The loan was made to the student, the student no longer has to pay it. His debt is cancelled.
The lender still gets paid since the government student loan program backs up the loan. That was the whole purpose of the federal student loan program, to get lenders to loan money to kids with no income, no assets, and no credit history.
That's the way I have always heard about it.
The fraud bit: the government may go after the institution, but that has nothing to do with the debt.
As far as I am concerned, the student took out the loan. They can file a class action suit and sue the bad institution. But they still owe the money. OH I know the govt put in this fraud provision, but it does not make sense from a loan perspective. The fraud is not by the lender, but the service purchased with the proceeds of the loan.
If the educational institutions had to lend the money to the students themselves, this whole mess would stop in a heart beat!
It's money laundering. the Schools get the $ no matter what. Who is left holding the bag? the taxpayers.
The schools did not hold the debt.
The loan was made to the student, the student no longer has to pay it. His debt is cancelled.
The lender still gets paid since the government student loan program backs up the loan. That was the whole purpose of the federal student loan program, to get lenders to loan money to kids with no income, no assets, and no credit history.
That's the way I have always heard about it.
The fraud bit: the government may go after the institution, but that has nothing to do with the debt.
As far as I am concerned, the student took out the loan. They can file a class action suit and sue the bad institution. But they still owe the money. OH I know the govt put in this fraud provision, but it does not make sense from a loan perspective. The fraud is not by the lender, but the service purchased with the proceeds of the loan.
If the educational institutions had to lend the money to the students themselves, this whole mess would stop in a heart beat!
It's money laundering. the Schools get the $ no matter what. Who is left holding the bag? the taxpayers.
OH yes!