Just something I put out there recently. We're cruising through America, trying to generate interest about the predatory student Loan industry. Have been quite successful to date.
The New Deal on Student Loans: Bigger, Meaner.
Alan Collinge
March 17th, 2007
Who would have thought 30 years ago that today, the average college student
would be leaving school with $20,000 in debt?
Well, it's true. And we have Congress to thank.
Here's what happened.
In the 1990's, Congress decided to give student loan companies nearly 100%
guarantees on student loans, and at the same time stripped nearly all
standard consumer protections away, including bankruptcy protections and the
right to refinance the loan in an open market. At the same time, Congress
legislated draconian collection tools into existence for the collection of
these loans, including wage,tax, Social Security and Disability garnishment.
Not to mention suspension of state licenses, termination from public
employment, and a host of other punitive measures far more ruthless than for
other types of debt, including payday loans and credit cards.
On the face of it, this may seem appropriate to the more conservative
reader: Student loans should be paid back. Freeloading students should not
be given a free ride through college at the expense of the taxpayer.
In actual fact, however, the truth is far different.
These removal of standard consumer protections have created an environment
where the student loan companies actually make far more money when a student
has trouble paying his/her loans. The inability of students to refinance
their debt makes them captive to the student loan companies, who can and do
tack on every fee, penalty, and collection charge possible. And because the
students can't take their business elsewhere, and have no standard consumer
protections, the fees stick. No negotiation.
Sallie Mae, by far the largest student loan provider, recently attributed
their record profits to penalties and fees collected on delinquent accounts.
Since their customers can never leave after consolidating their loans after
graduation, they are easy prey for the lending giant. Even the federal
government makes a 120% return on every dollar it pays out to cover
delinquent accounts! Stories of horrible loan administration, and
unnecessary fees and penalties abound, and are becoming the stuff of legend,
as any internet search will quickly verify.
This has created a vast underclass of decent citizens who are strongarmed
into repaying triple, quadruple, or even more than they originally borrowed
for school. Decent citizens are being forced to flee the country, live
under the radar, and are even killing themselves due to this crushing debt.
Until recently, most suffered in silence to this legalized loansharking.
Sounds, dramatic, but in fact, it is true. For millions, the pursuit of
higher education has become the worst mistake of their young lives.
The student loan industry, since 1994, has convinced Congress to create a
debt instrument the likes of which our country has never seen. While this
may play extremely well for the universities and the lenders, it is harming
the citizenry to alarming extents, in both the sticker price of college, and
the financial harm to those whose degrees never paid off.
Alan M. Collinge
StudentLoanJustice.Org
"Please support the StudentLoanJustice.Org PAC"