Loans Don’t Die

Andrew Sullivan —  Jun 19 2012 @ 8:10pm

What the economic collapse has wrought on a father whose son passed away but whose student loans did not:

Now, [Francisco Reynoso]'s suffering a Kafkaesque ordeal in which he’s hounded to repay loans that funded an education his son will never get to use — loans that he has little hope of ever paying off. … And the loans are maddeningly opaque. Despite the help of a lawyer, Reynoso has not been able to determine exactly how much he owes, or even what company holds his loans. Just as happened with home mortgages in the boom years before the 2008 financial crash, his son’s student loans have been sold and resold, and at least one was likely bundled into a complex Wall Street security. But the trail of those transactions ends at a wall of corporate silence from companies that include two household names: banking giant UBS and Xerox, which owns the loan servicer handling the bulk of his loans. Left without answers is a bereaved father.

Kay Steiger adds:

It’s important to know … that the loans Reynoso took out and is struggling to repay are private loans, which, as of 2005, are offered the same protections as taxes, child support, and criminal fines. This means that these loans are non-dischargeable, even if the loan holder files for bankruptcy. And even as the rules for paying back have become more strict, the private student loans themselves have become more popular.