The Great College Loan Swindle


We’ve been thinking about this issue for a very long time. One of the most important things we can do is to make student loans more difficult to get. Who gives $75,000 to an 18 year old? That’s just unwise even if it is for education. But the government makes such sums available and young people all too often become ensnared.

However, any talk of reining in student loans elicits howls from the universities (they love the easy money) and also from prospective students who don’t want to be shut out of the middle class because they don’t have funds for an education.

The latter objection is fair. But something still needs to be done and it will probably have to be somewhat painful.

As we’ve said before, the university system is primed for disruption. It is so full of fat, and corruption, and ridiculous debt, and inflated salaries, and inflated grades, and political correctness, and decadence, that something has to give.

The sooner it gives, the better.

Sadly, as is often the case with Taibbi (who I’ve long enjoyed reading) he comes perilously close to getting at the heart of the issue without really getting at it. He ends his piece with an attack on Trump and DeVos in all the ways one would expect from a Rolling Stone writer.

But you see Matt, it’s not the “for profit” debt collectors that are the fundamental problem. They are just nodes of crony capitalism growing off the much larger crony beast. We wouldn’t be in this situation if it weren’t for the federal government inserting itself into higher education.

The same can be said for healthcare. But that is for a different post.

(From Rolling Stone)

Take Veronica Martish. She’s a 68-year-old veteran, having served in the armed forces in the Vietnam era. She’s also a grandmother who’s never been in trouble and consid
ers herself a patriot. “The thing is, I tried to do everything right in my life,” she says. “But this ruined my life.”

This is an $8,000 student loan she took out in 1989, through Sallie Mae. She borrowed the money so she could take courses at Quinebaug Valley Community College in Connecticut. Five years later, after deaths in her family, she fell behind on her payments and entered a loan-rehabilitation program. “That’s when my nightmare began,” she says.

In rehabilitation, Martish’s $8,000 loan, with fees and interest, ballooned into a $27,000 debt, which she has been carrying ever since. She says she’s paid more than $63,000 to date and is nowhere near discharging the principal. “By the time I die,” she says, “I will probably pay more than $200,000 toward an $8,000 loan.” She pauses. “It’s a scam, you see. Nothing ever comes off the loan. It’s all interest and fees. And they chase you until you’re old, like me. They never stop. Ever.”

And that’s the other thing about lending to students: It’s the safest grift around.

Click here for the article.