February 9, 2012

2 Ivies sue alums over student loan default

Students defaulted on $964 million in school-administrated Perkins loans in the year ending June 2011, up 20 percent from five years before. That's reportedly led some schools to file lawsuits against former students who defaulted on their student loans.

Bloomberg reports three universities, including two in the Ivy League, have sued former students: Yale University, the University of Pennsylvania, and George Washington University have all sued former students over nonpayment of Perkins loans – a category that often goes to the neediest students. While most student loans are distributed and collected by the U.S. government, Perkins loans are administered by the colleges themselves.

“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,” Deanne Loonin, an attorney with the Boston-based nonprofit National Consumer Law Center, told Bloomberg. Obtaining a student loan is easy, she said, but if the degree doesn't lead to financial security, government and higher education lenders pursue students "very aggressively."

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