8.21.2007

Students, That Hand in Your Pocket may be a Loan Officer

by Jeff Siegel


In the old days, which is when I went to college, student loans were fairly straightforward. You borrowed the money from a federally-affiliated lender called Sallie Mae, which offered lower interest rates than banks since the federal government guaranteed the loans. I still have the cancelled check for my final loan payment, as a matter of fact.

But these are not the old days. These are the government is a burden, so let's privatize everything Reagan-Bush-Clinton-Bush days. These are the let the marketplace determine the most efficient way to lend students money, and if students get screwed, that's not our problem days. Student lending is an $85 billion a year business, Sallie Mae is just another private lender among dozens (and which had a $25 billion buyout deal in place until this month), and no one cares about the taxpayers.

In short, the student loan business is just as corrupt as Pentagon procurement, Congressional lobbying, and seemingly everything else that goes on inside the Beltway these days.

In one respect, what has happened in the student loan business, uncovered when the New York state attorney general's office started issuing subpoenas this spring, is no different from any other Washington scandal. College loan officials took cash, trips, stocks and assorted other goodies from lenders to steer students to the lenders. My favorite peccadillo? At least two federal officials who oversaw the student loan program owned stock in companies they were regulating – and had the nerve to claim it wasn't a conflict of interest.

But in another sense, this is much, much worse. This isn't about K Street wise guys sticking it to Indian casinos and their Congressional patrons. As bad as that is, it's one of those everyone gets dirty when they wrestle with pigs things. This is about college students getting cheated by their schools – and some pretty impressive ones, like Penn, Columbia, Johns Hopkins, Texas, and USC. It's one thing for this to happen at Big Al's School of Truck Repair and Rat Extermination; it's another when a Johns Hopkins loan officer gets 65 large in "consulting fees" from a lender.

Note to students: They are stealing from you. They are taking money out of your pocket, and for no other reason so they can gorge themselves. You need to do something about this, and not just let a bunch of old farts like me who still believe in quaint concepts like social justice rant. This is why we have voting – so you can throw the bums out of Congress, of whichever party, who allowed this to happen. I've paid off my loan; how long will it to take you to pay off yours, given how you have been double-crossed?

(The political cartoon is by Thomas Nast of Harper's Weekly circa 1870 from a famous series on corruption. This cartoon is from a collection of Nast's work from 1904 and is now in the public domain.)







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2 comments:

Liberal Arts Dude said...

Hello

Here is an excellent resource on student debt and politically what young people can do about it. It's a blog by Anya Kamenetz, author of Generation Debt and a genuine advocate for the economic interests of young adults. Link to her blog.

Rick Rockwell said...

L.A. Dude...

Thanks as always for your comments and for steering us to new material. I'm answering on Jeff's behalf because he is on assignment in Alaska, away from the 'net, and likely not able to comment for the next few weeks.

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