Sallie Mae: Predatory Lender
It’s taken me nearly a decade of fighting to get a payment that I can afford. During this decade my student loan debt has gone up excessively. I’ve had “legal fees” and “late fees” and “just because we can fees” tacked onto my loans that have been rolled in with them so that I’m not only paying the fees but also paying interest on those fees. So while I’ve finally got a payment that I can make on a bill that is as much as four times the amount that I actually borrowed, this fight is not over for me. It’s not over because my story is all to familiar. I’ve come home from this war wounded but alive. Others have not been so lucky. Besides the war continues to rage on even now.
I received the attached appeal from StudentLoanJustice.org urging me to get the word out and that is what this post is for. I encourage you to read the information below from Student Loan Justice and I encourage you to act on it – demand that this be changed. It’s not about my future, it’s not about some retired parent or uncle who’s credit has been obliterated so that the executives at Sallie Mae can buy a new private jet – it’s about all of us because like the housing bubble higher education is heading for a bust and when that happens the United States will be in a world of hurt. We’ll loose the tech-race, we’ll fall behind other developed countries, and we’ll loose our status as a world leader and innovator.
It’s time we put aside politics and focus on what is best for our country. They’ve made gross fortunes off of the defaults of people who were and are just trying to get an education. We’re not asking for reparations, we’re just asking that the injustice that is being done be stopped. I’m writing my representatives and I urge you to do the same.
Thank you. Here is the appeal:
Protection for College Students Needed Now
In 2005, language was slipped into the Bankruptcy Abuse Prevention and Consumer Protection Act which effectively removed bankruptcy protections from private student loans. The brazenness of this action shocked even the most jaded experts on the Hill (when it was discovered). After all, this amounts to the same thing as stripping bankruptcy protections from credit cards, or any other type of unsecured, free-market debt. Make no mistake: there are large injustices with the student lending system generally, but this move set a new low.
The banking industry and their lobbyists promised increased loan availability to disadvantaged students in return for the wholesale removal of this critical, free-market mechanism, but never delivered, the record now clearly shows. What they did deliver were tens of billions of dollars in outrageous loans that would make a subprime mortgage broker blush, with APRs as high as 28%, dropped onto the backs of unsuspecting students through deceptive and corrupt marketing techniques for which there simply is no comparison (consider that often, students would call their school’s financial aid offices, and unbeknownst to them, at the other end of the line was a student loan marketer pretending to be a university employee, and this point is proven, but we could go on at length here).
It was assumed by all that at the first possibility (i.e. when the democrats recaptured one or both houses of Congress), this grave injustice would be quickly righted. So in 2007, when Democrats swept both Houses, this painful period for the citizens was clearly at an end. Or was it? The democrats, to their credit, did introduce legislation to reverse this robbery, but didn’t put their back into it, evidently. The first attempt the legislation was quietly killed. A second attempt was narrowly defeated in a House vote thanks to the Blue Dogs cooperation with republicans like Howard “Buck” McKeon, and others. The third attempt, introduced last Spring, was on a slow road to passage, and would have been fine, but for an inconvenient election in November.
Surely the banking lobbyists charged with keeping this beach head were richly rewarded for their efforts. After all, a leaked Sallie Mae strategy memo that surfaced around the time the Democrats took power in Congress put preserving the current bankruptcy laws as the 2nd highest priority. And over four years, the record is clear that this mission was accomplished.
Consider, however, what is lost to this dangerous and predatory lending system. While we won’t be seeing them marching on Washington anytime soon, former students by the hundreds of thousands are currently reeling, devastated by this toxic debt. Their cosigning parents, grandparents, aunts, and uncles who wanted only for their loved one to get a college education now face financial ruin, and that is absolutely not in any way an exaggeration. And for what? So Sallie Mae can reap excessive profits from predatory loans made on a hyper-inflated commodity, which is higher education?
Ironically, the entities who so cleverly led the students into these monstrous debt situation are the same people now chastising the students about not reading the fine print. They now dispense belated words of wisdom on borrower responsibility from on high, effectively insulating themselves from all blame. But the ironies do not end there…the democrats who were so quick to rush to the financial aid of the financial industry (including Sallie Mae, and the other student lenders), have gone quiet on this final attempt at returning the bankruptcy protections that should have never been taken away, it seems. And where are the beltway advocates? It seems, that the only ones left in this fight are the citizens, and the Congress elected to represent them. Oh..and of course the banks with their money, expert advice, and threats designed to protect their profits no matter the public cost.
Democrats: Do what is critically needed right now, and return at least this obvious critical protection to the consumers before this term expires.