By Patrick Donohue
These will be the first days of the last days of Student Loans.
Sure, you should pay back what you have legitimately been loaned. Legally. Legitimately. Prudently. Fairly.
Are student loans legal?
Sure, lawyers have seen to that.
There is no credit check for student loan borrowers. The “collateral” is a pending and hoped for education and its earning power.
For Parent Plus Loan credit checks, they do not ask debt to earnings ratio. Incomplete credit check equals illegitimate loan.
We can trust a government program, right? They’re just trying to help, right? The nine most terrifying words in the English language are: I’m from the government and I’m here to help.” – Ronald Reagan
“Trustworthy lenders make it their goal to lend to qualified borrowers who will be able to repay their loan. With predatory lending, however, the lender is looking to take advantage of the borrower’s situation.“ (Desire to earn an education) (studentlloanhero.com)
“In many cases, these (Predatory) loans carry high fees and interest rates… all to the benefit of the lender… “Predatory lenders … induce and assist a borrower to take a loan that they will not reasonably be able to pay back.” (Investopedia.com)
Student loans are NOT a fair trade transaction to gain an education.
What started out as an innovative idea to allow downtrodden members of the world’s greatest society to become educated and improve their lives and those of their countrymen has been turned into a financial fiasco; to the point where lower income students and their families and even the masses of the American middle class can ill afford to attend college and take on its attending debt.
Those involved in the Student Loan Program have allowed our government, universities, and their bankers to chase profit and disregard our national well-being. We now cringe at the looming sight of the $1.5 TRILLION debt. Too bad? Just pay?
In the recent sub-prime home loan crisis, if you could not pay on your home loan, the house was repossessed. If you become unable to repay a student loan, you are liable to be harassed and hounded with no statutes of limitation and no viable collateral, since you were improperly and incompletely vetted.
Along the way, with the help and persuasion from the banks, those in charge removed some and then all legitimate bankruptcy protections and limitations, flinging disproportionate responsibility onto the borrower and relieving the banker or lender of any risk or responsibility, because the government guaranteed the loans.
Then the universities saw the “free money” and felt free, themselves, to raise tuition at four times the rate of inflation, while incomes remained static.
This loan program was supposed to build us up, but it is tearing us down. FDR said, “We cannot always build the future for our youth, but we can build our youth for the future.”
If we no longer build our American youth, we are in danger to watching the rest of the world surpass us and take the lead in science, technology, and innovation. We may outsource science and technology and in-source healthcare providers to “save money” and “increase profit share” but in doing so, we merely increase global corporate profits, as we sell our projects and jobs and our souls and livelihoods to the lowest international bidder. All the while, we are compromising American prosperity, integrity and even security.
There is some return on the investment and many are better off than before, but millions of borrowers and their families have become trapped with unpayable loans by sophisticated and cynical business tactics.
What about, ”I paid back my loans. You should, too.”? Congratulations. You have been used.
Some might be able to repay, but the payments didn’t merely go for education. Millions of dollars in salaries and bonuses and stock options were pocketed by CEOs of the loan servicers (Sallie Mae, Navient, Nelnet to name a few). Millions more were “contributed” to colleges to recommend loans and to candidates and members of Congress (Opensecrets.org) to pass policies that favor the lenders.
Even current President Biden and several former presidents have received “contributions” from the student loan industry. Former President Trump allowed his name to be used to form a “university” which encouraged and aided students to take out loans to attend the now defunct institution which has been ordered to repay millions.
Millions of dollars of student loan “profits” (upwards of $50 Billion per year, including fees on defaulted loans) are used to fund, in part, the Affordable Care Act; and billions of dollars of loans were repackaged and sold as assets to fund retirement accounts on Wall Street.
Our own government and its contractors and colleges double dipped and made huge profits on the backs of students and their families and didn’t provide job and advancement opportunities as corporations and businesses moved their operations overseas.
This will be the end of the road since we are now rightly skeptical of the instigators and the enablers.
Wanna Make America Great Again? Cancel all student loans, restore bankruptcy protection and responsible lending practices, and most of all, revamp higher education finance and Make College Accessible Again.
The country is already paying in dollars and lost opportunities.
Theodore Roosevelt once said, “A man who has never gone to school may steal from a freight car; but if he has a university education, he may steal the whole railroad.”
May we take this opportunity to remake the funding of college education into something better.
Patrick Donohue grew up in Salinas, California and is a former secondary teacher and coach and is semi-retired after a twenty-year career at AT&T. He graduated from the University of the Pacific in Stockton, California in the 1970’s with minimal student debt. He and his family have seen their four daughters all graduate from public universities in California and are in the process of attempting to pay off a much more substantial educational bill. They now reside in San Diego, California.