Graduates of Yale University, University of Pennsylvania and George Washington University are being sued by their alma maters for their inability to pay back student loans, Bloomberg reports.
The need-based loans, known as Perkins loans, come from a government grant system that is aimed at providing financial resources to students with poor and working-class backgrounds.
The report comes at a time when the national narrative sees student loans as the next disastrous “bubble.” Unemployment remains high, and the cost of college tuition continues to outpace inflation. A recent Gallup study found that 74 percent of Americans do not feel secondary education is affordable.
“Americans say higher education is important and feel a college degree or certificate affords more financial and job security. However, barriers exist to re-enrollment and degree attainment for many,” reports Gallup.
The Perkins loans operate in a circular manner. The flow of funds from debt repayment fuels loans for future students. When students are unable to pay, that depletes the amount of financing available for incoming students.
The school is obliged to legally go after the students who cannot pay in the agreed time frame. Since the money is funded by taxpayers, the schools must seek to recoup the loans.
“If the student doesn’t benefit financially from the education, the government or the school comes after them very aggressively,” said Deanne Loonin, an attorney with the National Consumer Law Center, in the article.