March 18, 2007
THE INDUSTRY EXISTS TO TRANSFER MONEY FROM TAXPAYERS TO ACADEMIA AND LENDERS:
'An unholy alliance' gouges students: probe ((MARK JOHNSON, 3/18/07, Chicago Sun-Times)
New York's attorney general has accused colleges across the country of taking kickbacks from student loan companies and reaping other benefits while making it harder for students to get better deals on their loans.New York Attorney General Andrew Cuomo said Thursday an investigation he began last month into the $85 billion student loan industry found numerous arrangements made to benefit schools and lenders over the students. In some cases, it found that lenders provided all-expense-paid trips for college financial aid officers to exotic locations in return for directing students to the lenders.
If the pols are going to create an ever bigger slush fund of money for college educations, they can't be surprised that the two main beneficiaries are growing fat off of them. Posted by Orrin Judd at March 18, 2007 7:53 AM
Our kiddies go into hock to buy an Escalade of an education.
Our colleges and universities provide a Yugo of an education to every kid they admit.
Everyone in the deal goes home fat and sassy at the end of the day.
Posted by: John J. Coupal at March 18, 2007 9:34 AMAnd what makes you think K-12 is any better?
With even less competition and more political protection, it is much, much worse.
$500,000,000,000 and counting.
Posted by: Bruno at March 18, 2007 9:51 AMThe university-financial complex?
Posted by: Mikey![[TypeKey Profile Page]](http://brothersjuddblog.com/nav-commenters.gif)
at March 18, 2007 12:36 PM
Local control means they don't get much money.
Posted by: oj at March 18, 2007 12:52 PMCan we say "Big Collegia"? Let the congressional hearings begin.
Posted by: Dave W at March 18, 2007 2:36 PMI recently did a programming gig at a college's Financial Aid department for tracking collections on student loans. The whole thing is a racket. Sallie Mae (the #1 education lender) lobbied the Clinton Administration to change the rules on student loans to lift the partial shield from collection action by collection agencies. The result was the Higher Education Act of 1997, which changed student debt from having some (mild) protection to being easiest type of debt to collect.
Collectors can assess huge penalties, with no bankruptcy protection and no refinancing allowed. From what I was told the collectors can grab it from your wages, your home, your retirement, even your Social Security, for life.
Students are dangled easy credit terms, with no interest and no princpal before graduation. Worse, parents often co-sign these $100,000-$200,000 adjustable-interest loans. Sometimes the signers aren't even shown a basic amortization schedule (as required for, say, a home mortage loan).
After they sign they are on the hook no matter what. And if interest rates go up they are really screwed; a loan of $100K at $900/mo at 7% takes 15 years to pay off, at 10% it takes 26 years ($465,000).
Title IV rules require any monies in excess of tuition + college costs to be given directly to the student within 3 business days. Colleges encourage over-applying and the kids think it's free money and blow it all. Four years later the collectors garnish Mom's pension from her late husband.
College loans are a bigger and more lucrative loan-shark racket than anything Tony Soprano could dream up.
Posted by: Gideon at March 18, 2007 5:12 PM