Radical students occupy Columbia University, 1968
The Occupy Wall Street kids complaining about large student loans think they’re emulating 1960s era protests but one thing that students did in the 1960s, occupy the dean’s office or the school president’s office or the administration building, the OWS kids won’t do. Much of that money has gone into the pockets of a bloated college bureaucracy, filled with Assistant Deans of this and Associate Provosts of that. University administrative employment as grown at twice the rate of faculty. Of course one of the effects of those 1960s era protests was that the radicals literally ended up taking over the campuses. The OWS protesters and university faculty and administrators see each other as kindred political spirits, so we’re not likely to see student protests move to the campuses, though we have seen some professors show up to express their support for OWS and similar “occupations” around the country. All of those administrators and faculty members who have been riding the student loan gravy train have a good reason to point the protesters at Wall Street and away from their own selves. As for the financial side of the loans, the OWS crowd should be protesting in Washington, because student loans are a racket that benefit mostly the government and SallieMae, not Wall Street. SallieMae issues most student loans, with the Federal Government guaranteeing them. When a borrower defaults on the student loan, the Feds pay SallieMae the loan amount plus interest to make SallieMae whole. The gov’t then turns over the debt to a collection agency, General Revenue Corp., which is, in fact, owned by SallieMae. GRC tacks on a 25% collection fee, which the Feds pay, and a 28% commission, which the borrower pays. Those fees have meant $400 million in revenue for SallieMae. GRC has the power to garnishee paychecks, tax refunds and Social Security checks so the Feds eventually get their money back plus interest. Since the Feds and Fannie Mae profit from it, there is no incentive to keep tuition costs down. Actually, because the Feds and Fannie Mae both profit from the 8.8%/yr interest and all those fees and commissions, it’s in their interest for the student to default. Just like your bank doesn’t want you to pay off your credit card, when a government agency is a creditor, it’s in their interest to have you in arrears. Banks don’t have nearly the garnishee and seizure powers that the government does.
Berkeley 1964
When he’s not busy doing custom machine embroidery, Ronnie Schreiber edits Cars In Depth and contributes to The Truth About Cars and Left Lane News
Categories: Protests
You are right and I wish more attention was paid to this. A few other points are worth mentioning. First, student loan borrowing limits are set by the feds, and it is the federal government that has been increasing the amounts students can borrow. And, guess who lobbies for those higher limits? Well, that would be the schools, led by the higher priced private institutions. The high tuitions of today are a direct result of the availability of the federal guaranteed student loan program.
Here’s a major irony, though. How is it that a student of 18, 19, 20 can sign for up to $31K in student loans…but can’t get a $500 credit card unless they have a job or get their parent as cosigner?
College tuition? It’s a ripoff! Postpone college until the bubble bursts!
I guses that one thing that this article illustrates is never, EVER give government the power to handle things (such as student loans and health care) that can be better handled by entities outside the govenment. All these kids with their worthless “grievance studies” degrees and massive student loan debts are screwed. They will find out the hard way over the next few years that when Unca Sugar wants his money back, he will do anything short of grabbing these kids by their ankles and shaking them for any and all valuables that may drop from their persons. As the saying goes, “The government that’s big enough to give you anything you want will be big enough to take everything you have.”
The money was demanded by the school, not by banks, and not even by the government or SallieMae. The schools set the tuition. The schools also offered B.S. degrees (no pun intended) that had no value in the real world. That also was not the fault of the banks, government or SallieMae. The schools are the ultimate source of their discontent. If they had the intelligence or the education commensurate with the reason for their problems, they would march on the schools and demand a refund. Loudly and shrilly, on camera. They won’t. They’re too dumb to know they are the rubes.
Do more research.
The issue is wide spread more than the colleges.
I know if I ‘occupied’ The Art Institutes for ripping me off, I’d be alone, segmented. This issue is more wide spread than this.
Sallie Mae, Goldman Sachs, Education Management Corp, and others manipulated the system worse than the housing market and now you see the results.
You know, it the Occupy Wall Street people had any sense, this would be making conservative Republicans and TEA Partiers out of them.
P.S. In the immortal words (and turning point) of P.J. O’Rourke upon getting his first paycheck from a real job as an adult: “Who the heck is FICA? This is Communism!”
Sallie Mae is in Wilkes Barre, PA. You know that they have no mechanism for paying a loan off in person at that facility. I was trying to hide some cash and wanted to pay off a relative’s student loan in full by going to the W-B location in person, but could not.
If I were a conservative, I would, rather than dismiss the idea of a wholesale student loan amnesty, offer to advance the legislation on the condition that those who paid their loans off on time receive some sort of long-term tax exemption equal to the amount they paid off.
Loon alert.
“Since the Feds and Fannie Mae profit from it, there is no incentive to keep tuition costs down. Actually, because the Feds and Fannie Mae both profit…”
ITYM Sallie Mae. Might want to fix that.