Let’s Fix This Fraud With More Fraud. WTF?

Alan J. Yeck

Tossing out any dollar amount in student debt relief with no other action is just another form of fraud committed by our government against its people – again! It’s a fraud sandwich and we’re the protein.

$10,000 – 50,000 paid by the government, to the dirty government collection contractors (Navient, et al), will then be directed back to the political PACs, Super PACs, and student loan industry lobbying firms. Everybody in on the con, wins! But that’s not us, my friend. “It ain’t me, it ain’t me, I ain’t no senator’s son.”

There is a reason the politicians, including the attorneys general, are not listening about implementing the foundational reforms that must happen in the student loan industry to remove the corruption, provide relief to existing victims, and prevent this crisis from happening again.

The elected elite are either: 1) listening only to the lobbyists who work for the student loan industry to keep their money train scam rolling along; 2) are part of the corruption/kickbacks themselves; 3) have their heads up their asses.

While I can understand the skill of misinformation of number 1, and can personally relate to number 3, I have a feeling their lack of addressing the real issues that caused this crisis comes down to number 2. It’s gone on too long, over both blue and red administrations, for them to claim ignorance. 

We the people, are the least of their concerns. 

To end this problem today – 

1. Recalculate loan balances at zero interest (the government should not profit off of educating its people). With this formula we’ll save millions who have already paid back their original principal and are being held hostage by interest (10 times the original loan amount. I know you don’t understand how that can happen but it does).
2. Restoration of unconditional, full bankruptcy rights for student loans. Bankruptcy isn’t a free pass at all, is it? Millions of borrowers, through the racketeering of collections agencies are in true, lifelong, debtors’ prison today. When Congress began to tamper with this right in the early 1970s the loan default rate was less than 1%. Today it’s over 20% and growing. Removing bankruptcy protection is the foundation of today’s crisis which all the student loan industry corruption was built upon. 
3. Hold higher education accountable for the costs of their programs. Until this is done, they will just continue to raise their costs. Higher education is a financial black hole that will suck in every penny and then start going through your couch cushions to find more. Degree costs have risen 400%, above inflation, in the last generation. Policies have to be put in place that restrict loans going to any institution that cannot demonstrate fiscal responsibility and the return on investment for completing their programs.
4. Immediately end the practice of the loan servicers from garnishing wages, tax returns, and social security. 
5. Restructure the loan payback formulas to reflect the cost of life. Currently calculations from the loan servicers do not consider that you have to pay rent/mortgage. Car payments, insurance, healthcare, food, electricity, maintenance, emergency funds…they let the government get their taxes then they swoop in to steal the rest. The current formulas almost guarantee to force defaults, which in turn interest builds, added to the principal and interest applied on that new amount. 
6. Increase Pell and Perkins Grants including for the trades and apprentice programs, again holding the educational institutions accountable. 

The current system and the currently discussed solutions are all just part of the con, the scam. It’s Three Card Monty with Uncle Sam not only dealing but telling you how much you have to bet, knowing you’ll lose every hand. Fixing fraud with more fraud. WTF?

https://www.forbes.com/sites/adamminsky/2021/02/19/17-state-attorneys-general-push-biden-to-cancel-50000-in-student-loans-adding-to-pressure-campaign/?fbclid=IwAR0kvMqGz-QzRDroD3yS3_h11OY1f52iBl99nB55aKO6CyoPUn4wWxo3tRU&sh=20b451fe45fe

The Killing of American Higher Education (Part 5)

Alan J. Yeck

The Dirty, Rotten, Crooked, Broken, Student Loan System and the Immoral Bankers, Brokers, Collectors, and Corrupt Politicians Who Make Billions Off of It While the Courts Garnish Wages and Destroys Lives

There Are Solutions

There are solutions beyond what is offered in the political rhetoric we hear from those running for office who do not understand how all the pieces of this crisis connect and those that do but either fight fixing it or only pretend to fix it to ensure continued campaign contributions for themselves. So, whether we are dealing with a criminal in on the fix or someone who just doesn’t care enough to understand how it all works, it doesn’t matter.

As a baby boomer myself, I’ve heard my friends say things like “I paid for my education… These kids today are just lazy… They expect everything to be given to them… My kids worked three jobs and paid for their own education… Tell those damn kids to get off my lawn!” I don’t think they are mean or ignorant but rather misinformed. They compare their personal experiences to those of today’s students,  and it’s like comparing apples to horse shit–comparisons do not work. Times have changed, and they’ve especially changed for higher education.

These student loan debtors are not lazy, or ungrateful or whiners or trying to cheat the system. They were preached to by us, all of us, on the importance of education and its necessity in being successful. We told them that blindly, not understanding the manipulation that was going on behind the scenes. Remember how I started this piece with the politicians of the early 1970s and their view of youth then as pinko, commie, long-haired hippies? If you automatically assume today’s generations (millennials and Gen Z) to be lazy and that they expect everything to be given to them, then congratulations! Apparently, it’s your turn to take on the role of the small-minded, bigoted, American citizen.

The most recent crop of Democratic presidential candidates proposed solutions to student debt that ranged from doing nothing to forgiving all debt. There’s a lot of room in between those two extremes, but thus far all proposed “fixes” have been partial and would only prolong the crisis, which concurrently prolongs corruption. Nothing is fixed, but the money keeps flowing to profiteers. Partial fixes suggested by recent political candidates include:

1. Lower to no interest rates
2. Changes in the bankruptcy code to allow private student loans to be discharged
3. Free community colleges, vocational schools, and training programs for all
4. Free Ccommunity colleges, vocational schools, and training programs on a sliding scale based on income
5. Free education at all state schools based on income
6. Free education at all state schools for everyone
7. Government- funded savings accounts at birth created for every child at birth to be used to pay for education once they turn 18
8. Federal grants to states who invest in public colleges
9. Expand Pell grants to $10,000 for low- income families
10. Free education in exchange for service in the Peace Corps, AmeriCorps
11. Expand the currently broken public service loan forgiveness program
12. Federal government to refinance the loans up to $27,000
13. National service program that allows young people to join the military or aid programs addressing climate, community or infrastructure and receive a scholarship in exchange
14. “Tweak” the current income-driven repayment system
15. Raising the zero- dollar repayment threshold on borrowers earning 250% of the poverty line
16. No interest accrual for three years
17. Half of interest exempted
18. Loans forgiven, tax-free, after 20 years of payments
19. Undefined portion of loans forgiven, if on federal assistance, for three out of five years
20. Zero funding for for-profit colleges
21. Expanded GI Bill benefits that veterans can use to pay for their education
22. Americans who commit to one year of public service would receive two years’ worth of college tuition -free. Those who commit to two years of service would have four -years paid for.
    1. Qualifying roles include, working as special education aides and teaching assistants, home health aides and nurses for nonprofit organizations and other jobs in the federal, state and local governments,
23. Allowing the savings accounts (and tax benefits) of 529 colleges for job training, credentialing, licensing
24. Free for those aged between 17 and to 24 who participate in public service.
25. 60 percent of in-state tuition is covered, but if the borrower works for three years in-state, they would get their full in-state tuition bill covered
26. Free for public school educators after they spend five years working in public schools
    1. Suspend all student loan payments while working for the entire time they work in public schools
    2. 20 percent of debit is forgiven for public school teachers each year they teach

27. Eliminate all student debt regardless of current income
28. Free college for anyone with an income under $25,000
29. Forgive up to $50,000 of student loan debt for borrowers earning under $100,000
30. Federal government buys all outstanding debt – borrowers repay 10 percent of income for ten10 years.
31. Expanding loan forgiveness for borrowers who work in underserved communities

Only one candidate has mentioned the outrageous, unjustified cost of higher education itself and stated that it must be reined in. The following—all of it—is what must happen to get our educational system back to truly being the best in the world -–-not just the most expensive and costly.

• Change the bankruptcy code to allow student loans, both federal and private, to be dischargeable again without the added burden of having to prove undue hardship. Bankruptcy is the single greatest mechanism that would right the educational market. When it was removed, those that removed it and encouraged its removal began making huge amounts of money, and the corrupt system we have today was born.
  • The vast majority of student loan debtors will not use this option because it’s still a terrible process to go through, but those who have hundreds of thousands of dollars in student loan debt caused by compounded interests may have no other option. Giving debtors $50,000 right off the bat gives the appearance of helping but only ensures continued corruption. The game continues and its dirty players continue to make tremendous amounts of money from the millions of borrowers whose student loan debt well exceeds $50,000.
• All student loans currently not in default, deferment or forbearance should be recalculated from the original cost at zero percent interest.
  • Student loans must be recalculated at the original costs without additional interest charges. All monies already paid should be deducted from this number.
  • Establish a new formula for any remaining monthly payments that recognizes the true costs of living in today’s America. Borrowers must be able to afford car payments or transportation costs, a mortgage or rent, insurance and maintenance payments, food, savings and emergency funds a normal percentage. Living a normal, stable life has to be the baseline, and the collection agencies should answer to it. The current formulas make it so it’s impossible to consistently make payments, which is what is counted on so students go into default and interest gets jacked up again.
• Establish a free public K-16 system, which would also include trade schools and apprentice programs. The education of a country’s citizens should be prioritized the same as any other national security interests.
  • Promote the value of alternate methods of education.
• Traditional colleges and universities must be held accountable for their promises, costs, and fees.
  • Reinstate the gainful employment rule and expand it to all institutions regardless of nonprofit or for-profit status. This rule would require higher education institutions to prove their graduates can find gainful employment to maintain access to federal financial aid. It also requires that schools assess what their cost for debt loan would be to their earnings.
  • The total cost of a degree must be shown up front, including all fees.
• All student loan debt must be discharged for students who acquired that debt from schools that have since gone out of business or had their accreditation revoked.
• Cap the loan amount allowed to be borrowed and put toward a degree. Universities will have to meet the market prices rather than just passing on their wasteful financial practices to students.

Epilogue

President Johnson’s war on poverty included funding to help those without the financial resources to attend college. The theory being that the higher the education one pursues, regardless of degree or skill/trade, the more likely they will bet able to support themselves, their families, and our country. It was a very worthy dream, but the irony is that this very program, which was established to help our disenfranchised, has made them the largest holders of student loan debt.

The old sons-of-bitches politicians quietly removed the single tool that would force financial corrections in the higher education markets: bankruptcy. This decision was the single greatest cause of today’s crisis but also of the billions of dollars made by corrupt politicians and the student loan industry (which is why congress kept it in place.  They and their masters are making too much money to want to change it). It locked the metaphorical cell door on the congressionally made student loan debtor’s prison.

Congress expanded financial aid regardless of income/need and then created a quasi-governmental corporation (Sallie Mae) to handle the huge increase in student loans being made as a result. By doing so,  they established a buffer between themselves and the corruption,  allowing them to look you in the eye and lie, all the time with their pockets open . From there, dozens of corrupt collection/servicing companies began making billions of dollars off of student loans every year.

For-profit colleges began to crawl out of the woodwork and grew exponentially with all this new money to be made. Many of these schools, as well as traditional nonprofits, were less concerned with quality education than they were with making money for themselves and their shareholders. As long as the students could borrow more (and never be able to declare bankruptcy), they were going to charge more.

The student loan industry continued misinforming students of their options and used unfair formulas to determine what the monthly payments would be. By doing this, they ensured defaults, which meant more interest and larger amounts to be paid back (and students still can’t declare bankruptcy on loans in the hundreds-of-thousands of dollars because of compounded interest).

Universities and colleges, having no real oversight, mismanaged their institutions and then covered up those mistakes by inflating tuition costs and tacking on semi-hidden fees.

The financial industry, seeing the huge profits to be made, applied financial instruments similar to those used in the mortgage crisis to student loan debt. The more the student borrowed, the more they defaulted, they more money to be made from them.

This trillion-dollar industry, created by congress, now benefits congress. They are also the only ones that can change it unless the judges begin take notice of the current system’s insanity and fraud. It’s always about the money, folks, isn’t it? We hear the people we’ve elected speak of honor and ethics and morals. They tell us how they are helping us and how important we are, but the reality is that our importance ends the moment a winner is announced in an election.

Together we must cross all political and social lines and come together as Americans to hold politicians and schools accountable now and for the future of our country.

Author’s Note: My Story

I defaulted on my school loan during the mortgage crisis of 2009 (I had to choose between house payments or student loan payments). The loan servicer called me and said I had to pay them $83,000 within five days after agreeing to default. No other option was ever given to me, and I sure as hell didn’t have $83,000–ever!  Years later I was contacted by both FH Cann and Navient and presented with a bill of $139,000. I said no way was that what I owed. I was told I could either agree to that amount and sign the papers stating that it was correct, or they would come after me in court and garnish my wages. Fear. Shame. Embarrassment.

Garnishment involving my new employer. I signed. In other contexts, it would be called extortion, but not in the student loan industry. I signed. I’m on a forbearance at the moment, but my payment plan is $818.00 per month for the next 29 years (I’m 58 years old now). That means the total cost of my $31,000 loan will be over $280,000. I have nothing but social security for retirement, and I know they’ll come after that and legally take that too. I’ve made poor, regrettable financial choices in my life and would like to start over by declaring bankruptcy, like many have before me, including former President Trump (six business bankruptcies). But that would limit the profits the student loan system reaps and puts into its puppet politicians’ pockets, so we all continue to be fucked. Even if you’re not in this position, please know they are still fucking you over, too, because any system that allows only the ultra-rich to get richer leaves anyone else with crumbs, if anything at all. A corrupt system hurts us all, and the fact that it’s so blatantly exists, openly flaunted and its fraudulent practices celebrated dissolves the very fabric of our democracy. It cannot be left to destroy us any longer.

I’ve lived a life of shame, anxiety and depression for many years as student loan companies would call my home, my work, my family members. They had robot calls leaving messages about my debt on my boss’s phone. I’ve written to my congressmen, senators, governor, attorney general… And only one thing has changed: M=me. I will not allow these motherfuckers to hold me down anymore. This is my story, but I know there are millions–millions more!– just like mine. The shame is not on us but on them. Fight! Fight! Fight!

This is the fifth and final installment of a five-part series by Alan Yeck reflecting on the student loan system, its challenges, and the far-reaching effects it can have. For a full list of works cited, please view the last installment in the series.

We have the power to change the business of education back to a right for all. Contact your representatives and ask them to listen to these facts and national narratives.

Read Part 1 here

Read Part 2 here

Read Part 3 here

Read Part 4 here

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Full Series: Works Cited

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Arvedlund, E., & Fernandez, B. (2019, July 1). Your student loan servicers-Navient, Nelnet, and Fedloan-pay big bucks to CEOs and lobbyists. Retrieved from The Philadelphia Inquirer: https://www.inquirer.com/business/student-loans-navient-fedloan-great-lakes-nelnet-mohela-slsa-scott-buchanan-doe-20190805.html

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Pringle, B. (2017, December 13). Skyrocking university president salaries paid for by student debt. Retrieved from The Washington Examiner: https://www.washingtonexaminer.com/skyrocketing-university-president-salaries-paid-for-by-student-debt

Sackstein, S. (2019, April 18). Why Has the Cost of College Outpaced Inflation? Retrieved from Ed Week: http://blogs.edweek.org/teachers/work_in_progress/2019/04/why_has_the_cost_of_college_ou.html

Schoen, J. (2016, December 8). Why college costs are so high and rising. Retrieved from CNBC: https://www.cnbc.com/2015/06/16/why-college-costs-are-so-high-and-rising.html

Sharpe, R. (2016, November 3). Those Hidden College Fees. Retrieved from The New York Times: https://www.nytimes.com/2016/11/06/education/edlife/those-hidden-college-fees.html

Stebbins, S. (2019, October 26). How much do govenors make per year? Here’s the breakdown by state. Retrieved from USA Today: https://amp.usatoday.com/amp/40340391

Steele, J. B., & Williams, L. (2016, June 2018). Who got rich off the student debt crisis? Retrieved from Reveal News: https://www.revealnews.org/article/who-got-rich-off-the-student-debt-crisis/

Stratford, M. (2019, August 15). How the student loan industry lobbied Devos to fight state regulations. Retrieved from Politico: https://www.politico.com/story/2019/08/15/student-loan-devos-lobbying-1464926

Student Loan Debt Statistics for 2019. (2019, September 23). Retrieved from The Motley Fool: https://www.fool.com/the-ascent/research/student-loan-debt-statistics

Student Loans Discharged under Totality-of-Circumstances Test. (2018, May 29). Retrieved from National Consumer Bankruptcy Rights Center: https://www.ncbrc.org/blog/2018/05/29/student-loans-discharged-under-totality-of-circumstances-test/

Swaminathan, A. (2019, November 25). Student loan reform group sues Education Secretary Betsey DeVos and CFPB Director Kathy Kraninger. Retrieved from Yahoo: https://finance.yahoo.com/news/student-loan-lawsuit-education-secretary-devos-cfpb-160011498.html?guccounter=1

Sweet, K. (2019, February 14). Report finds problems with student loan servicing, oversight. Retrieved from AP News: https://apnews.com/cc655fdea293469d86231e4bcb10a5ee

Tanzi, A. (2019, May 12). U.S. Stepping Up Enforcement of Delinquent Student Loans. Retrieved from Bloomberg News: https://www.bloomberg.com/news/articles/2019-05-12/u-s-stepping-up-enforcement-on-delinquent-student-loans

The Astonishing Increase In The Price Of Textbooks Since 2004, Visualized. (2019, March 9). Retrieved from Digg: https://digg.com/2019/textbook-recreational-book-price-change-data-viz

Turner, C. (2018, August 27). Student Loan Watchdog Quits, Says Trump Administration ‘Turned Its Back’ On Borrowers. Retrieved from NPR: https://www.npr.org/2018/08/27/642199524/student-loan-watchdog-quits-blames-trump-administration

Open Letter to those in Opposition to Student Loan Forgiveness

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.

Legitimate?

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.

Predatory?

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.

Ethical?

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.

Corruption?

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.

Misappropriation?

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

https://www.change.org/p/pandemic-stimulus-cancel-student-loans-by-executive-order

JPMorgan CEO Jamie Dimon: Student Loans Are “Irrational”

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.

The Killing of American Higher Education (Part 4)

Alan J. Yeck

The Dirty, Rotten, Crooked, Broken, Student Loan System and the Immoral Bankers, Brokers, Collectors, and Corrupt Politicians Who Make Billions Off of It While the Courts Garnish Wages and Destroys Lives

The Modern Philistines

David faced one giant Philistine and defeated him. The modern Philistines never forgot this lesson and therefore they attack today with overwhelmingly larger giants, both in numbers and in strength. Individual student loan debtors cannot afford the legal fees to challenge the system, and that’s even if the courts had any balls to stand up and make their own definitions of “undue hardship”.

Bill Clinton was paid nearly $18 million over a five-year period to be the honorary chancellor of a for-profit edcuation network, Laureate International Universities (multiple lawsuits have been filed against this organization). His contract with them concluded in 2015 as Hillary started her run for president. During her time as Secretary of State, after Bill was honorary chancellor, the U.S. State Department gave $55 million in grants to a non-profit organization chaired by Laureate’s chairman, Douglas Becker.

The following was taken from a report by David Halperin, published on June 21st, 2016, “Friends In High Places: Who Endorses America’s Troubled For-Profit Colleges?” posted on the web page Republic Report: Investigating How Money Corrupts Democracy. I have kept the hyperlinks in case you want to dive deeper and would urge you to read the full report found here.

This by no means identifies all the players involved in this nightmare. It would probably also include your congressman, your senators (all three branches of the federal government), your state reps, governors and attorneys general who have not moved forward in investigations and prosecution for political reasons. All are involved in the creation and maintenance of a system so corrupt that it is unparalleled to anything in the history of the United States. Some of the below are still active in one capacity or the other and others have moved on or are deceased.

“I went to college hoping to make a difference in the lives of my future students. I came out with a debt around [$50,000], could not get full-time work, so I went back to get my master’s in special ed. I had four credits to finish, but my mom got sick so I had to quit school. I am 53 years old and now owe over [$130,000] with interest. I can’t buy a house, have no retirement [fund] and will never pay this off. The American dream is out of reach. Unless I win the lottery, I will be paying until I die and even then it won’t be paid off!” said Jeanne Mallett. 

The Damage and Destruction Well Beyond a Bad Credit Rating

The destruction caused by garnished wages, garnished tax returns, garnished social security payments and unfair monthly payments go much deeper than a bad credit rating. Being financially crippled, being in a government-sanctioned debtors’ prison literally destroys the American soul. It’s not about the money but our American understanding of what is societally right or wrong and how the student loan system openly and completely, violates those beliefs. You cannot continue to fuck people over and over again and again and maintain a functioning society – at least not the one we grew up believing in. Truth. Honor. Justice.

In a study at Northwestern, those with higher debt levels relative to their incomes reported much higher levels of stress, anxiety, depression, a larger presence of mental disorders, drug dependency, and poorer health overall. In a survey by Student Loan Planner, one in 15 student loan borrowers has considered suicide because of their loans. I believe that number is much higher on a national scale. People consider suicide when hope disappears, and the student loan system does just that – kills the hope that anything will ever get better. Other studies show that student loan debtors constantly lose sleep over their loans, which has prevented them from taking care of themselves or purchasing health insurance. Those who do have health insurance are more likely to see a mental health professional to help deal with the stress of debt.

Economics

The average graduate will leave college owing almost $40,000 in student loans. While industry folks (politicians, judges, collection agencies, higher education administrators, etc.) are concerned with shaking down the individual, there is a much broader, negative effect on the U.S. economy. You will never turn on the the news and see that the markets are on the verge of crashing globally because Lydia and Marcus went into default on their loans. Student loan debt is a slow, painful death for the individual and affects sustained long-term economic growth. Besides the obvious hit on the home buying market, millions of these borrowers have no savings or retirement fund. With collectors garnishing social security, what little folks do have is not enough to live on. You will see an increase in homelessness and all related social issues, including hunger, disease, crime and drug use — all amplified tenfold if this corruption isn’t addressed.

Advocates

There are many individuals and organizations out there fighting the good fight. Below are a few of them to check out, and please, help them in any way you can. Considering the amount of money at stake for corrupt politicians and the loan industry, it’s truly incredible that we are making any headway to bring attention to these criminals and the damage they continue to do to our country.

• Student Loan Justice https://studentloanjustice.org/
• Student Debt Crisis https://studentdebtcrisis.org/
• Student Borrower Protection Center https://protectborrowers.org/
• Harvard’s Project on Predatory Student Lending https://predatorystudentlending.org/
• Higher Ed Not Debt https://higherednotdebt.org/

This is the fourth installment of a five-part series by Alan Yeck reflecting on the student loan system, its challenges, and the far-reaching effects it can have. For a full list of works cited, please view the last installment in the series.

We have the power to change the business of education back to a right for all. Contact your representatives and ask them to listen to these facts and national narratives.

Read Part 1 here

Read Part 2 here

Read Part 3 here

A Giant Letter for Giant Hope

They don’t seem to pay attention to my normal size letters so I thought I’d go big this time. I wanted to get 10′ sheets from a paper mill but they don’t do small projects and I had no need for an additional 10,000 yards so I had to become a ‘craft king,’ a ‘maker man.’

I ordered 44″ x 20 yards of printer paper then glued four, 44″ x 44″ sheets together to make the envelope. The three pages inside were 44″ x 104″ long. Finally, I bought some polyurethane, 1/2″ insulation to hold the shape of the envelope. Fortunately, I also had a lot of help from my cats. $123.00 later, it was on it’s way to President Biden. It’s supposed to arrive this Friday. 

I don’t know if anyone will read this one either. I just know I have to keep trying to bring facts and lasting solutions to those in charge about the student loan debt crisis. What is currently coming out of Washington appears to come from the student loan industry lobbyists, and do nothing but ensure the corruption continues. I’m always hopeful in our democracy though. What else can I be?

The Killing of American Higher Education (Part 3)

Alan J. Yeck

The Dirty, Rotten, Crooked, Broken, Student Loan System and the Immoral Bankers, Brokers, Collectors, and Corrupt Politicians Who Make Billions Off of It While the Courts Garnish Wages and Destroys Lives

The Black Hole of Incompetent Leadership in Higher Education

Universities teach business education (best practices in leadership, management, finance, accounting, organizational behavior, HR, etc., and all the processes that go with these) but they seldom apply it to their own operations. It can often be an ego-driven, personality-based free-for-all from the top down in constant turmoil hidden from outside eyes.

A 2018 report from the Organization for Economic Cooperation and Development (OECD) has the U.S. spending more on higher education than any other country in the world with the exception of Luxembourg (college is free  for the citizens of the small country, so we’re still number one on higher education spending) but the results are far from what they should be.

Andreas Schleicher, OECD director for education and skills says that “The U.S. is in a class of its own… Spending per student is exorbitant, and it has virtually no relationship to the value that students could possibly get in exchange.” Averaging $30,000 per student the U.S. spends double what the other developed countries spend. The $1.6 trillion question is, why?

According to data from the Bureau of Labor Statistics comparing the Consumer Price Index (CPI) for all goods, the average annual increase in college tuition between 1980 and 2019 grew by nearly 300 percent compared to a 120 percent increase for everything else. This is only the average tuition cost increase; there are many public and private institutions that have increased much more. In one generation, we have crippled the great equalizer of education and placed millions of Americans in a modern-day debtor’s prison. The extent of the damage and destruction that is being done to our country from this system is deep, wide and if not addressed in full, will have a cataclysmic effect on the nation’s health for decades.

State Reductions in Subsidies

Over the last 30 years, public dollars spent on higher education were drastically reduced year after year, and the only way for higher education to survive was to increase tuition and pass the financial burden on to the consumer – and that model continues to this day. I’ve heard this repeated over and over by senior administration to the trustees, the faculty, the parents, so much so that they begin to believe it.

The fact is that in inflation-adjusted public dollars, much more is spent on higher education today than in the 1970s. In fact, public investment in higher education is more than ten times what it was then. Compare this to military spending in the same time period which only increased twice as much. States did significantly reduce funding during the last great recession, but we are still looking at an $80+ billion subsidy, so it still doesn’t account for the increases in the current price of post-secondary education. Studies also show that when state funding does increase, there is little reduction, if any, in tuition (Rizzo, Ehrenberg).

The Bennett Hypothesis

The Bennett Hypothesis began in 1987 when President Ronald Reagan’s Education Secretary William J. Bennett wrote in a New York Times op-ed entitled “Our Greedy Colleges” that federal government’s financial aid programs “…enabled colleges and universities blithely to raise their tuitions, confident that Federal loan subsidies would help cushion the increase.”

Bennett’s hypothesis has been studied and debated by scholars and economists with neither being able to clearly state cause and effect validity.  Over the last 30 years, though, we’ve seen a correlation between tuition costs increasing as federal student loans increased. When Bennett was asked about his hypothesis in a 2013 New York Times interview he said he still believes financial aid contributes to tuition increases but is not the only cause.

“If the federal government gives money, tuition goes up. If the federal government doesn’t give money, it goes up. Now, I think the availability of federal funding drives it up more quickly and more surely. Federal student aid makes it easier for colleges to do what they’re going to do anyway, which is raise tuition. There’s more money available.”

Bowen’s Rule

Howard Bowen was the president of Grinnell College and an economist who theorized in his book “Costs of Higher Education” that higher education institutions will spend all the money they are given or can spend. If they have covered all budgeted expenses, they will find something else to spend it on. On the other hand, if colleges and universities are under financial strain, instead of finding areas to cut costs, they’ll look for ways to increase revenue — tuition being the easiest way. Bowden’s Rule, alternatively known as the “revenue theory of cost” is explained in five points:

1. The dominant goals of institutions are educational excellence, prestige, and influence.
2. There is virtually no limit to the amount of money an institution could spend for seemingly fruitful educational ends.
3. Each institution raises all the money it can.
4. Each institution spends all it raises.
5. The cumulative effect of the preceding four laws is toward ever increasing expenditure.

Tuition increases have little to do with what education is supposed to be, but rather a modern mixture of executive administration and faculty governance being marketed and sold a social media version of it. They’re raising tuition because they want the money and the more costly the institution… Well, it must be awesome (rule 1).

More Students Cost More

Because the number of people attending college today has increased, the amounts that the state and the federal governments subsidize on a per-student basis are lower than they were at the peak of appropriations in the 1990s. As demand for it increases, education requires more teachers, more support staff, more infrastructure. That is just how service industries are affected by economic growth. While there’s truth in that, it doesn’t explain why higher education costs in the U.S. are double and triple what they are in similarly developed countries.

Employee Costs

The increases to faculty salaries and the increased cost of healthcare benefits have driven up operational costs, which could only be paid off by increasing tuition.

In the 1970s, the vast majority of faculty teaching on campus were full-time employees. Today, it is not uncommon to have more part-time adjunct (non-tenure track) faculty teaching than full-time. These faculty are paid per course they teach, and most do not receive any benefits. Full-time faculty salaries at the majority of colleges and universities have remained relatively flat throughout the last 30 years. This year, there was an average increase of 2 percent, but the inflation rate was 1.9 percent. I will note that there are professors whose salaries are in the six figures, but they are the exception and not the norm. The average salary for a teacher is less today than it was 40 years ago.

Administrative Bloat

In 1980, colleges spent $21 billion on instruction (41 percent of total spending) and $13 billion for all other support services (26 percent of total spending). Data from the National Center for Educational Statistics shows U.S. public degree-granting institutions today spend $372 billion total with 42 percent of that amount being spent on instruction and 37 percent on support services. Spending on instruction increased by 1 percent while administrative spending increased 16 percent, meaning universities are spending about the same on administration as they do on instruction (their raison d’être).

Some of these increases can be attributed to an increasing number of rules and regulations from the Department of Education that require significantly more resources to ensure compliance. There are also more programs for students who are struggling academically with tutoring services, career counseling, and internships. The U.S. also leads the world in money spent on non-teaching staff who do not provide direct academic support such as campus safety, alumni relations, admissions, recruiters, fundraising, financial aid, athletic, diversity and inclusion, food service, and maintenance staff. There are senior executives who are being paid an outrageous, questionable amount of money but the increases have not been given to senior executives so much as those working professional support jobs.  Administrative positions increased by 60 percent between 1993 and 2009, ten times the growth rate of tenured faculty in the same time period.

Athletics

College sports can make a great deal of money for some schools… For a few schools… For very few schools, so the vast majority are losing money from their sports programs. These programs can only be supported through direct and indirect financing through fees, general funds, tuition…  Every student is therefore paying more to support the sports programs. Schools argue that they attract more students and therefore increase overall revenue, but athletes are often given some type of scholarship ranging from a full ride to a reduction in costs (as is the case with NCAA Division III schools, which are forbidden from offering scholarships but can offer deep discounts. Go figure).  The vast majority of college sports are subsidized programs, and those costs are again passed on to the student. I personally support college athletics but believe the costs associated with them need to be completely transparent to potential students.

The University Amusement Parks, Books of Gold and the Mystery of “Fees”

Last year, a higher education institution spent a record $12 billion on constructing new facilities to attract students, including the infamous lazy river where student can destress by floating around an amusement park-like water attraction. There are climbing walls, shiny new sports facilities, gourmet dining and luxury dorms. Some of these additions may be paid for by outside funds or alumni, but ultimately, the inevitable maintenance and repair fees ahead will be added into budgets, and those budgets will be passed on to the students. Universities want more students, but there is no legitimate argument for the welfare of the student taking priority over revenue. They have created a machine, and it needs a great deal of cash for those gears to keep turning.

Textbooks

Not seen when parents and students are looking at the costs of education are the textbooks. Compared to your basic bookstore non-fiction novel, which has actually decreased in costs, textbooks have more than doubled, increasing four times faster than inflation. This escalation goes hand-in-hand with the rest of the student loan industry. The four major publishers that control the majority of the textbook market, charge what they want because they know customers will be obliged to pay. New texts can run easily into a few to several hundred dollars, often with multiple books needed for each course.

Fees: Hidden Costs of College

In the last 20 years, fees have increased 30 percent more than the outrageous tuition increases, but rarely are they talked about. The bottom line is that fees, as in ‘tuition and fees’ are a way for institutions to amass more money without it being seen as increasing tuition. Increasing tuition normally requires trustee or state approvals, but fees can be tacked on at will – and they are. Need more money to cover employee salaries? Add an orientation fee. Short on funds for the new sports uniforms? Create a technology use fee. Paying with a credit card? Convenience fee. Drop a class – fee. Add a class – fee. And on and on and on… Because many of these fees can be hidden in dense college bulletins, in the fine print, while others are only applicable to specific programs, students often don’t see the full picture of college costs until their bills become due. Senior management at these colleges and universities have made the decision to bring their institutions and higher education down to the lowest possible ethical operations without crossing the line into true fraud, but they are damn close.

Are You Shitting Me?

Public (your tax dollars) university presidents are paid like CEOs of Fortune 500 corporations. I do not fault them for saying ‘yes’ to their exorbitant salaries but rather condemn the trustees, who are supposed to act as students’ guardians, holding their best interests in mind and actions. A full report including the top paying private institutions, can be found here. If you don’t want to look at the list, though, I can break it down for you simply. The lowest-paid president among the top-50 university presidents made more in 2018 (including base, bonuses and non-taxable income) than the highest-paid state governor.

We look to these leaders to hold dear the public trust of higher education, yet they appear to be completely out of touch with their own students’ challenges and needs. They fear the trustees, only, and have no sympathy for the debt their graduates will carry for many years after they themselves have retired with the title of president emeritus/emerita and dedicated campus office. If this is not the case, where are their voices in addressing the corrupt student loan system in which they have become key players?  Their bloated salaries and positions mean more to them than those they are supposed to be taking care of. Piss. Poor. Leadership. The maniacal cost of higher education isn’t because of just one thing but a consistent mismanagement of university funds and priorities. Because education cannot oversee itself, we must demand our elected officials at the state and federal levels call out this waste and abuse and hold senior leadership accountable. Until that is done, costs will continue to rise and continue to be passed on to the students.

This is the third installment of a five-part series by Alan Yeck reflecting on the student loan system, its challenges, and the far-reaching effects it can have. For a full list of works cited, please view the last installment in the series.

We have the power to change the business of education back to a right for all. Contact your representatives and ask them to listen to these facts and national narratives.

Read Part 1 here

Read Part 2 here

Lies, Damn Lies, and Damn Student Loan Debt Lies

Alan J. Yeck

Too many of us are just reading the headlines and not the content, the meat of the articles. On social media we are quick to respond, to post, to tweet based only on that headline and by doing so we perpetuate lies.

There was a recent article headline (I’ll paraphrase) ‘Biden Close to Cancelling Student Loan Debt.’ As I read the article, the headline was completely misleading. I do not know if it was the author’s choice to manipulate us or the editors, but it was nonetheless manipulation – a lie by omission of the facts. The article was about Senators Warren and Schumer introducing a bill to cancel up to $50,000 of student loan debt for each borrower – very different from the headline. The reality is that there is so much misinformation out there about student loan debt that even reading the article would have done little, if any to clarify the crisis. Please allow me a few more minutes, and sentences, to explain a bit more.

Damn Student Loan Debt Lie #1

The amount of student loan debt that is currently in mainstream media is around $1.7 trillion, both federal and private student loans. This number comes from the loan servicers/Department of Education telling us what is owed. This is a number that gets folks very worked up about ‘forgiving’ from their tax dollars. 

The Truth 

Millions of Americans have paid off their student loans, and then some, but cannot get out from under the ongoing interest scam. For example, Corella had a $35,000 student loan for a graduate degree in education (she’s a 7^th grade teacher). To date she’s paid $38,000 back but the loan servicer is telling her she still owes $87,000. This is not an uncommon story at all. Pull those numbers from the Department of Education and we’ll see that millions have paid back their loans but not counted as such because of the predatory interest.

Damn Student Loan Debt Lie #2

“It’s those kids, privileged kids, that think they don’t have to pay back their debts. I pay my debt and so should these punks. Get the hell off my lawn!”

The Truth

Of the 45 million Americans with student loan debt, only 37.5% are below the age of 30. The other 62.5% are older than 30. Minorities and women are disproportionately affected by student debt. Predatory lending, longer times to complete, and longer times to pay back increase the interest, which is then often capitalized on the original balance, which interest is then reapplied to. 

Damn Student Loan Debt Lie #3

It’s their own fault for going to these expensive, private schools. 

The Truth

Four-year public institutions enroll a higher percentage of students (44.8%), followed by two-year public institutions (33.2%), and four-year private non-profit institutions (19.5%). The cost of a four-year degree has increased 400% above inflation in just one generation. While the schools are quick to point the finger at decreased state and federal funding, they themselves are very much to blame. Fiscal mismanagement, increased competition from for-profits, bloated mid-level administrative lines, and the lack of leadership at the executive and board levels are just as much, if not more so to blame for the unjustified increases in tuition and fees. 

Higher education is a black hole that will absorb every penny it’s given and still want more. They must be held accountable for their costs, their degrees offered, their completion rates, and time of completions. Six years is the acceptable number today to complete a four-year degree, but even with that insane statement (“six years is the acceptable number today to complete for a four-year degree” – WTF?), the completion rates within that time frame are less than 50%.  Why? Because of arrogance, tradition, traditional arrogance, inability to change, and lack of any real (teeth) federal oversight. The feds must address this or the costs will continue to go up. 

Damn Student Loan Debt Lie #4

There are several options for repayment that are based on a borrower’s income. There’s no reason they should ever go in default. 

The Truth

The repayment plans are between 10-20% of discretionary income or income that they believe is ‘leftover’ after you pay your bills. Unfortunately, they don’t consider these bills in your life to determine a true discretionary number; rent or mortgage; utilities; auto loan payments; auto insurance; phone; internet; veterinarian bills; health insurance; dental; food; and emergency funds, or any kind of savings/retirement. What this means is that when your transmission goes and you must fix it to keep your job, you are forced into default on your student loan because you have not been allowed financially to plan for this. Then they start piling on the interest. The system is created to increase defaults. Take it all. Default. Take more, longer. Repeat until you die (at least that’s something to look forward to in this corrupt system).

We have lost what the purpose of education is supposed to be. Education is the single greatest factor that will determine our future as a nation (or the single greatest factor in destroying our nation). Education isn’t just degree programs but also the trades and apprenticeships – all equally critical, and all should be equally supported. Instead, the politicians have turned education into a commodity, like pork bellies, to be traded and make a great deal of money off of, for a very small group of people. 

Sustainable Solutions

• Remove interest and recalculate from the original balance borrowed, less what has been paid back by the borrower. That’s the real number. The government should not make money off of helping its people/building the future of the country. 
• Restore, unconditional bankruptcy rights to student loan borrowers. This was the foundation that this crisis was built on. Criminalizing student loans has made a great deal of money for a small group of people. 
• Hold higher education financially accountable for the costs of their degrees, job placements, graduation rates, graduation time frames, and do not lend to students going to institutions that do not comply. 
• Recalculate and reform payment plans including stopping all wage, social security, and tax return garnishments.
• Disassemble the loan servicing companies that have lied, cheated, and stolen the lives of so many Americans through their fraudulent operations.   

Canceling $10k or $50k without any other changes to the student loan industry, predatory lending, bankruptcy, and the overly inflated cost of education only ensures the crisis continues and the money continues flowing back to D.C. It’s still fraud, it’s still corruption. We have lived with this dirty game so long that now we fool ourselves into thinking $50k is good?

Just because the government is giving us a box of chocolates (Russell Stover to boot) when they screw us doesn’t make it all okay now. It’s nothing more than rearranging the deck chairs on the Titanic. I’m happy for you if it addresses your problem but ultimately, the country is still fucked. 

We have the power to change American politics back to a system that serves the people, not the politicians. Contact your representatives and ask them to listen to these facts and national narratives.

The Killing of American Higher Education (Part 2)

The Dirty, Rotten, Crooked, Broken, Student Loan System and the Immoral Bankers, Brokers, Collectors, and Corrupt Politicians Who Make Billions Off of it While the Courts Garnish Wages and Destroy Lives

Alan J. Yeck

The Age of Darkness, Greed, and Gnashing of Teeth

“It was lip-smacking,” wrote an employee of the student debt collection industry after witnessing a student loan debt protest where students wrote across their shirts the huge amounts of debt they owed.

Lip-smacking. These are the people from the loan “servicing” companies, the other end of the phone calls, the other end of the letters and emails, the other end of human decency. It’s as if by taking out a student loan, you unknowingly sold your soul to the devil.

One in four borrowers will be forced into default, or approximately one million every year, but that will increase. The dollar amount of defaulted loans is more than the tuition for all public colleges. Since the federal government can seize tax returns, garnish wages, and garnish social security payments, the agencies contracted to recover the defaults are doing very well. Very, very well.

The New (and improved) Mortgage Crisis Instrument: SLABS

Student Loan Asset-Backed Securities (SLABS). Do you understand what these are and how they make you a lot of money? No? That’s because you’re not supposed to. There is much more detailed, complex information on how these “financial instruments” work but here are the major points you need to understand – let the scales fall from your eyes.

The top three student loan collection agencies also lead with the most issuance of SLABS are Navient, Pennsylvania Higher Education Assistance Agency (PHEAA) and Nelnet (all are being sued for a variety of illegal operations). They work in collaboration with help from our buddies at Goldman Sachs, JP Morgan, Wells Fargo, et al. These are the same firms and people that brought you the 2007-2010 residential mortgage-backed securities (RMBS) crisis that foreclosed on over a million homes, who were then bailed out by the U.S. tax payer in the neighborhood of $30 trillion. Goldman Sachs awarded record bonuses that same year to the very people who caused the collapse. This group of bottom dwellers sell your student loans to investors (over $1.5 trillion in SLABS currently outstanding). These investors receive monthly loan payment and interest. Navient, PHEAA and Nelnet receive the cash, fees and commissions, which allows them to continue making more loans, while the risk is pushed to the investor.

The Higher Education Act and SLABS: A Marriage Made in Hell

Now here’s where you can see the scum rise to the surface. In 1992, federal policy from the Securities and Exchange Commission allowed student loan companies to avoid regulatory oversight. This is the same time period that student loans jumped $10 billion in two years with many changes to the HEA reauthorizations allowing more money to more people regardless of income, credit history or ability to repay. The most SLABS were sold between 2005 and 2007, with 2005 being the same year that all student loan debt was exempted from bankruptcy.

Because the market corrector of bankruptcy was stripped away from these citizens’ rights, they are on the hook for life, so SLABS are insured by the federal government which means if a loan goes into default they will garnish wages, tax returns, and social security benefits. A defaulting student borrower now owes more due to interest and fines and with the help of the federal government the investor now makes more money. Defaulting is good business for those unique people who have no interest in humanity or our country. It incentivizes the lenders to continue to make risky loans while the government protects them and the investors – everyone but the student borrowers who are then consumed, bones and all.

Over the last 10 years those “servicing” agencies have made record profits, as have those brokerage houses from these financial instruments selling your debt and profiting even more when a loan goes into default and the interest begins to substantially increase the amount owed. These institutions know that since there is no bankruptcy option available, those borrowers are forced to pay for life – debtors’ prison. “Sure, go into default and we’ll take your tax returns and garnish whatever wages you make.” Brilliant in the most diabolical way.

Borers Maggots of Our Political System

Borer maggots from beetles and moths tunnel and feed under a trees bark, in the darkness unseen by the light of day as they destroy the water and sap tissues in the tree. This causes girdling or strangulation which weakens the structure and causes the branches to dieback to the eventual death of the tree. Millions of acres are destroyed every year. Political lobbyists are the borer maggots of our political system.  It’s not about presenting a viewpoint or idea. It’s about buying influence, and they spend a lot of money doing it. Where your vote ends, which is immediately after the election, lobbyists step in to ensure that they get the legislation they want to happen, not what is best for you or the country but for them and who pays their salaries.

Source of Funds are PACs, Super PACs, Individuals – an average would be 60 percent to Republican candidates and 40 percent to Democratic candidates. Both parties get to be in on the take.

The student loan industry has their maggots deep in the House, Senate, Executive Branch and the Department of Education and the damage they’ve created cannot be hidden any longer.

About $90.92 million has been spent lobbying since 1998 (the Center for Responsive Politics based on data from the Senate Office of Public Records).

Student loan companies spent $11,072,047 (the Center for Responsive Politics based on data from the Senate Office of Public Records) on campaign contributions to Congress over last 9 election cycles (2002 – 2018). For 2019, Navient alone spent $1,000,000 dollars lobbying congress, the Department of Education and the Office of the Vice President.

“I went back to school in 40’s to get a better job. I got an Associate, Bachelors and a Masters. Almost 9 years later I don’t have a better job but I have almost $80,000 of debt. No matter how much I pay the balance doesn’t go down. I am at my wits end. I don’t know what to do. I barely have gas money to get to work to pay this bill,” said LaDean Mitchell.

Defiance. We Must Fight!

I cannot keep up with all the lawsuits filed in the last several years against the student loan industry including the (self) servicing agencies, Department of Education, Secretary of Education, Betsy Devos, the Consumer Financial Protection Bureau and their new leader Kathy Kraninger. What I want you to understand is that system is completely and utterly broken and in complete chaos driven by unprecedented greed and corruption. Below is by no means a complete list.

The Consumer Financial Protection Bureau filed against Navient in 2017 (when Seth Frothman was still there fighting for American consumers) for “systematically and illegally failed borrowers at every stage of the repayment by”;

• Steering borrowers toward more expensive forbearance instead of affordable repayment plans;
• Misleading borrowers about the options available;
• Processing payments incorrectly.

Attorneys General of California, Illinois, Mississippi, Pennsylvania, New Mexico, Arkansas, Arizona, Connecticut, Idaho, Iowa, Kentucky, Missouri, Nebraska, North Carolina, Oregon, Pennsylvania and Washington as well as the Securities Exchange Commission and the Consumer Financial Protection Bureau have launched investigations and/or filed lawsuits against this industry for fraud and unfair practices.

New York state sued the Pennsylvania Higher Education Assistance Agency (PHEAA), aka American Education Services. New York Attorney General Letitia James said they “failed miserably” in their servicing of the Public Service Loan Forgiveness Program.

I previously mentioned Seth Frothman, who resigned from the Consumer Financial Protection Bureau as its chief ombudsman over student loans. In his resignation letter to the than acting director Mick Mulvaney, Frothman stated the administration “has turned its back on young people and their financial futures…unfortunately, under your leadership, the Bureau has abandoned the very consumers it is tasked by Congress with protecting…instead, you have used the Bureau to serve the wishes of the most powerful financial companies in America.”

The Celebration of Corruption

By the Department of Education accrediting (recognizing the validity and affirming the quality) any institution of higher education, they have done so on behalf of the students that are or would be attending. What has occurred is that for-profit institutions were accredited because of the money paid by these institutions to lobbyists and politicians – not because they were quality programs that would give the graduates the career promised them. Then they go out of business and those students who took out loans to attend are still on the hook for all the money those institutions took from them, or rather, have a barbed hook inserted through their spine by the federal government.

The National Student Legal Defense Network filed a lawsuit in U.S. District Court for the District of Columbia alleging that the Department of Education’s practices “caused students at the schools to borrow money and waste months of their lives in pursuit of an education they did not know was unaccredited.” In 2017, Dream Center Education Holdings purchased around 100 for-profit schools from Education Management Corporation. A few months later, some of these schools lost accreditation but students were still required to pay for the fraud perpetrated on them.

Recently, Harvard University’s Project on Predatory Student Lending filed a lawsuit again Betsy Devos on behalf of former students that were enrolled in for-profit schools operated by Corinthian Colleges that are now out of business.

Another lawsuit was filed by a non-profit student loan advocate group Student Debt Crisis, against DeVos and the Department of Education as well as against the Consumer Financial Protection Bureau and its Director, Kathy Kraninger. This lawsuit alleges that because of mismanagement, over 40 million student loan borrowers ($1 trillion) are at risk of being cheated by the companies that administer their loans.

Kraninger, who is the head of an agency originally established to look after the interest of consumers including student loan borrowers, hired former Pennsylvania Higher Education Assistance Agency (now being sued by Attorney General of New York) executive Robert G. Cameron as the agency’s student loan ombudsman. The shepherd has hired the wolf to oversee the flock. Why? Because the shepherd’s real job is keeping the fraudulent money flowing back to her masters in the higher ed student loan industry, not the sheep. Among many other destructive moves, Kraninger has also proposed a debt collection rule that would allow debt collectors to send unlimited texts and electronic communications to consumer as well as appointing Rebecca Steele, a former mortgage banker who was called the “new face of the housing crisis” to serve on the Consumer Advisory Board.

“In October 2013, The New York Times Referred To Rebecca Steele, Then Rebecca Mairone, As The “New Face Of The Housing Crisis” Due To Her Role In “Saddl[ing] The Housing Giants Fannie Mae And Freddie Mac With Bad Mortgages That Resulted In Over $1 Billion In Losses.” “More than five years after the housing bust, the roll call of banking executives who have been blamed by the public for the crisis has grown ever longer. But when it comes to top managers who have been hit with a jury verdict for pushing dubious mortgages, the list is small indeed. The new name added this week was Rebecca S. Mairone, a midlevel executive at Bank of America’s Countrywide mortgage unit, who was held liable by a federal jury in Manhattan for having saddled the housing giants Fannie Mae and Freddie Mac with bad mortgages that resulted in over $1 billion in losses,” said Landon Thomas Jr.

I’m sure she’ll be of great help to the financial industry.

There are also numerous class action lawsuits ongoing about the loan industry’s deceptive practices and dirty dealings filed by unions, coalitions and individuals.

This is the second article in a five-part series by Alan J. Yeck reflecting on the student loan system, its challenges and the far-reaching effects it can have. Check back each Thursday for the latest installment. For a full works cited list, please view the last installment in the series.

We have the power to change the business of education back to a right for all. Contact your representatives and ask them to listen to these facts and national narratives.

Read part 1 of the series here

The Killing of American Higher Education (Part 1)

The Dirty, Rotten, Crooked, Broken Student Loan System and the Immoral Bankers, Brokers, Collectors and Corrupt Politicians Who Make Billions Off of it While the Courts Garnish Wages and Destroy Lives

Alan J. Yeck

Introduction

The U.S. spends almost double that of anywhere else in the world on higher education and that’s before the interest charges are shackled upon the students. Nine million Americans are either in default, deferment or forbearance on their student loans with a million more each year. These students are Democrats, Republicans, African American, Caucasians, Latinx, Asian, Native American, young, old, married, divorced, LGBTQ, fathers, mothers—every single demographic that exists. It’s not a political party issue; it’s blatant criminal activity by our elected officials, their collection agencies and the Department of Education. For their own profit, they have created a life-long debt sentence for these students at the cost of our country’s future.

The student loan debt crisis didn’t just appear. The warning sirens have been blaring for over a decade with the causes going further back than that. The subprime mortgage crisis was also seen years before but again, the people who could have changed it, the politicians, chose to do nothing until it was too late and then they bailed out the firms to the tune of $30 trillion. That same year Goldman Sachs paid out record bonuses to the very people who caused it. Why was this allowed and why is the student loan debt allowed? Because nasty, rotten bankers, brokers, collection agencies, politicians and billionaires are making a great deal of money off of the dreams and misfortunes of students and the mismanagement of higher education (again allowed). Shame on them all. A pox on them all. There are solutions beyond the news bites and campaign rhetoric but solutions don’t pay as well.

The student debt crisis is not new. It wasn’t like a tornado that pops up with the warning sirens giving only minutes of notice before it destroys everything in its path. It has been in the making since the 1970s and touched down on land over a decade ago. It was seen then—sirens blaring, projected to get worse. The narrative never changed: Do not ignore this or very bad things will happen—and it has. Our elected officials didn’t just ignore it but instead they have actively, albeit quietly, ensured the system remained broken and has supported the loan “servicing” agencies in pushing their boots harder on the necks of borrowers for their own profits.

These numbers, including our $1.7 trillion student loan debt figures are always increasing so this is a snapshot of the first quarter of 2019:

• Federal loan borrowers in repayment: 18.6 million.
• Federal loan borrowers with loans in deferment: 3.4 million.
• Federal loan borrowers with loans in forbearance: 2.7 million.
• Federal loan borrowers with loans in default: 5.2 million.

11.3 million American citizens cannot make their payments. Twenty-five percent of all borrowers will go into default and that’s where the true ugly begins. At this point interest begins to quickly pile on and can double, triple, quadruple the original loan amount.

Once in default, the loan is sent to collections. This is also the point where the power finance players make their money. With the blessing of congress and the courts, wages are garnished, social security payments are garnished, tax refunds are taken in full, you are no longer eligible for deferments or forbearance, and your credit is ruined. This can also cost you your job, or prevent you from future employment. This will last until the loan is paid back or until death (except for private student loans where creditors can come after the estate).

How we reached this point can be very confusing (intentionally designed) so I’m going to attempt to deconstruct the main areas that facilitated the fraud and the areas that keep it going and growing. All of these issues have been previously reported by numerous journalists but have not always tied the relationships together of higher education, politicians (all branches of the federal government), collection/servicing agencies, financial institutions, billionaires and how they worked and continue to work together to commit such a monumental deception on the American public.

Beware phony advocates for reform that appear to speak on your behalf with partial fixes but do so just to ensure there are no real changes to the system that would result in any financial losses for themselves and the masters they serve. The predatory student loan industry exists because our elected officials are either corrupt themselves, don’t take the time to truly understand all the complex aspects of the abuse and fraud in the system (they choose to listen to the industry’s own lobbyists instead of their own constituents), or are just plain morons. Regardless, all kill American higher education.

The American student loan system—government loansharking enforced with judicial muscle. The mafia never had it so good.

No Good Deed Goes Unexploited

It is important to understand the history of how we arrived at our current crisis, because as I said it’s not new, it didn’t just happen last year. It was not only allowed but designed, fed and encouraged to be the devious monster that exists today. This is not the complete history but what is needed to bring us to today.

1944. The GI Bill was established to reward veterans who served their country during World War II to catch up with those Americans who remained in college during this time. Prior to this, many of these people would never have been able to afford to go to college before or after their service. This is really the first involvement we see of the federal government assisting citizens who didn’t have the wealth to attend college on their own. There were advocates who wanted this extended beyond veterans to allow more Americans to benefit from higher education, but the majority members of congress felt that since they never received that, no one else should either. No free rides was the mantra.

1958. The “Red Menace” swept the country and with Russia’s launch of Sputnik. Congress sponsored low-interest loans under national security. It’s of interest to also note that the National Defense Education Act also included debt cancellation for those students who became teachers. There was still no support for need- or academic-based undergraduate funding.

1965. President Johnson and the 89th Congress enacted the Higher Education Act (HEA). Title IV was the first true federal government commitment to providing college opportunity to students in need. This included the Guaranteed Student Loan (GSL) and College Work-Study Programs which also applied to middle-income families. Because the cost of education was somewhat affordable then, any loans to the middle class would have been a small percentage of the program. Enrollments increased and student aid appropriations took the lion’s share compared to other domestic social programs.

1972. This was a big year in higher education. The reauthorization of the HEA laid the foundation for today’s student loan system including establishing the term “postsecondary” to recognize that not everyone needed a four-year bachelor’s degree but did need further education of some sort. This would allow financial aid for those students attending community colleges, trade schools, vocational schools and students attending part-time. The reauthorization also included:

• Pell Grants began as a way students could directly receive federal aid beyond the campus-based programs.
• Private schools were now allowed to participate fully in receiving these monies.
• State Incentive Grants, which provided matching dollars to help states expand their need-based grants.
• Hidden quietly in the darkest corners of Title IV where mold feeds and vermin defecate, they established the Student Loan Marketing Association, AKA Sallie Mae, as a publicly chartered corporation to increase funding to guaranteed student loans (GSL).

The Old Sons of Bitches

In the early 1970s, while the protests of the Vietnam War were still in full swing on college campuses throughout the country, legislators became paranoid that these long-haired, lazy, hippie pinkos would use the bankruptcy system to get out of paying the federal government back for their student loans. (This was the early 70s and our government was completely controlled by wealthy, white men who did think like this.) This fear had nothing to do with reality and there was no evidence to support this position. At that time their main target was those pursuing medical and law degrees that were higher priced. Keep in mind that the degree costs were a small fraction compared to today’s tuition.

In 1973 the Congressional Commission on the Bankruptcy Laws of the United States issued a report which included that student loan debt cannot be discharged for five years after graduation. Three years later the Education Amendments of 1976, Section 439A, was adopted even though the Government Accounting Office reported less than one percent of student loans had gone to bankruptcy. Now, no student loans could be discharged in bankruptcy until five years after graduation, or unless the borrower could prove repayment imposed “undue hardship” (which was never defined by the law makers). While this passed it did have more than a few critics. Michigan Congressman James O’Hara stated that establishing this “treats educational loans precisely as the law now treats loans incurred by fraud, felony, and alimony-dodging. No other legitimately contracted consumer loan … is subjected to the assumption of criminality which this provision applies to every educational loan.”

In 1978, with the passage of the Bankruptcy Reform Act, the exception to bankruptcy discharge of student loans was moved from the Higher Education Act to the U.S. Bankruptcy Code at 11 USC 523(a)(8). While Congress sought to reverse the earlier exception, the Senate’s version prevailed maintaining the inability to discharge student loans for five years and adding that it applied to loans backed by the government and nonprofit institutions of higher education.

In 1979, Congress wanted to address the problem of lack of participation by lenders (although this wasn’t known to be a problem by anyone) so they quietly passed an amendment giving banks a higher rate of return on student loan by linking them with changes in Treasury bill rates. Prior to this the government set a cap on what lenders would make. With banks making more money, the student loan industry was born.

Just because the corrupt say it’s legal, doesn’t mean it’s still not corrupt.

The Noose Tightens

1986-92. Loan volume shot up again after the 1986 and 1992 Higher Education Act (HEA) reauthorizations. In 1990, the Crime Control Act extended the period before student loans could be discharged in bankruptcy from five years to seven years and then a year later the statute of limitations on defaulted loans, six years, was totally eliminated by the Higher Education Technical Amendments. There was a failed push to increase Pell Grants to reduce the reliance on loans and instead Congress raised the borrowing limits of students and created a new unsubsidized loan for the middle-class that was no longer based on financial need. This meant anyone could now take on a student loan regardless of their income or parents’ income. Smelling more money could be made off of the well-meaning, caring, loving parents, they also uncapped the Parent Loan (PLUS) program. Now parents could borrow, on behalf of their children, the full amount of their children’s’ educational costs. Because of these changes, enrollment took off and in a two-year period the amount borrowed increased over $10 billion.

The Student Loan Reform Act of 1993 revised how loans are serviced and financed, allowing for more students to take out more loans. This also established an income-based repayment plan stretching out to a home mortgage length of 25 years. The Department of Education responded by creating more than 70 complex rule-making packages, further complicating the regulatory process for students, schools and the government itself.

By 1998 the Higher Education Amendments, Section 971 eliminated the seven year period required before a student loan could be discharged in bankruptcy. There had been no debates or hearings on this prior to President Clinton signing the bill into law. This meant there was no longer a statute of limitations nor could student loans even be considered for bankruptcy – ever, unless the ambiguous, indeterminate, undefined “undue hardship” provision could be proven.

In 2005 the final nail was hammered into the hands of student borrowers by Congress with the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act. This meant all federal and private educational loans were excepted from bankruptcy discharge unless the undefined “undue hardship” could be proven (note: you have a better chance of being hit by lighting, which would probably be a welcome relief to my student loan borrowers, than having a judge dismiss a student loan in bankruptcy).

The politicians, with help from their financial keepers, knew by now that money, lots and lots of money, could be made off of student borrowers. By increasing funding to everyone, by ensuring every kind of nonprofit and private educational institution was eligible to receive federal and private loans, by supporting the skyrocketing costs of higher education, by removing the only tool that could provide some kind of market correction (bankruptcy), and by placing student loan debt in the financial markets (SLABS) which allowed those on the inside to make billions of dollars, they had successfully created the most devious, destructive system ever in the history of the United States.

This is the first article in a five-part series by Alan J. Yeck reflecting on the student loan system, its challenges and the far-reaching effects it can have. Check back each Thursday for the latest installment. For a full works cited list, please view the last installment in the series.

We have the power to change the business of education back to a right for all. Contact your representatives and ask them to listen to these facts and national narratives.

Reflections on Higher Education Reform: “Free College” and the fallacy of the college degree as a necessity.

By Christiane Warren, Ph.D., Guest Contributor

January 15, 2021

In today’s public discourse both on and off university campuses, the overwhelming consensus asserts that a college degree has become a necessity, even a collective right to secure individual economic security and to address past and present wrongs of racial and economic inequality.  If the cost of college remains high, many students, and disproportionally this means, students of color, are unable to attain a college degree.  Thus, existing levels of social and economic inequality continue to persist and even grow, contrary to the long-cherished belief that a college education serves as the key to social mobility and economic stability.

The answer to this generally accepted causal connection, as offered by the incoming administration and its Progressive supporters, can be found in an expanded role of Federal funding and regulation aimed at removing financial barriers from college attendance. While noble in its basic sentiment, these ideas are highly problematic and largely unrealistic in their implementation. Furthermore, much of their justification is built on a flawed premise, shaded by ideological subjectivity, and will lead, not to greater equality, but only to the hastened demise of the American higher education structure.

To address the issue in detail, it is necessary to clarify the current crisis in its actual terms: The first assumption, that a college degree is a “must have” and thereby should be fully funded by the public, namely the taxpayer, is false. Not every person needs to, nor is academically able, to earn a college degree. Most jobs still do not require four years of study. By reducing the college degree to a means for obtaining employment, we lower its educational value and place an undue burden on many students, who are neither prepared for, nor truly need four years of intellectual study in abstract thinking and theoretical analysis to obtain employment and relative financial security. Most of today’s occupations can be entered into with an arguably improved, High School education and 18 months to 2 years of vocational skills acquisition.

Yet, many argue that the modern-day high school diploma no longer serves the needs of the 21^st century workplace. The responsibility and cost of educating the American public has been displaced, largely on community colleges and state universities, where most under-prepared students attend. The need for additional services both in student activities and services along with the steep increase in assessment requirements, have greatly contributed to the growth in administrative costs.  Many educators place emphasis for reform here, demanding that colleges offer even more robust support systems, alter admission criteria and adjust course curricula to reflect the learning needs of academically under-prepared and financially marginalized students.

This acceptance of so-called “credential creep” as a fact due to the overall failure of many public high school systems, is inherently wrong and should be vigorously fought. Shifting the responsibility of general education from high school, which is free and mandatory, to colleges, which are voluntary and require payment, is contradictory to the tenets of equity and defies basic common sense.  It also further contributes to the escalation of costs and persistent educational inequality. When the educational responsibility of the secondary school system is transferred to post-secondary sector, society ends up paying twice for the same service and perpetuates instructional redundancies. Students spend additional time, financial aid, and energy, learning in college what society paid for them to learn while in high school. Not only does this deplete already limited public resources, but it also decreases their chances of success, and thus leads to greater drop-out and loan default rates.

Educators and reformers acknowledge the problem; however, they advocate for colleges to provide more support services in the name of racial and economic equity. Doing that, however, only exacerbates the original problem of inequality and further adds to the cost of higher education.

For those who truly seek reform, both for students and for society, the answers are far from easy. Points for exploration may be found in ending social promotion in public schools, curtailing systemic disciplinary discrimination against male students of color, raising the professional status of public-school teaching through recognition, salaries and support, and limiting the reliance on standardized testing as the primary measure of student achievement. By bolstering the depth and quality of the general education students achieve through their high school diploma across the board, the necessary community and critical skills, so valued can be acquired before leaving school. Thus, post-secondary learning can be either focused on acquiring specific job training skills or furthered in college for those who have both the inclination and ability to do so. Doing so should be preferable over lowering standards and expending money to teach the same course work again that was not processed in high school, during the first 2 years of college.  While on the surface, free college, especially with an emphasis on community college appears to be a laudable concept, however, on closer examination, it is based on flawed assumption and will inevitably prove to fall short of its social justice goals, while burdening the American taxpayer with an unsurmountable bill.

More About the Author: 

Guest author, Dr. Christiane Warren, Senior Consultant at Anna J Cooper Education Advocacy. Recognized for producing growth and cultivating success in the career and education space, Dr. Warren has served as tenured faculty, department chair and academic dean for entire divisions and in the Academic Affairs office at both 2-and-4 year institutions in NJ and NY. Read more about Dr. Warren here.