Culture

Hey OWS, How About Occupying the Dean's Office... or SallieMae?

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