'm touring my new, nationally bestselling novel The Bezzle! Catch me TODAY (Apr 27) in MARIN COUNTY, then Winnipeg (May 2), Calgary (May 3), Vancouver (May 4), and beyond!

One of my weirder and more rewarding hobbies is collecting definitions of "conservativism," and one of the jewels of that collection comes from Corey Robin's must-read book The Reactionary Mind:

https://en.wikipedia.org/wiki/The_Reactionary_Mind

Robin's definition of conservativism has enormous explanatory power and I'm always finding fresh ways in which it clarifies my understand of events in the world: a conservative is someone who believes that a minority of people were born to rule, and that everyone else was born to follow their rules, and that the world is in harmony when the born rulers are in charge.

This definition unifies the otherwise very odd grab-bag of ideologies that we identify with conservativism: a Christian Dominionist believes in the rule of Christians over others; a "men's rights advocate" thinks men should rule over women; a US imperialist thinks America should rule over the world; a white nationalist thinks white people should rule over racialized people; a libertarian believes in bosses dominating workers and a Hindu nationalist believes in Hindu domination over Muslims.

These people all disagree about who should be in charge, but they all agree that some people are ordained to rule, and that any "artificial" attempt to overturn the "natural" order throws society into chaos. This is the entire basis of the panic over DEI, and the brainless reflex to blame the Francis Scott Key bridge disaster on the possibility that someone had been unjustly promoted to ship's captain due to their membership in a disfavored racial group or gender.

This definition is also useful because it cleanly cleaves progressives from conservatives. If conservatives think there's a natural order in which the few dominate the many, progressivism is a belief in pluralism and inclusion, the idea that disparate perspectives and experiences all have something to contribute to society. Progressives see a world in which only a small number of people rise to public life, rarified professions, and cultural prominence and assume that this is terrible waste of the talents and contributions of people whose accidents of birth keep them from participating in the same way.

This is why progressives are committed to class mobility, broad access to education, and active programs to bring traditionally underrepresented groups into arenas that once excluded them. The "some are born to rule, and most to be ruled over" conservative credo rejects this as not just wrong, but dangerous, the kind of thing that leads to bridges being demolished by cargo ships.

The progressive reforms from the New Deal until the Reagan revolution were a series of efforts to broaden participation in every part of society by successively broader groups of people. A movement that started with inclusive housing and education for white men and votes for white women grew to encompass universal suffrage, racial struggles for equality, workplace protections for a widening group of people, rights for people with disabilities, truth and reconciliation with indigenous people and so on.

The conservative project of the past 40 years has been to reverse this: to return the great majority of us to the status of desperate, forelock-tugging plebs who know our places. Hence the return of child labor, the tradwife movement, and of course the attacks on labor unions and voting rights:

https://pluralistic.net/2022/11/06/the-end-of-the-road-to-serfdom/

Arguably the most potent symbol of this struggle is the fight over homes. The New Deal offered (some) working people a twofold path to prosperity: subsidized home-ownership and strong labor protections. This insulated (mostly white) workers from the two most potent threats to working peoples' lives and wellbeing: the cruel boss and the greedy landlord.

But the neoliberal era dispensed with labor rights, leaving the descendants of those lucky workers with just one tool for securing their American dream: home-ownership. As wages stagnated, your home – so essential to your ability to simply live – became your most important asset first, and a home second. So long as property values rose – and property taxes didn't – your home could be the backstop for debt-fueled consumption that filled the gap left by stagnating wages. Liquidating your family home might someday provide for your retirement, your kids' college loans and your emergency medical bills.

For conservatives who want to restore Gilded Age class rule, this was a very canny move. It pitted lucky workers with homes against their unlucky brethren – the more housing supply there was, the less your house was worth. The more protections tenants had, the less your house was worth. The more equitably municipal services (like schools) were distributed, the less your house was worth:

https://pluralistic.net/2021/06/06/the-rents-too-damned-high/

And now that the long game is over, they're coming for your house. It started with the foreclosure epidemic after the 2008 financial crisis, first under GW Bush, but then in earnest under Obama, who accepted the advice of his Treasury Secretary Timothy Geithner, who insisted that homeowners should be liquidated to "foam the runways" for the crashing banks:

https://pluralistic.net/2023/03/06/personnel-are-policy/#janice-eberly

Then there are scams like "We Buy Ugly Houses," a nationwide mass-fraud outfit that steals houses out from under elderly, vulnerable and desperate people:

https://pluralistic.net/2023/05/11/ugly-houses-ugly-truth/#homevestor

The more we lose our houses, the more single-family homes Wall Street gets to snap up and convert into slum properties, aslosh with a toxic stew of black mold, junk fees and eviction threats:

https://pluralistic.net/2022/02/08/wall-street-landlords/#the-new-slumlords

Now there's a new way for finance barons the steal our houses out from under us – or rather, a very old way that had lain dormant since the last time child labor was legal – "tax lien investing."

Across the country, counties and cities have programs that allow investment funds to buy up overdue tax-bills from homeowners in financial hardship. These "investors" are entitled to be paid the missing property taxes, and if the homeowner can't afford to make that payment, the "investor" gets to kick them out of their homes and take possession of them, for a tiny fraction of their value.

As Andrew Kahrl writes for The American Prospect, tax lien investing was common in the 19th century, until the fundamental ugliness of the business made it unattractive even to the robber barons of the day:

https://prospect.org/economy/2024-04-26-investing-in-distress-tax-liens/

The "tax sharks" of Chicago and New York were deemed "too merciless" by their peers. One exec who got out of the business compared it to "picking pennies off a dead man’s eyes." The very idea of outsourcing municipal tax collection to merciless debt-hounds fell aroused public ire.

Today – as the conservative project to restore the "natural" order of the ruled and the ruled-over builds momentum – tax lien investing is attracting some of America's most rapacious investors – and they're making a killing. In Chicago, Alden Capital just spent a measly $1.75m to acquire the tax liens on 600 family homes in Cook County. They now get to charge escalating fees and penalties and usurious interest to those unlucky homeowners. Any homeowner that can't pay loses their home.

The first targets for tax-lien investing are the people who were the last people to benefit from the New Deal and its successors: Black and Latino families, elderly and disabled people and others who got the smallest share of America's experiment in shared prosperity are the first to lose the small slice of the American dream that they were grudgingly given.

This is the very definition of "structural racism." Redlining meant that families of color were shut out of the federal loan guarantees that benefited white workers. Rather than building intergenerational wealth, these families were forced to rent (building some other family's intergenerational wealth), and had a harder time saving for downpayments. That meant that they went into homeownership with "nontraditional" or "nonconforming" mortgages with higher interest rates and penalties, which made them more vulnerable to economic volatility, and thus more likely to fall behind on their taxes. Now that they're delinquent on their property taxes, they're in hock to a private equity fund that's charging them even more to live in their family home, and the second they fail to pay, they'll be evicted, rendered homeless and dispossessed of all the equity they built in their (former) home.

It's very on-brand for Alden Capital to be destroying the lives of Chicagoans. Alden is most notorious for buying up and destroying America's most beloved newspapers. It was Alden who bought up the Chicago Tribune, gutted its workforce, sold off its iconic downtown tower, and moved its few remaining reporters to an outer suburban, windowless brick building "the size of a Chipotle":

https://pluralistic.net/2021/10/16/sociopathic-monsters/#all-the-news-thats-fit-to-print

Before the ghastly hotel baroness Leona Helmsley went to prison for tax evasion, she famously said, "We don't pay taxes; only the little people pay taxes." Helmsley wasn't wrong – she was just a little ahead of schedule. As Propublica's IRS Files taught us, America's 400 richest people pay less tax than you do:

https://pluralistic.net/2022/04/13/for-the-little-people/#leona-helmsley-2022

When billionaires don't pay their taxes, they get to buy sports franchises. When poor people don't pay their taxes, billionaires get to steal their houses after paying the local government an insultingly small amount of money.

It's all going according to plan. We weren't meant to have houses, or job security, or retirement funds. We weren't meant to go to university, or even high school, and our kids were always supposed to be in harness at a local meat-packer or fast food kitchen, not wasting time with their high school chess club or sports team. They don't need high school: that's for the people who were born to rule. They – we – were meant to be ruled over.

If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:

https://pluralistic.net/2024/04/26/taxes-are-for-the-little-people/#alden-capital

[bitchesgetriches]

Buy Now Pay Later Apps: That Old Predatory Lending by a Crappy New Name

When money is tight (so... now) it can be really tempting to turn to buy-now-pay-later apps like Klarna and Affirm to buy what you need or even just want. But we looked into BNPL, and the results are not pretty...

Did we just help you out? Say thanks on Patreon!

[fincrif]

What Are the Signs of a Fake Personal Loan Offer?

In today's digital era, applying for a personal loan has become easier than ever. However, with convenience comes risk, as fraudulent loan offers have surged, targeting unsuspecting borrowers. Scammers create fake personal loan schemes, tricking people into paying upfront fees, sharing sensitive information, or falling for unrealistic offers.

If you’re planning to apply for a personal loan, it’s crucial to identify the warning signs of a fake loan offer to avoid financial fraud. In this article, we’ll explore how scammers operate, the red flags to watch out for, and how to protect yourself from loan scams.

1. How Do Fake Personal Loan Scams Work?

Fraudulent loan providers often operate online, using deceptive tactics to lure borrowers with fake promises and misleading terms. Their goal is to collect personal data, charge upfront fees, or steal money before disappearing.

✅ Common Tactics of Fake Loan Scams:

Offering loans with zero credit checks or guaranteed approval.

Demanding upfront payments before loan disbursal.

Using fake websites, emails, or social media ads.

Pressuring borrowers to act urgently.

Asking for bank account details, Aadhaar, or PAN without proper verification.

📌 Tip: Legitimate lenders always follow a structured loan approval process and never demand upfront fees.

2. Signs of a Fake Personal Loan Offer

To avoid falling victim to fraud, look for these red flags before applying for a personal loan:

🚨 1. No Credit Check Required

Scammers claim that credit history does not matter.

Real lenders always evaluate creditworthiness before approving loans.

🚨 2. Upfront Fees or Processing Charges Before Approval

Fraudulent lenders demand advance payments for processing, insurance, or taxes.

Legitimate lenders deduct processing fees from the loan amount, not beforehand.

🚨 3. Guaranteed Approval Without Verification

Scammers promise 100% approval, even for those with bad credit.

Authentic lenders assess your income, credit score, and eligibility before approval.

🚨 4. Suspiciously Low Interest Rates

Unrealistic 0% or extremely low-interest offers are often scams.

Compare rates with recognized banks or NBFCs before applying.

🚨 5. No Physical Office or Contact Details

Fake lenders often operate without a registered office address.

Genuine financial institutions have customer service numbers, office locations, and official websites.

📌 Tip: If an offer sounds too good to be true, it probably is. Always verify lender credentials before proceeding.

3. How to Identify Fake Lenders and Websites

Fraudsters often create fake loan websites and impersonate reputable financial institutions. Here’s how to spot a fraudulent lender:

✅ Check the Website URL:

Fake websites may have spelling errors or unusual domain names (e.g., “loan-company.net” instead of “loancompany.com”).

Look for HTTPS encryption in the URL for security.

✅ Verify the Lender’s Registration:

In India, all legitimate lenders must be registered with RBI (Reserve Bank of India) or operate as an NBFC.

Search for the lender on the RBI website to confirm its authenticity.

✅ Look for Customer Reviews:

Search for Google reviews, Trustpilot ratings, or complaints on consumer forums.

If multiple people report scams, avoid the lender.

📌 Tip: Always apply for loans through official bank websites or recognized NBFC portals.

4. What to Do If You Receive a Fake Loan Offer?

If you suspect a personal loan scam, take immediate action:

✅ 1. Do Not Share Any Personal Information

Avoid providing bank details, Aadhaar, PAN, or salary slips to unknown lenders.

Scammers misuse these details for identity theft or fraudulent transactions.

✅ 2. Report the Scam to Authorities

File a complaint with RBI’s Ombudsman, Cybercrime India (cybercrime.gov.in), or consumer protection agencies.

If money has been stolen, report it to your bank and local police station.

✅ 3. Warn Others About the Fraud

Share scam alerts on social media, financial forums, or complaint boards.

This helps prevent others from falling for the same personal loan scam.

📌 Tip: If a fraudulent lender has accessed your financial details, monitor your bank statements and credit report for any suspicious transactions.

5. How to Apply for a Personal Loan Safely?

To ensure you get a genuine personal loan, follow these precautions:

✅ 1. Apply Only Through Trusted Lenders

Use banks, NBFCs, or RBI-registered financial institutions.

Avoid offers from unknown companies on social media or WhatsApp.

✅ 2. Read the Loan Agreement Carefully

Check for hidden charges, prepayment penalties, and fluctuating interest rates.

Never sign a blank or incomplete loan document.

✅ 3. Check for Secure Payment Methods

Legitimate lenders never ask for payments via Paytm, Google Pay, or direct bank transfers before approval.

Processing fees should always be deducted from the loan amount.

�� 4. Verify Customer Support & Registration Details

A genuine lender will have physical offices, helplines, and email support.

Fake lenders often have unreachable phone numbers or vague contact details.

📌 Tip: Always cross-check loan terms with at least two or three legitimate lenders before proceeding.

Final Thoughts: Stay Alert & Avoid Personal Loan Scams

While a personal loan can be a great financial tool, fraudulent loan offers can lead to serious financial losses. By staying informed and vigilant, you can avoid falling victim to scams.

🚀 Key Takeaways: ✔ Never pay upfront fees for loan processing. ✔ Avoid lenders offering guaranteed approval without verification. ✔ Always apply through official bank or NBFC websites. ✔ Verify the lender’s registration with RBI before proceeding. ✔ Report fraudulent loan offers to cybercrime and financial regulators.

By following these precautions, you can secure a safe and hassle-free personal loan without falling prey to fraudsters.

For expert guidance and genuine personal loan solutions, visit www.fincrif.com today!

[wutbju]

Click here to embiggen.

A WutBJU reader found this promissory note this month in his files. It's from 1996.

Now the student paid it off on May 31, 2000. So he gets props for that.

But look closer.

For a cost of R/B/T of $4200.13, BJU expected a total $13,186.41 over four years.

That's three times the amount of the principal.

The interest rate was 14%. In 2024, that rate is nearly 3x the going rate for undergraduate loans.

But in 1996? It was nearly double the rate.

It's a credit card interest rate in 1996.

That's what you call "predatory lending."

When this BJU alumnus' mother told BJU Board member Ed Nelson about this 14% interest rate, he called her a "liar."

But here's the proof.

This is Bob Jones University, folks. Jesus got out the whips when He found the same thing in His day.

[sharedrm]

It is

[firstoccupier]

The Lingering Shadow of the 2008 Foreclosure Crisis: Have Homeowners Recovered?

During the Obama administration (2009–2017), the United States grappled with the aftermath of the 2008 financial crisis, marked by a surge in home foreclosures driven by predatory lending and subprime mortgages. Between 2007 and 2010, approximately 3.8 million homes were foreclosed, displacing millions of families (Federal Reserve Bank of Chicago, 2011). These “dirty paper” loans, often issued by…

[fiercemillennial]

They're gutting the CFPB, and your coins are in danger. Nearly 200 contracts canceled? That's not "streamlining," that's a power grab. We're breaking down what this means for you and how to fight back. Time to get loud and demand financial justice. #CFPB #Finance #ConsumerProtection #MoneyMoves #Accountability #TheLowdown #Career #Finance #FierceImpact #FierceMillennial

[thebiballerina]

Many of you have pointed out that this map is... strange (why is Maryland no longer above water?), and the Canadians in the notes largely seem to agree that these nicknames are inaccurate. This consensus is much the same on the Reddit post this post is sourced from.

But buckle up, folks, because I've just been on a research bender, and this is way weirder than I expected it to be.

The Canadian nicknames actually do all appear on the Wikipedia page, "List of provincial and territorial nicknames in Canada".

Here's where it gets weird.

Most of the nicknames that match this map have the same source on that Wikipedia page. (This is true of Alberta, British Columbia, Ontario, New Brunswick, Nova Scotia, Prince Edward Island, Quebec, Saskatchewan, the Northwest Territories, and Nunavut.)

If you happen to find that highly suspicious (as you should), you might check reference number 4:

"The Nicknames of Places in Canada and the United States". CashNetUSA Blog. 2019-11-18. Archived from the original on 2022-07-02. Retrieved 2022-04-17.

The author of this blog post is none other than Barbara Davidson, who is credited as the artist in this post. The blog includes the map, and I would guess it was where the map was first posted.

Essentially: The sources on the Wikipedia page for these Canadian province/territory nicknames consist of the person who posted this map.

But wait! There's more!

The more is widespread financial crime, by the way. The saga continues under the cut.

What is CashNetUSA, and why does their blog include posts about nicknames for places in the US and Canada? Their website looks extremely sketchy, and reading between the lines on their "About Us" page gives the impression of a predatory lender (online-only edition). If you ever had a personal economics class, you were probably warned against lenders like these.

Let's see what the Better Business Bureau has to say about CashNetUSA. Their average customer rating is 1.1 out of 5 stars! (Admittedly, that is only out of 92 reviews.) They had 331 customer complaints closed in the last 3 years, with only 47 listed as resolved.

This gets even more interesting when you look up CashNetUSA's parent company, Enova International, Inc.

Specifically, when you look up Enova International on the website of the Consumer Financial Protection Bureau (CFPB), a US government agency responsible for enforcing federal consumer financial law.

The CFPB issued an order against Enova in 2019, as it was found to have committed several violations of financial law, including debiting bank accounts without the consent of the customer and granting loan extensions which were then not honored. They paid a $3.2 million penalty for that and were ordered to stop their illegal practices.

On November 15th, 2023, Enova was found to have violated that order and continued to defraud consumers. They now have been fined $15 million and banned from offering short-term loans entirely, along with several other penalties. (Here is the press release about this, and the CFPB listing of the action against the company.)

Now, I haven't even had a chance to verify the supposed sources for the blog post, which so helpfully includes the sources in a Google Sheet linked on the page. I already know at least a few of the sources are unreliable, and some of the links are entirely broken.

I plan on checking up on the sources later, unless someone beats me to it, so stay tuned. But for now, here's a life lesson I have never once imagined myself imparting:

Perhaps predatory lending companies, engaging in repeated illegal practices to defraud money from their customers, are not the ideal source of information about US state and Canadian province/territory nicknames!

Map of nicknames for states and provinces in USA and Canada.

Barbara Davidson, 2019

[textsearchaccessgooglemicrosoft]

PREDATORY LENDING

[bitchesgetriches]

Buy Now Pay Later Apps: That Old Predatory Lending by a Crappy New Name

If you found this helpful, consider joining our Patreon.

[cazort]

Hey I want to share a thing about debt because a lot of people with less financial know-how don't necessarily realize how debt works.

When it comes to optimizing your own financial situation, debt is not necessarily a bad thing, and living debt-free is not necessarily the best financial choice.

The problem is high-interest rate debt, and/or debt that is more that you can handle.

Everyone in modern society who is supporting themselves has living expenses, housing being a big one. You usually either rent your home, or own it. If you own, you probably took out debt to buy. The interest rate on mortgage debt tends to be lower than other debt because the bank can take back your house if you stop paying on the debt. This possibility makes it less risky to the bank, so they lend at a lower rate.

Because the rate on mortgages is so low, you can often make more income by investing your money, than you can save by paying off mortgage debt.

For example if you got a mortgage several years back, your rate might be as low as 4% or less. Currently you can earn nearly 5% on savings accounts or money market mutual funds, and even more on CD's. These are all essentially risk-free investments.

If you invest in riskier investments like the stock market, you can earn more. Like the S&P 500 index funds tend to return around 10% on average, although it's unpredictable and they may lose money some years.

So even if you have a higher interest rate, like 6-7% (more typical for mortgages these days) you still get a higher return putting your money in the stock market relative to paying off your mortgage.

The same is true if you have subsidized student loans with a low rate. Like if your rate is 3-4%? You can make more money in a savings account these days. Even with a higher rate, you can make more money in the stock market.

These observations are relevant to issues like student loan cancellation.

People act like student loan debt cancellation is a progressive policy that primarily helps the poor, but this is not necessarily true. Often the poorest people didn't go to college to begin with. If they have debt, it is likely consumer debt like credit cards, retail store debt like buying items on layaway, or payday loans or tax refund advances. These debts are very high interest rate and can cost people a lot even in the short term.

Many people with student loan debt actually benefit from the debt because they pay it off as slow as possible and instead save and invest their money. They may put it in a Roth IRA, a 401(k) where an employer matches fund, or just a brokerage account where they can buy stocks for their own immediate income. And of course, people with college degrees often earn more money than those without.

Student loan forgiveness thus ends up giving a bunch of free money to people who may have been leveraging their debt to become richer.

Proposals for debt forgiveness that I've seen put forth often do not have adequate measures to ensure that they aren't giving out a lot of money to people who are basically rich.

They also do nothing to help the poorest among us, who have other types of debt.

And furthermore they do nothing to prevent new ppl from taking on more student loan debt again.

I think a better way to help people is finance reform laws that crack down on predatory lending like payday loans, tax refund loans, credit card debt, and any high-interest debt. States like North Carolina that have passed aggressive anti-predatory lending laws have seen good results from them. Interestingly, even though banks initially opposed those reforms, it ended up not hurting banks, because it was mainly small scale predatory lenders and not banks who were exploiting the poor. So this sort of reform is a win-win, good for the poor, good for big business too. Basically the only losers are the individual predatory loan sharks and a few aggressive, shady banks.

So yeah. Those are my thoughts for the evening in case anyone cares about this stuff.

[tryingtobecoollikeyou]

So going through my mail because I haven't touched it in like a week. Most of it is just pre-approved credit card offers and other junk, but I always take a look just in case. Found one that's one of those loan check things and....

80% APR!?!!

That means you're paying nearly double what you borrowed!!! How the hell is this legal????

[etakeh]

Hey so Joe really is desperate for votes.

But also I need you to know: I took a $10,000 loan in...2001? sometime around there. I paid on it for ages, they garnished my tax return once for thousands. I finally gave up and applied for forbearance over and over and over. And I got it, because I was/am poor.

But they kept on charging interest. The only time that stopped was during the Plague Times.

The balance that was discharged was almost $8000.

and my case is nowhere near as dramatic as some others. That's how horrible this is.

anyway, I just want to say to Mr Joe Biden: About fucking time. But it does NOT let you off the hook for any of the bullshit you're doing, or are going to do if you get another 4 years without fear of repercussion.

I got an email today ↑↑↑

If you borrowed LESS THAN 12000 and payed for TEN YEARS and your balance is HIGHER THAN IT STARTED

Yeah, so if you haven't got student loan debt, maybe you aren't aware that this is a very common thing.

This is why I haven't paid in years. Just kept using the "sorry I'm poor" forbearance thing.

But anyway, that's great, Joe. Good job. At least you're trying right?

ok but wait. He's been in politics for a long, long time. Surely he's been fighting for student loan relief this entire time. Right?

Naw. Gaurdian,2019:

ok but surely he regrets having done this. Surely.

again, Naw. Newsweek 2021:

Jacobin, 2022:

And now, when the election season is upon us, we get a glimmer of hope.

What a coincidence.

**Disclaimer** I'm not interested in debating who to vote for, or even if you should vote. I just want to make sure people know what they are voting (or not voting) for.

[macro-pulse]

🔒 THE LAW THAT MADE STUDENT DEBT PERMANENT

How $9 million bought a trillion-dollar scam ⚖️

BEFORE 2005: STUDENT LOANS WERE NORMAL DEBT

✅ WHAT YOU COULD DO:

Include private student loans in bankruptcy filing

Discharge debt after 7 years like credit cards

Fresh start if you faced financial catastrophe

Protection from predatory lending (banks had to assess real ability to pay)

🏦 WHY BANKS HATED THIS:

Had to actually evaluate creditworthiness

Couldn’t loan unlimited amounts to anyone

Took real losses when borrowers couldn’t pay

Limited profit potential due to discharge risk

THE $9 MILLION PURCHASE OF CONGRESS:

💰 SALLIE MAE’S LOBBYING BLITZ (1999-2005):

Year by year spending:

1999: $220,000

2000: $240,000

2001: $390,000

2002: $870,000

2003: $1,240,000

2004: $2,150,000

2005: $4,900,000

TOTAL: $9,010,000

🎯 WHO THEY TARGETED:

House Judiciary Committee: Writes bankruptcy law

Senate Banking Committee: Oversees financial regulation

Committee chairs: Personal meetings and campaign contributions

Swing votes: Concentrated pressure and money

THE LIE THEY SOLD TO CONGRESS:

📢 THE SCARY STORY:

“Irresponsible young people are gaming the system! They go to college, rack up huge debts, then immediately file bankruptcy to escape responsibility!”

📊 THE ACTUAL DATA:

Student bankruptcy filings: Less than 1% of all education loan borrowers

Abuse cases: Virtually nonexistent in court records

GAO investigation: Found no evidence of systematic abuse

Academic studies: Confirmed student loan abuse was a myth

💡 THE REAL MOTIVATION:

Banks wanted guaranteed collection regardless of:

❌ Economic circumstances

❌ Job market conditions

❌ Fraudulent schools

❌ Disability or illness

❌ Economic recessions

WHAT THE 2005 LAW ACTUALLY DID:

🛡️ GAVE STUDENT LOANS SPECIAL STATUS:

Now treated the same as:

👶 Child support payments

🚔 Criminal restitution

🏛️ Tax debt

🍺 DUI fines

⚖️ THE “UNDUE HARDSHIP” STANDARD:

To discharge student loans, you must prove:

Current inability to pay (obvious)

Persistent inability to pay (for the “foreseeable future”)

Good faith efforts to repay (subjective)

📊 SUCCESS RATE:

Before 2005: Normal bankruptcy discharge available

After 2005: Less than 1% of attempts succeed

Legal costs: $10,000+ just to try

Outcome: Virtual impossibility of discharge

REAL VICTIMS OF THE LAW:

👩‍⚕️ CASE STUDY: THE DISABLED NURSE

Situation: Permanently disabled, cannot work

Debt: $75,000 in private loans for nursing degree

Income: Disability payments ($800/month)

Court ruling: “Undue hardship not proven”

Reason: “Might recover someday”

🎓 CASE STUDY: THE FRAUDULENT SCHOOL VICTIM

Situation: School closed before graduation, degree worthless

Debt: $45,000 for non-existent education

Job prospects: Zero (no degree, school was a scam)

Court ruling: Still must pay

Reason: “Should have researched school better”

👨‍💼 CASE STUDY: THE RECESSION VICTIM

Situation: Lost job in 2008 financial crisis

Debt: $85,000 MBA that became worthless

Age: 50+ (discrimination in hiring)

Court ruling: No discharge allowed

Reason: “Economic hardship is temporary”

THE LOBBYING VICTORY LAP:

📈 IMMEDIATE RESULTS FOR BANKS:

Private loan volume: Exploded from $5B to $20B annually

Interest rates: Increased (no bankruptcy risk)

Lending standards: Disappeared (“fog a mirror” lending)

Profit margins: Skyrocketed to 40%+

📉 IMMEDIATE RESULTS FOR STUDENTS:

Borrowing costs: Higher interest rates

Approval standards: Relaxed (banks had no risk)

Over-borrowing: Encouraged (why not? It’s permanent)

Protection: Eliminated completely

THE CURRENT HORROR SHOW:

♿ EVEN EXTREME CASES CAN’T ESCAPE:

The Quadriplegic Case:

Borrower: Paralyzed in car accident

Debt: $30,000 in private loans

Income: $0 (cannot work)

Court decision: No discharge

Logic: “Might find suitable employment”

The Terminal Cancer Case:

Borrower: Stage 4 cancer, 6 months to live

Debt: $50,000 in student loans

Prognosis: Terminal

Court decision: No discharge

Logic: “Hardship must be permanent”

WHAT THIS LAW REALLY ACCOMPLISHED:

🎯 FOR THE LOAN INDUSTRY:

✅ Eliminated all risk from student lending

✅ Guaranteed collection regardless of circumstances

✅ Unlimited profit potential with government backing

✅ Legal immunity from normal consumer protections

💀 FOR BORROWERS:

❌ Permanent financial bondage regardless of circumstances

❌ No protection from economic catastrophe

❌ No escape from fraudulent or predatory lending

❌ Lifetime liability even for worthless degrees

THE BIGGER PICTURE:

This wasn’t just bad policy - it was legalized predatory lending. Congress literally made it legal for banks to trap people in permanent debt for basic education.

The 2005 law didn’t prevent bankruptcy abuse - it prevented bankruptcy protection.

Next up: How this system specifically targets communities of color 🎯

Remember: They didn’t make these loans non-dischargeable because students were abusing bankruptcy. They did it because banks wanted to abuse students. 💡

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[stillwaterseas]

saw one of those "paying ANY interest is theft" posts and my first thought is always "tell me you don't understand economics without telling me" but my SECOND thought was "ah, yes, the gut-level appeal of antisemitism"