Pretty schocking?  More like pretty normal.

Some numbers via zerohedge.com:

Percentage of borrowers aged 40 or older is 31.9% and they are also carrying 31.9% of the total $870 billion in student loan debt.

  " The average outstanding student loan balance per borrower is $23,300. Again, there is substantial heterogeneity in balances of individual borrowers. The median balance of $12,800 is roughly half the average level, which indicates that a small fraction of people have balances significantly higher than the median."

I wouldn't be surprised of that small fraction of people with "balances significantly higher than the median" included a healthy dose of architects with Ivy league degrees (in addition to the obvious culprits such as law & med school grads).

Yo.

Although there are differences between student loans from the federal government and the private sector (and clearly federal loans are better for the borrower), I would be cautious about overestimating the generosity of the feds.  In our smaller-is-better/outsource-everything world of governance there is not as much difference as there used to be.

Some highlights from a recent Bloomberg article on the state of Federal student debt collection:

"With $67 billion of student loans in default, the Education Department is turning to an army of private debt-collection companies to put the squeeze on borrowers."

"The debt collectors made out well, too. Based on a review of government contracts and Education Department data, the private companies -- working directly for the government and through state agencies -- received commissions of about $1 billion in the year through September."

“Student-loan debt collectors have power that would make a mobster envious,” Harvard Law Professor Elizabeth Warren..."

"Under Education Department contracts, collection companies “rehabilitate” a defaulted loan by getting a borrower to make nine payments in 10 months. If they succeed, they reap a jackpot: a commission equal to as much as 16 percent of the entire loan amount, or $3,200 on a $20,000 loan.

Incentive Pressure
These companies receive that fee only if borrowers make a minimum payment of 0.75 percent to 1.25 percent of the loan each month, depending on its size. For example, a $20,000 loan would require payments of about $200 a month. If the payment falls below that figure, the collector receives an administrative fee of $150."

"The IRS let Campos, the Boston student-loan debtor, set up a payment plan he could afford when he fell behind on his taxes, he said.

“The IRS was better,” Campos said. “They bent over backwards to help you.”

Don't forget that even if the Federal government offers loan forgiveness, there still might be a tax liability involved.

With laws/rules always subject to change (maybe for the better but maybe not), the old carved in stone advice remains potent:

(image via forexstreet.net)

Yo!

Also, more info on the growing resurgence of debtors' prisons via the Daily Mail, Breast cancer survivor handcuffed and thrown in jail over a mistaken $280 medical bill as 'debtor's prisons' return to the U.S

Some excerpts:

"Illinois resident Lisa Lindsay had received the medical bill in error and was told she did not have to pay up.
However, the bill was turned over to a collection agency and state troopers arrived at her home and took her away in handcuffs.

The Illinois teaching assistant eventually had to pay more than $600 to escape prison, as legal fees were added to the bill."

"Debt collectors have become so aggressive claim some that poor people who are behind on payments of as little as $25 a month are being sent to jail.
Even though debtor's prisons have been illegal since 1833, lenders are being accused of exploiting legal loopholes to have their borrowers found and sent to jail until they pay up.

Acting within the law, debtors aren't arrested for nonpayment, rather for failing to arrive to court hearings thereby falling foul of contempt of court laws."

"A 2010 report by the American Civil Liberties Union that examined five states - Georgia, Louisiana, Michigan, Ohio, and Washington -- discovered that people were being imprisoned at 'increasingly alarming rates' through legal debts.
Some of the examples cited included a woman who arrested four individual times for failure to pay $251 in fines and costs related to a fourth-degree misdemeanor conviction.
Another example that the ACLU used was of a mentally ill juvenile imprisoned by a judge for a conviction for stealing school supplies.
'The sad truth is that debtors' prisons are flourishing today, more than two decades after the Supreme Court prohibited imprisoning those who are too poor to pay their legal debts,' said the ACLU."

'In this era of shrinking budgets, state and local governments have turned aggressively to using the threat and reality of imprisonment to squeeze revenue out of the poorest defendants who appear in their courts.'"

What's really fucked up is that the breast cancer survivor didn't owe anything.  The original bill was a mistake but she was still tossed in the slammer and needed to spend $600 to clear her name.  Don't think it couldn't happen to you.

Land of the free, yo!