Fix Features

Yale Sues its Own Students

by Nathan Harden - Fix Editor on February 6, 2013

When I read this story, I suddenly became grateful. You see, I used my book advance from Sex & God at Yale to pay off my student loans. Turns out I was very fortunate–more so than some of my fellow low-income graduates, apparently.

Yale University may have an endowment in excess of $20 billion, but that hasn’t stopped it from suing some of its poorest graduates for unpaid student loans.

Bloomberg News reports:

Needy U.S. borrowers are defaulting on almost $1 billion in federal student loans earmarked for the poor, leaving schools such as Yale University and the University of Pennsylvania with little choice except to sue their graduates.

The record defaults on federal Perkins loans may jeopardize the prospects of current students since they are part of a revolving fund that colleges give to students who show extraordinary financial hardship.

Yale University is among colleges suing former students for defaulted Perkins loans, which are earmarked for students with extraordinary financial hardship, court records show.

Yale, Penn and George Washington University have all sued former students over nonpayment, court records show. While no one tracks the number of lawsuits, students defaulted on $964 million in Perkins loans in the year ended June 2011, 20 percent more than five years earlier, government data show. Unlike most student loans — distributed and collected by the federal government — Perkins loans are administered by colleges, which use repayment money to lend to other poor students.

“If you borrow to go to school, it may not be just the government that ends up coming after you if you can’t pay,” said Deanne Loonin, an attorney with the National Consumer Law Center, a nonprofit advocacy group in Boston. “We offer credit very easily.” If the student doesn’t benefit financially from the education, “the government or the school comes after them very aggressively.”

Debts must be repaid. That’s certain. And Yale has a legal right to sue for repayment. But I’m surprised to read about a proudly progressive, wealthy university like Yale going after low-income graduates so aggressively. Aren’t you?

Read the full story here.

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Tagged as: college bubble, default, federal loans, lawsuit, perkins, student loans, sue, University of Pennsylvania, Yale

  • http://atlantarofters.blogspot.com The Sanity Inspector

    They can’t afford to set the precedent. More and more students, no matter their wealth or lack thereof, will feel it’s okay to blow off what they owe to the big rich university. There’s no debt forgiveness because unlike a car or house you can’t repossess an education.

    Now I wonder if the writer will explain exactly why he is surprised that a rich person or entity would object to being taken advantage of, financially.

  • Anonymous

    I like how you copy/pasted the photo attribution too. Genius!

  • Kevin

    “Debts must be repaid. That’s certain.”

    You should have a long conversation with the Occupy Wall St. crowd. They didn’t learn this bit of information while in college.

  • The_Plasmatics

    Perhaps you can use the profits from your book to pay off part of the cost for a cheeseburger.

  • del2124

    Well it’s suing former students who got Perkins loans based on their family income. If they actually graduated from Yale (or Penn or GW) its unlikely they’re still poor.

    In general if they are still poor, because they’re unemployed or working in low-paying jobs, they can take advantage of reasonably generous repayment plans. If they’re not poor, well, they’ve got the money and the schools are right to sue them for repayment.

    • M_Becker

      If they’re in “low paying jobs” it’s likely that Yale sold them a bill of goods on the value of a “liberal arts” education. Qualifies you to be a barrista (with additional on-the-job training) at Starbucks, but not much else.
      Where’s the Senate investigation when you need it.

      • del2124

        That’s stupid. Pretty sure a Senate investigation devoted to “why aren’t Yale graduates making more money?” wouldn’t have much public support.

        • M_Becker

          No more stupid than the Senate going after “for-profit” universities. That which is good for the goose…
          And while we’re at it, they may want to look at state universities who actively recruit out-of-state students simply because they pay full ride. And then there’s the law schools…

          • del2124

            Well no, Yale low income former students is like 140 people. Low-income for-profit former students is like 2.4 million people.

          • M_Becker

            Ah yes, still missing the point. Oh well.

          • del2124

            I guess I am. What, specifically, is your point?

  • http://twitter.com/zefalafez Zefal

    It’s only evil when the banks do it.

  • John

    No, I’m not the least bit surprised. Hypocrisy and liberalism go together like a hand and a glove.

  • PJ

    So Yale convinces teenagers to sign on to loans to fund a liberal arts eduction that will likely result in nothing more than good cocktail party conversation, then sues them when they don’t pay? Yale: predatory lender.