Sunday, May 07, 2006

Sallie Mae: Finding A Way To Make The 13th Amendment Moot

Sallie Mae's Success Too Costly For Students?

Yet another problem with Universities Today: The greater dependence of students on Student Loans.

The fact is, while many students are happy to get anything to go into college, the fact that they've become dependent on loans is a crime. Most students will, when they graduate, start their adult life in deep debt, which is bad enough -- but the system is now set up so that if anything goes wrong, the debt balloons and grows larger. Worse yet, you can't get any relief from it outside of paying for it, as the debt is protected in every way, from bankrputcy protection to the ability to take money from disability and retirement (something only deadbeat parents have to worry about). Sickness is no excuse, indeed it's a reason for them to get tougher.

It doesn't help, of course, that Sallie Mae owns some massive collection companies. So all they need to do is get a Default judgement, and their potential profit explodes. They get their money from the government (all principle, interest and fees from late or nonpayments), plus they split what they can extract from collections with the government, 25% to them, 75% to the government. Imagine: Automatic collection of the full debt and interest, plus the ability to collect as much extra money as you can get (including higher levels of interest, since they're no longer protected by the contract they signed). Sallie Mae profit, the government gets back some money (if the whole thing is collected, it's more than the original loan), and as for the former students unable to pay...well, they deserve your vindictiveness anyway, since they didn't insure their future would cover their loans.

Which makes sense if you study any of the Liberal Arts as a major. However, if you happen to suffer a sudden reversal, or don't find a job immediately, or get radically ill, or are unemployed for a period of time, or find yourself in desperate need of money; you've just had your life given away to Sallie Mae -- and there's no recourse to the 13th Amendment because there was no force in your signing of the loan papers. You gambled (although few think of school as gamling), you lost (although you had no idea that losing is what it's known as) and you're going to pay for the rest of your life (and not just in cash -- crappy credit now keeps you from good jobs, cuts you off from purchases, makes you pay more for less and even threatens to deny you the basic necessities).

So what should be done?

How about a looser system. One that allows for full forgiveness for people forced onto disability, one that allows for breaks and forgiveness, one that has a limit to what the former student needs to pay (try twice the original debt), one that doesn't allow Sallie Mae to profit twice from Defaulters (once from the government, again from the collection agencies it owns). One that allows for certain Bankruptcies (I'd say ones where the student loans account for less than half the total debt. After all, hospital debt can rack up fast, and sometimes you're stuck in a position where you can't halt the debt until it's too late.).

Also, better fund the universities. We need to make it so students don't have to throw themselves into hock just to gain needed skills or documentations. Maybe some of them can learn some trades; we're in desperate need for plumbers, electricians and other skilled trades. Maybe instead of Masters for teaching, a concentration that allows the student to gain their teaching certificate without breaking themselves with two years of higher costs. Maybe some of these jobs that supposedly require degrees could do without them, giving people unable to afford school a chance to prove they deserve a better life.

Sadly, the United States is working to become the first nation where ambition is a sure path to enslavement. The above suggestions can go a long way to stop this slide.


Alan said...

Excellent. Perfect point. Thank you-

Anonymous said...

I say forget college, and go learn a trade--start with a vo-ed program in high school. College degrees just dont pay off anymore. College is a racket, go read FREE books from the library!