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About Street roots. (Portland, OR) 1998-current | View Entire Issue (Jan. 20, 2012)
10 ■ i n street roots I *M Jan. 20, 2012 How the student loan industry runs a $90 billion con BY ALAN PRESTON bankruptcy. Those who succumb to defaulting on their lan Michael Collinge’s first job as an student loans are not statistical anomalies. aerospace engineer did not pay him Collinge cites National Center of Education quite enough to keep up with the data that there is a shocking 20 percent payments on the $38,000 of student loans that default rate within the first decade after he’d accumulated earning his degrees. Before graduation for people who borrowed more he knew it, he was pulled into a vortex of debt, than $15,000. As their loans are sold from one default and collection, and within seven years collector to the next, fees and penalties of graduation, his loans had ballooned to over expand exponentially, making the prospect of $100,000 due to penalties, fees, collection repayment that much more impossible to charges and compounded interest. fathom. Meanwhile, lenders and collectors Collinge faced three choices: accept his fate have free license to garnish wages, disability and spend the rest of his life in poverty, leave benefits and even Social Security without a the country or stay and fight. Numerous court order. Incredibly, it is more profitable others in his shoes have been so desperate for lenders when students remain in default that they have made a tragic fourth choice — than it is when they pay them back. Collinge suicide. Collinge chose to go public and fight, writes: “By 1998, there was a perverse and so was born one of the nation’s foremost financial incentive for the student loan whistleblowers on the student loan industry. servicing companies to do a horrible job of His book, “The Student Loan Scam,” has loan administration. The more ineffective the become a primer for the uninformed and companies’ customer service was, the more unaware. likely it became that students would default — Before reading Collinge’s book, I was and thus, the more money student loan among the naive. My privileged upbringing companies would ultimately make.” provided me a debt-free college education, and Today, student loans are a $90 billion I never questioned the standard narrative industry and these loans have a stranglehold about student loans: That they were for the on millions of lower- and middle-class citizens. benefit of the student and the ticket to While tuition rates skyrocket, students have to fulfilling one’s promise in life. “Scam” not only borrow more, only to see their employment rid me of this myth, it also taught me that the prospects dim. Rather than truly counseling collusion among the student loan industry, students, the higher education system has higher education and Congress is one of the become beholden to lenders and has most glaring economic justice issues of our incentives to push students to borrow beyond day. their means. What has emerged, writes Collinge begins with a historical Collinge, is “an unholy alliance between perspective, detailing the rise in power of lenders and universities that trampled the Sallie Mae, the nation’s leading source of very students they claimed to serve!” private student loans, into a conglomerate that “Scam” is a riveting book that exposes the controlled all aspects of the industry - loans, student loan industry as self-interested, guarantees and collections. By 2005, Sallie predatory and amoral. Although not especially Mae had become the second most profitable well written, the book is a well-researched and company in the country, and its executives credible account of an industry that is every were raking in millions of dollars on the backs bit as exploitative as the mortgage industry of the borrowers. (Sound familiar?) that spurred the housing bubble in 2008. Responding to Sallie Mae’s increasing Here’s the irony: We are living in a economic power and influence in Washington, competitive global economy that demands a Congress began systematically removing all highly educated workforce, yet those who the standard consumer protections afforded to pursue higher education often find themselves other forms of debt from student loans. Most buried under a lifetime of debt in order to troubling, student loans are the only type of become part of this educated workforce. consumer debt that cannot be discharged in Moreover, if students can’t pay their debt, C O N T R IB U T IN G W R IT E R A The Student Loan Scam by Alan Michael Collinges, 184 pages they stand to lose the licenses and certifications for which they were trained, creating a vicious cycle of deepening despair for students and escalating profits for lenders and collectors. The full title of Collinge’s book is “The Student Loan Scam: The Most Oppressive Debt in U.S. History — And How We Can Fight Back.” Unfortunately, after absorbing the author’s argument that this is, in fact, history’s most oppressive debt, it’s hard to imagine fighting back at all. Collinge provides a recipe for action, but the realization that lenders have immense political power can give the reader a sense of impotence. The people who most need to agitate for a political solution are too often silenced by their own humiliation and shame. In his book, Collinge makes multiple references to his website studentloan.justice. org, which he developed to create a safe forum for borrowers to tell their stories and to educate the public and encourage activism. Those in the “take personal responsibility” wing of American politics dismiss Collinge’s book and Web site as the whinings of a disaffected liberal who exempts borrowers from their obligation of debt repayment. Their vitriolic responses, as seen in the comments on his blog, are hyperbolic and disingenuous. Collinge isn’t exonerating the small minority of borrowers who make irresponsible decisions about their student loan debt. He is saying that their choices don’t exist in a vacuum. From their first interactions with student loan officers at their colleges (who receive kickbacks from lenders to steer them into certain types of loans) to their subsequent attempts to work with lenders and collectors (who have no financial incentive to cooperate), the cards are stacked against them. The “Student Loan Scam” is a sobering must-read for prospective students who are planning to take out student loans. It’s also a call to action for both graduates who hold student loan debt and economic justice activists. Reprinted from Real Change Newspaper, Seattle, Wash. Portland coffee bean Hearing Voices IN T E R N A T IO N A L ® embrace p>uaw diversity We tip our mugs to Coffee Bean International for donating coffee to Street w w w .portlandhearingvoices.net Thank you! Fallen Off the Edge A new book by A r t Garcia "Fallen Off the Edge" is a chronicle of one man's experiences after returning from the Vietnam War. Told through the eyes of Street Roots columnist Art Garcia, this book celebrates the major victories born from a series of questionable choices. Art's jocular storytelling takes the reader along with him in and out of the California prison system over the course of 10 years until he found the strength and courage to pull himself up from the fall. The book is available online at www. blurb.com under searchword Art Garcia. Roots and keeping our vendors warm in the morning' M irador COMMUNITY STORE Canning jars & equipment, cookware, kitcher took & appliances Organic cotton sheets, toweb, & blankets Food dryers Juicers 2106 SE Division m iradorcom m urntystorexom M on-Sat 10-6 • Sun 11-5 Books on meat-fre cooking, gardenin & sustainability
