Student debt has crippled a generation
I saw this tweet from Elizabeth Warren
In the choice between students & student loan companies, Betsy DeVos made clear she stands with companies that cheat & squeeze borrowers.
— Elizabeth Warren (@SenWarren) April 12, 2017
so I went to the Google to find news coverage. The Times has an editorial.
Education Secretary Betsy DeVos is inexplicably backing away from rules that are meant to prevent federal student loan borrowers from being fleeced by companies the government pays to collect the loans and to guide people through the repayment process.
On Tuesday, she withdrew a sound Obama administration policy that required the Education Department to take into account the past conduct of loan servicing companies before awarding them lucrative contracts — and to include consumer protections in those contracts as well.
These companies aren’t the loan companies, they’re the collecting agencies – one of those carbuncles of capitalism that are such nice little earners for people whose only talent is carbuncling.
The department is doing the loan industry’s bidding at a time when student debt has crippled a generation financially and the country’s largest loan servicing company, Navient, is facing several lawsuits accusing it of putting its own interest before that of the borrowers it is supposed to help.
A suit brought by the Consumer Financial Protection Bureau claims that Navient saved itself money by steering borrowers into costly repayment strategies that added billions in interest to their balances.
See there? That’s carbuncling. The goal of the federal student loan program should not be to make repayment more expensive in order to enrich the “loan servicing” companies.
And, the Times goes on, it’s even worse in the case of Sallie Mae.
The Illinois and Washington attorneys general argue that Sallie Mae engaged in predatory lending, saddling people with private subprime loans that the company knew in advance were likely to fail because borrowers would not be able to repay them. The two attorneys general — part of an investigative coalition of 29 states — argue that borrowers deserve to have these tainted private loans forgiven.
Oh um – private subprime loans that the company knew in advance were likely to fail because borrowers would not be able to repay them – that sounds so familiar. What does that remind me of, hmmmmmm…
The scenario outlined in the court documents bears a frightening resemblance to the subprime mortgage crisis of a decade ago — when mortgage companies caused millions of borrowers to lose their homes by steering them into risky, high-cost mortgages they could never hope to repay.
Poor people. People with less money than rich people and middling people. They get the high interest loans because of the risk factor, so they get fucked over when it all goes smash. Apparently this is what we do here – we look for ways to make poor people pay extra for being poor, and then we gaze very hard in another direction when the poor people are left penniless and in debt and with nowhere to live.
The Illinois and Washington lawsuits argue that Sallie Mae used subprime private loans to build relationships with exploitative schools that then helped the company make more federal loans to their students. Those loans were the jackpot for the company, the lawsuit argues, because they were guaranteed by the government, which steps in to reimburse the lender when a borrower defaults.
This is what profit-making “universities” do – it’s what they’re for. They provide basic vocational training at inflated prices to students who take out federal loans…and then end up ruined when they can’t pay the loans back. It’s a systematic con game, and it’s disgusting.
And DeVos is undoing Obama administration efforts to rein all that in. More power to the carbuncles!
And when the country had a chance to vote for candidates that promoted free college (Sanders) or debt-load reduction (Clinton), the country in its ‘wisdom’ selected a candidate who had bilked thousands of poor students out of money to enrich himself.
I have only recently completed my sojourn as a student; I returned a couple of times because of having trouble figuring out what I want to be when I grow up (which I finally realized wouldn’t be a problem if I simply refused to grow up, right?). I experienced these changes first hand. When I first started college, I could go an entire semester for less than the cost of one class now. And books? They were high then, just as now, but high meant something different. It meant I couldn’t get through a semester without paying $100 – $120 for my books. Now, you can’t get one book for that.
Meanwhile we continue to cut down the availability and up the eligibility requirements for getting grants, which forces more students into loans. Ridiculous.
Education through college should be free; post-graduate degrees are negotiable, but since the country benefits from the masters and doctorates out there, I personally see no reason why we should be unwilling to pay for those programs, as well. Now, if a student (um, like me, maybe?) goes back for a new degree, that might be a time to consider them having to pay something, but it should by no means be paying what we are now.
I for one would gladly have some of my tax money diverted from building bombs to buying books. Our priorities in this world are very screwed up.
And if we insist on payment for public colleges, we should at least ensure a reasonable tuition (for those that are afraid free college will lead to abuse and slackerism – something I see in students all the time, and expect the percentage of students who weren’t really interested in learning would not increase if college were free). Reasonable (to me) means that college should not cost more than 10% of the median income in the country. I’m sure a lot of college students would be thrilled to get by for that sort of cost.
In our current political climate, I fear we’re going to go the other way – a return to the bad old days when only the truly wealthy could afford to send their kids to college. Already the middle-class are saddling themselves with huge debt, because their kids can’t qualify for grants, and have to take out loans. The poorer students are feeling the squeeze of tightening grant funds, and are pushed into subprime loans.
If we are unwilling to do any of the above, at least we should set up a non-profit agency (governmental or NGO) to administer all loan funds, interest free, and with very generous repayment schedules.
What’s maddening about this is that it isn’t a matter of conservatives being shitty, it’s a matter of them being shitty conservatives.
A true conservative should want to make sure that, if we’re going to use tax dollars to subsidize or guarantee student loans, that the money is being spent wisely, consistent with the purposes of the program, and not in a manner that rewards or encourages abuse.
But somehow the party that wants to drug test everyone receiving unemployment insurance is totally ok with sleazy companies with lousy track records abusing a government program.
This is where conservatism has changed. It is all about business, no matter what, protecting business from their own excesses, from their own bad practices. It is about people who hate individuals who have nothing, and fawn over those who have everything, and want to do everything they can to transfer what little the poor have into the pockets of the rich.
They aren’t conservatives at all, they are feudalists.