Student Aid Requests Soar

Paying for College
21

<p>Bottom line - parents/students are willing to pay out the big bucks for private school tuitions. It is the rare private college that has a problem meeting its quota of enrollment each year. Prices jump - and parents/students take out more and more loans to pay for these colleges. We can finger point all we want… but nothing will change until students refuse to pay these prices. In some odd way, it is the fault of the consumer… they are driving the expensive dorms, rec centers, etc. Just take a look on CC - while many parents grouse about the cost of the private LACs… they still want what is offered overall. Sure, they’d like a cost break, and/or could live without the expensive dorms, it just doesn’t end up being a make-or-break deal.</p>

<p>And yes, the colleges end up playing the “keeping up with the Joneses” game. Even our local private Catholic <em>middle schools</em> and high schools suffer from this. Our closest private Catholic middle school once had a tuition of 3K per year. They upgraded buildings and in the space of one year, tuition jumped to 5K a year to cover the new costs. The reason for the upgrades?? Other local private Catholic middle schools (from the same diocese!) had made upgrades already and our local one was seeing a decline in enrollment because of the competition. Their solution? Upgrade and pass the cost to the consumer. Guess what? Enrollment went back up.</p>

<p>Like the private Catholic middle/high schools from my city, the privates also need to keep upgrading their facilities to stay competitive and keep enrollment high. Until students balk at the prices and start filling up the community colleges and affordable state schools, the privates will be able to keep their prices high. </p>

<p>If students balk en masse at the prices of privates - then privates will have to decide if they want to lower their costs or have their prestige (of attracting elite students) fall as they end up filling spots primarily with students who are able to pay but are not necessarily top-notch students. Most the privates would do the former. However, there are always parents/students who want the private college offerings and the demand will continue for quite some time.</p>

<p>Annika</p>

22

<p>“You’ve got this backwards. Ted Kennedy and Nancy Pelosi wanted to have more grants for college students and they also want to get rid of the private student loan lenders, so they decided to pay for the grants by taking away the lenders profit margins (eliminating subsidies and thus eliminating profits). They then used what used to be the lenders profits to increase the availability of grants. Without profits the lenders had no choice but to exit the student loan business, which is what Kennedy and Pelosi want. What Kennedy/Pelosi didn’t count on was their little scheme to collide with the subprime mtge mess and create a financial crisis in college aid. Now they are scrambling to CYA a disaster of their own making.” </p>

<p>In part the reason that Kennedy+Pelosi and others were trying to redirect emphasis from the private student loan lenders was due to blatant abuses on the part of these same lenders. NN financial alone was caught overbilling the USDOE 250+ million dollars, and effectively nothing was done. Despite the USDOE IG recommending the loophole which allowed this abuse be closed. </p>

<p>Without profits?, how much do they need to be liquid? SMC alone increased its fee revenues 220%+ percent since 2001. And exactly how much public money should be directed to these companies before they consider it enough to be profitable? And since these companies have had incredible increases in stock values and the profits since privatization, in some cases 2000% increases…but now need more massive inflows of public cash to stay liquid…it would again seem these are not the people to be handing even more money or to allow the future of students and their families to be dictated by such companies. </p>

<p>“This is bogus too, esplly as a reason for colleges tricking themselves out with saunas and fancy rec centers. There is only a limited amount of money you can borrow for an ug education with federal student loans. Roughly about $16,000 over the course of 4 years. Hardly a dent in a fancy school whose COA can run upwards of $200k over 4 years. Where families are running into problems is going to the bank down the street for a college loan that is really just a bank loan that you could just as easily use the $$ to remodel your house with.” </p>

<p>Since 2000 the 6% yearly rise in tuition has risen almost on the same curve as the increased percentage of loan amounts used for student funding. And the reason for colleges losing fiscal responsibility because of loans relates to the numbers of students involved. Under the old grant model a limited number of students were eligable for grants. </p>

<p>And as such some simply elected not to attend college. But since the transition to the loan model, virtually all students have to borrow to meet increased tuition costs vis a vis reduced grants and many more borrow to simply attend. And there are relating ethical issues such as the marketing hype which has been legally problematic as have the deals colleges have made to allow this type of marketing pressure on their campus’s. </p>

<p>And under many grant programs there was (and are) often requirements that curriculums achieve certain ends. That paradigm does not exist with the loan model, except in very limited cases such as the Perkins program. </p>

<p>So the individual loan amounts on subs may be capped, but the overall numbers of students taking out these loans has increased. And that limit is not applied to the increased presence of private loans, which can have no caps. As those caught with 50,000 cooking school tuitions can attest.
So yes, more money for water fountains and trophy buildings.</p>

23

<p>And cptofthe house is quite right about the coming crash in regards to the student loan situation. </p>

<p>These companies have massively overleveraged themselves. Students and families are now subjected to debts which cannot be paid because the investment in a college education is no longer a balanced equation. </p>

<p>It will be much worse than the mortgage crises, and much more extensive.
When it does come it will be a moral bellweather for our representatives as to who they chose to protect and how they proceed in resolving this mess.</p>

24

<p>At least part of the reason families have been willing to borrow heavily to finance an education is because the money was so easy (too easy?) to come by. If it becomes harder to borrow to finance an education, more people will seek less expensive alternatives.</p>

<p>Unfortunately those less expensive alternatives, i.e., state schools, are in many cases, already full.</p>

25

<p>As you get those with more income sending their kids to the state schools there will be even fewer spots there for those who are struggling financially to go even there. This might be what is necessary to bring a reduction of costs from many of the private schools out there that are charging way too much.</p>

26

<p>Atana, I’m not talking about NelNet or Sallie Mae. I’m talking about the nonprofits like PHEAA. Three more nonprofits exited the student loan business this week. They are not scum, have done nothing illegal, and yet have arbitrarily had their profit margins taken away from them to increase grants, ie, free money. It doesn’t matter how many students are getting the federal (capped) loans, the amount of the cap is still not enough to get anyone in unmanageable debt, and it is certainly not enough to afford a six figure private college. It is the private bank loans to overly emotional parents and students who are convinced private is the way to go that are causing the problem, not the nonprofits who are obeying the rules and helping people.</p>

<p>The liquidity problem comes about due to the nonprofits issuing bonds to generate the loan money and these are usually or primarily auction rate bonds. They are secure due to the federal loan guarantees, but have been lumped in with the sketchy structured investment vehicle bundles that relate to the subprime mess, so rather than sort out what’s good and what’s not, institutional investors have decided not to buy ANY auction rate bonds and the auctions are failing for the first time EVER. That is what is causing liquidity issues. And that is not the nonprofit student loan lender’s fault.</p>

27

<p>Well perhaps the problem is one of definition. </p>

<p>Unfortunately USDOE policies have been so heavily skewed to such as SMC and NNC that smaller companies, including non-profits have been incredibly marginalized insofar as having a proper say in how policies are set. </p>

<p>And it’s not the non profit lenders fault, but they like the old system of government directs have virtually no influence in the current regulatory environment in the USDOE. </p>

<p>As far as sketchy investment bundling and other inappropriate tricks, those have as you noted has driven many of the troubles. The problem is the large players are so enmeshed in these games that they have compromised the entire system. As an example SMC has long been violating both USDOE regulations and general financial regulations by their effective control over USA funds. </p>

<p>So yes sane institutional investors are backing away. But in part that has been a consequence of a much too free and loose regulatory environment over other echelons of the student loan industry. In some regards a situation similar to the abrogation of responsibility which caused the sub prime mess. Essentially the sweet heart regulatory environments which allowed such as Lord and SMC to so far run out of bounds over an entire system has compromised it to the point of effective failure. </p>

<p>And Kennedy and Pelosi (and the GOP people) cannot politically survive if they explain to the public how this mess actually came to be. It arose largely because substantial industry lobby ‘donations’ to congress bought an agenda which has become socially and now economically destructive. Essentially what Phil Graham and Penny Pritzer did to the banking systems stability has an equivalent in the SL situation with the activities of such as Senator Enzi and congressmen John Boehmer and Howard McKean</p>

<p>So current actions by Kennedy & Pelosi and company seem to be a behind the scenes attempt to move the more troublesome companies out of the untoward control they were given over the entire system. But as you noted, this move will have unintended consequences in other sectors of the current system. Including what’s betokened by the collapse of confidence by institutional investors in the bonds at the base of this system. </p>

<p>This crises of confidence will only get worse as defaults climb (and they are projected to do so this year) and if congress demands accurate numbers on the real default levels. Currently the USDOE has several systems for assessing defaults, but the numbers they routinely publish are those most favorable to their corporate com padres. But by their own numbers, in certain sectors of the SL environment defaults are nudging 20%. And congress will be pressured by two new competing pressure groups; students and families who can no longer bear the costs of an avowedly predatory lending system and members of the financial community who fear an increasingly unstable system. And of course there will be those in congress who’ll follow the old agenda bought and paid for by lobbyists. </p>

<p>[Friends</a> in High Places Deliver Big for Sallie Mae Behind the Scenes | The New America Foundation](<a href=“http://www.newamerica.net/blogs/2007/05/friends_in_high_places]Friends”>http://www.newamerica.net/blogs/2007/05/friends_in_high_places)</p>

<p>Excepting the ripple effect through the rest of an already shaken economy it might be better to allow the current system to fail. Since the turn of the century it largely has operated to the benefit of a few key (and large) corporate interests. And certainly not to the ends of system stability, students, colleges or the public which indirectly fronts large portions of the money. </p>

<p>In the last generation the US mode for educational financing has worked poorly and compared to other better systems has been essentially macro-parasitic in it social effect.</p>

<p>And the numbers involved if this system does collapse are simply unreal…current overall national student loan debt is approaching 550+ billion…</p>

28

<p>Does anyone feel that life is getting hard day by day?</p>

29

<p>Institutional lenders are not backing away from student loan issues because of any misgivings they have about the SL industry, it’s because the SL auction rate securities have been tainted by the mtge securities. It is the mortgages that are the problem, not the student loans. And once again, I am not talking about Sallie Mae. That problem can be dealt with w/o bringing in the nonprofits. They are being swept in by a PR campaign, the goal of which is to eliminate everything but federal direct lending. The fact that Sallie Mae and NelNet have misbehaved is just something Kennedy and Pelosi can hang their hats on to justify their actions. Ever since Clinton, the dems have wanted to go to federal direct lending; it is has been an option for years now, but students and their families have not chosen it in great numbers, not because of “predatory lending”, but because dealing with entities like PHEAA is so much easier and more pleasant and frankly affordable than the direct lending, also for the colleges themselves altho’ they’d have their heads chopped off if they publicly admitted it at this point. There is also no predatory lending by the nonprofits. There are all kinds of federally mandated disclosures and interviews and hoops to jump through that there is no excuse for anyone not knowing what they are getting into with a federal student loan other than, well, I hesitate to say stupidity, so perhaps failure of personal responsibility to read things and LISTEN before signing the paperwork is the problem. Plus, once again, we are talking about a max of $16k or so for 4 years of school, not some astronomical amount of money.</p>

<p>The fact that you cite The New America Foundation is telling. Perhaps I can find something on point from The Heritage Foundation.</p>

30

<p>Here’s one article:</p>

<p>[Halving</a> Student Loan Interest Rates Is Unaffordable and Ineffective](<a href=“http://www.heritage.org/Research/Education/wm1308.cfm]Halving”>http://www.heritage.org/Research/Education/wm1308.cfm)</p>

<p>Seems halving the interest rate on the loans, which is what is hurting the nonprofits, was not such a good idea.</p>

<p>Here’s another, basically the same thing:</p>

<p>[Against</a> Our Interest: We don’t need a new student-loan burden.](<a href=“http://www.heritage.org/Press/Commentary/ed011707a.cfm]Against”>http://www.heritage.org/Press/Commentary/ed011707a.cfm)</p>

<p>The halving of the interest rates is what hurt the nonprofit lenders without making college any more affordable for the students. All part of a squeeze to force out the lenders and thereby force the students and the colleges into the direct lending program. All the while doing nothing to address the only place where there is even the beginnings of an argument for predatory lending, and that is all the banks who flood my mailbox with stuff like “want $40k for college? call this 800 number!” That is where the real problem is. The Kennedy/Pelosi solution is short term exploding in their faces, and long term, if successful, will hurt students and bloat the federal bureaucracy and cost the taxpayer. Not really a solution.</p>

31

<p>I also don’t know where you’re getting that 20% default rate from. The predicted 4 year composite cohort default rate (CDR) for all institutions is 11.9% and the 2 year CDR is 5.1%. See:</p>

<p>[Default</a> Rates Projected to Soar :: Inside Higher Ed :: Higher Education’s Source for News, Views and Jobs](<a href=“http://www.insidehighered.com/news/2008/01/21/defaults]Default”>http://www.insidehighered.com/news/2008/01/21/defaults)</p>

<p>And note in this article that the highest default rates, the ones that get you losing your federal aid funds, occur at proprietary schools, not traditional colleges and universities. Note the last paragraph in particular:</p>

<p>"The [cohort default rate] was designed as an indicator of institutional quality and integrity,” a CCA memo states. “This is a questionable policy metric because community colleges, proprietary schools and minority serving institutions all accept a much higher percentage of lower income students than do traditional schools, and many have a higher CDR as a result. The single best predictor of a student’s likelihood of default is the student’s own socioeconomic status.”</p>

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<p>Annika,
Let’s assume students balk at paying such a high price at a private school. The school’s enrollment figures drop slightly and the strength of their incoming classes drop - its prestige drops. The school will respond with new buildings and in turn pass the buck onto the students to service its debt payments. In the end: the college is at same level of prestige, students are paying higher costs, and a bunch of administrators patting themselves on the back.</p>

<p>There’s no way to force restraint by colleges when their funding is so secure.</p>

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<p>Private vo techs are amongst the schools with the high default rates. </p>

<p>[Government’s</a> default-rate data is a view through rose-colored glasses Student Loan Info for Parents](<a href=“http://parentstudentloans.■■■■■■■■■■■■■/2007/10/25/governments-default-rate-data-is-a-view-through-rose-colored-glasses/]Government’s”>Government’s default-rate data is a view through rose-colored glasses | Student Loan Info for Parents)
[Finding</a> Fault in Student Default Data](<a href=“http://www.businessweek.com/bwdaily/dnflash/content/oct2007/db20071023_678754.htm?chan=search]Finding”>http://www.businessweek.com/bwdaily/dnflash/content/oct2007/db20071023_678754.htm?chan=search)
Finding Fault in Student Default Data
Rates of student loan default are much higher than previously reported, according to a new study. And some borrowers bear a bigger burden
Nearly 10% of student borrowers default in the first four years after they graduate, according to a new study of education loans that suggests the federal government has taken too narrow a view when measuring repayments. Moreover, the likelihood of default varies drastically across racial lines with black and Hispanic graduates far more likely to default, according to the study, Hidden Details: A Closer Look at Student Loan Default, released by Education Sector, an education policy group based in Washington.
In September, Education Secretary Margaret Spellings announced that the student loan default rate had fallen from 5.1% in 2006 to 4.6%. But the Education Dept. data cover only the first 24 months after a student graduates.
Longer Term Paints Starker Picture
The new study, released Oct. 23, analyzes data collected over 10 years by the National Center for Education Statistics (NCES) of 1993 college graduates. Instead of examining just the two-year cohort rate, published yearly by the Education Dept. which looks only at student loan default in the two years following graduation, Education Sector expands the window to reveal a starkly different picture of loan repayment.
“The problem is far bigger than the rates provided by the U.S. Department of Education suggest,” says Kevin Carey, research and policy manager for Education Sector. “And the problem is much more substantial for certain kinds of borrowers.”
Extrapolating from the NCES data, analysts found that the default rate was much higher than the Education Dept. rate, around 9.7%.
Lenders Defend Lifetime Rates
The Education department stated that the two year cohort rate is mandated by Congress and didn’t elucidate the reasons behind that choice. Student lenders such as Sallie Mae (SLM) say they largely disregard the cohort rate, and choose instead to view the business and health of student loans and student lenders based on the lifetime default rate. In 2003, the Education Dept.’s Office of the Inspector General found that the smaller two-year look at default doesn’t actually reflect long-term default trends.</p>

<p>[Default</a> Rates Projected to Soar :: Inside Higher Ed :: Higher Education’s Source for News, Views and Jobs](<a href=“http://www.insidehighered.com/news/2008/01/21/defaults]Default”>http://www.insidehighered.com/news/2008/01/21/defaults)
Default Rates Projected to Soar
Supporters and critics of a Congressional proposal to alter how the U.S. government calculates the rates at which student borrowers default on their government backed loans have speculated that the change would significantly increase the rates — causing more colleges to run afoul of rules designed to punish institutions with high rates.</p>

<p>Default Rates Projected to Soar
Supporters and critics of a Congressional proposal to alter how the U.S. government calculates the rates at which student borrowers default on their government backed loans have speculated that the change would significantly increase the rates — causing more colleges to run afoul of rules designed to punish institutions with high rates. </p>

<p>New data from the U.S. Education Department confirm that view.
In November, the House of Representatives amended legislation to renew the Higher Education Act with a provision that would extend to three years, from the current two, the “cohort default rate,” which gauges the proportion of student loan borrowers who default within a certain time period after they leave college.
The change, proposed by Rep. Timothy Bishop (D-N.Y.) and Rep. Raul Grijalva (D-Ariz.), is designed to make the cohort default rate a more realistic assessment of how individual institutions (and lenders) are faring in keeping student borrowers on track to repayment, both to gauge students’ indebtedness and potential failure by colleges in ensuring that their students are getting an affordable and valuable education.
Based on previous studies and reports, lobbyists and others estimated that adding a third year to the time period in which defaults were tracked could increase default rates by an average of 60 percent, putting more institutions at risk of penalty by the Education Department. Colleges that have a cohort default rate of 25 percent for three consecutive years or 40 percent for any one year lose access to federal student aid funds, and the department can impose restrictions on the ability of institutions to receive and disburse funds if their rates exceed 10 percent
As seen in the table below, which is based on Education Department data from the 2004 fiscal year, the average rate would nearly double for for-profit colleges and increase by between 50 and 75 percent for most other types of institutions.
Projected Impact of Change in Default Rate Formula by College Sector
Institution Type Projected 4-Year Rate Projected 3-Year Rate Current 2-Year Rate
Public 9.5% 7.2% 4.7%
—Less Than 2-Year 14.1 9.7 5.7
—2- to 3-Year 16.6 12.9 8.1
—4-Year or More 7.1 5.3 3.5
Private 6.5 4.7 3.0
—Less Than 2-Year 26.7 18.7 9.0
—2- to 3-Year 16.2 12.2 7.4
—4-Year or More 6.2 4.5 2.8
Proprietary 23.3 16.7 8.6
—Less Than 2-Year 26.6 18.5 8.9
—2- to 3-Year 27.2 19.5 9.9
—4-Year or More 19.2 13.7 7.3
Foreign 3.4 2.5 1.5
Unclassified 10.0 10.0 5.5
Total 11.9 8.6 5.1
Source: Education Department</p>

<hr>

<p>Not surprisingly, the numbers greatly trouble for-profit colleges, and the Career College Association, which represents those institutions, has urged its members to argue aggressively against the proposed legislation, which they note would raise rates “much higher than any previous estimate.”
The group’s talking points, while clearly focusing on the measure’s projected impact on career colleges themselves, encourages officials at its member colleges to focus as well on other types of institutions that could be hurt by the provision.
“The [cohort default rate] was designed as an indicator of institutional quality and integrity,” a CCA memo states. “This is a questionable policy metric because community colleges, proprietary schools and minority serving institutions all accept a much higher percentage of lower income students than do traditional schools, and many have a higher CDR as a result. The single best predictor of a student’s likelihood of default is the student’s own socioeconomic status.”</p>

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<p>And behind the simple fact that a students socioeconomic status is the best indicator for potential default are some troubling ethical and social concerns. </p>

<p>Proprietary vo techs have amongst the highest default rates in some cases approaching 20%. Inherently this may be because of the populations they serve.
But the less reputable schools do tend to charge appalling tuitions for programs which have little or no employment value and less ethical student loan companies (and some of the largest) have linked themselves closely to these schools. What they are doing is targeting vulnerable populations, knowing full well that the schools they are lending for are disreputable. But its rare for the USDOE, State Ed Boards, local AG’s to interdict this type of activity. </p>

<p>For the respectable CC’s and vo techs the issue of default is closely linked to the changes in policy resulting form the overemphasis on the loan model over grants. Since governmental support for these schools, including student grants has been generally reduced there has been a shift to these students borrowing increasing amounts of money to attend school.
In the past the CC’s were able to keep tuitions comparatively low for the populations they traditionally serve. But due to inadequate support and the overall escalation of college cost proportionally this is no longer the case.
So the end result has been students needing to borrow for training in trades which may not pay enough to compensate for the loan debts.
An elitist approach would be to indicate that these student should simply not attend school. But these populations use these schools to try to elevate their social and economic status. But the equation of benefit to cost has been broken, especially since loans are now the dominant model for student funding even at lower echelon schools.
Ultimately these developments will wreck the CC’s and vo techs and will have major detrimental effects on the populations they serve. Emily Griffith and John Ruskin are no doubt in their graves gnashing their teeth…</p>

35

<p>Ah, so you agree that what you are really talking about is the default rate of minorities going to vo tech schools and NOT the traditional college/university student (minorities included).</p>

<p>First, I will have to say that I didn’t know you could take out a federally guaranteed student loan to go to cooking school or to ITI Technical College to learn a trade. I will have to look up the details on that. Second, I still maintain that all that entails is at most around $16,000 of debt over 4 years. Since most vo tech degrees or certificates (more likely) don’t take anywhere near 4 years to complete, what you are really talking about is a much smaller amount of loan debt, shall we say $7,000? The stuff they sent us for our kids seemed to indicate you could only borrow around $3500/yr the first two years. So, $7,000 of loan debt for vo tech school.</p>

<p>“So the end result has been students needing to borrow for training in trades which may not pay enough to compensate for the loan debts.”</p>

<p>Tell me what trades these vo tech schools train these kids for where they cannot pay off a $7,000 loan over 10 years at a ridiculously low interest rate. And further more, I do not get how this “problem” that only affects a tiny tiny portion of the post secondary student population in a tiny tiny number of “schools”, and where a full 80% of the people you’re talking about do NOT default on their loans and instead become trained, employed, competent functioning members of society warrants a wholesale slaughter of the student loan industry so that my tax dollars can go to just giving away free money.</p>

36

<p>If there are truly disreputable trade schools that are engaging in fraud or otherwise doing something illegal, the solution is to prosecute them and shut them down. Creating nationwide financial chaos and a new bloated federal bureaucracy filled with free give aways will not solve that problem, assuming it actually exists and is in fact related to federally guaranteed student loans and nonprofit lenders. Which I doubt.</p>

<p>Nobody is suggesting that these students just not go to school. Our community is bending over backwards to get people enrolled in community college and/or trade school. But there are still people who will jump on any excuse to avoid it. One mother demanded the city provide free bus fare. She said it costs $4 a day to ride the bus and she couldn’t afford to give that much to her son. Well, when I went to a private 4 year university on scholarship, my single mom couldn’t afford to give me anything, so I lived at home and rode a bicycle to school every day. A summer job at McDonalds would buy that kid a good bicycle and then some. For that matter, one 8 hour shift at McDo on Saturday would pay for a week’s bus fare and then some. The photographer who shot my S’s senior photos worked a full 40 hour week to pay for his photography degree while going to school full time. My FIL worked as a garbage man to pay for college. The fact that these kids are getting low cost loans that should be teaching them financial responsibility, and which work very well for the vast majority of students, including minorities in trade school, does not in any way indicate a broken system to me. It is a very generous system that works quite well. At least it did until Kennedy and Pelosi decided to destroy it.</p>

37

<p>There are a lot of kids that want their parents to pay for all their college and cost of living… I kind of like this guys approach <a href=“http://www.yeabuddy.net%5B/url%5D”>www.yeabuddy.net</a> at least he is trying to earn his way..</p>

38

<p>I haven’t seen colleges with valet laundry and both my kids do attend very elite LAC’s.</p>

<p>They are still happy to be home to have a bath and other comforts, and no, my house doesn’t have a hot tub (wish it did) or anything fancy.</p>

<p>The situation is ridiculous, though. I agree with you.</p>

<p>And although I can’t afford a vacation, I did scrimp to send them abroad because in many cases this is part of an education for the jobs they want. </p>

<p>Even more ridiculous is the need for internships, many unpaid, which cuts into the summer earning potential.</p>

<p>For my kids, their schooling is not a luxury and for various complicated reasons the state u’s were not good options.</p>

39

<p>Oh, I did pay extra this year for D to have air conditioning but only because she is a senior, she is working on campus for the summer (along with interships) and NYC really is impossible during the summer.</p>

40

<p>“Ah, so you agree that what you are really talking about is the default rate of minorities going to vo tech schools and NOT the traditional college/university student (minorities included)”</p>

<p>Essentially in agreement, although I would tend to view the population attending vo techs as being of economic class rather than minority. Because if they are considered part of a class they are certainly not a small proportion of the population. </p>

<p>“Second, I still maintain that all that entails is at most around $16,000 of debt over 4 years. Since most vo tech degrees or certificates (more likely) don’t take anywhere near 4 years to complete, what you are really talking about is a much smaller amount of loan debt, shall we say $7,000? The stuff they sent us for our kids seemed to indicate you could only borrow around $3500/yr the first two years. So, $7,000 of loan debt for vo tech school.
Tell me what trades these vo tech schools train these kids for where they cannot pay off a $7,000 loan over 10 years at a ridiculously low interest rate.”</p>

<p>The problem here is not in the initial loan amounts. The problem has resulted from in the stripping of normal consumer protections from student loans. A few deferments, or late payments are enough for these loan amounts to substantially increase. And adding to the problem are the policies within the USDOE and sweetheart lobby deals with congress which have allowed the big loan companies to charge excessive enhanced fees. As noted earlier and openly admitted to by the CEO’s of these companies the fee enhancements are a major element to their strategy. SMC alone has admitted to 200%+ fee increases since 2001. </p>

<p>And the populations attending CC’s and trade schools will, due to economic troubles fall very quickly into the paradigm wherein these fee enhancements take over. And if they go even temporarily into default, its not unknown for the collection fees and refinancing to increase the original amount by 30%.
And in some cases, even when they are not in default they are reported as such to the US government. Several of the larger companies have been caught pulling the little trick of reporting to the US government deferments which came back into into payment as mediated defaults. </p>

<p>And because of the unique and abusive collections tactics allowed the loan companies (well in excess of any other sector of the financial industry) they have little need to work with borrowers in trouble. Even if they themselves were instrumental in causing the problems with 'fee enhancement". There is good cause for Harvard Laws Professor Elizabeth Warren to describe the debt tactics of the SL industry as something the mob would envy. </p>

<p>And since the AMA recently begged the USDOE to reinstate loan forgiveness programs, extend deferments and etc its obvious that the great mass of poor are not the only ones having trouble with this issue. And with many in academia they are in a similar situation. </p>

<p>“…so that my tax dollars can go to just giving away free money…”</p>

<p>And the USDOE essentially allowing NNC to over bill the US government almost a quarter billion of taxpayers money is any better…? It all really is coming down to which sector of the student loan system deserves slaughter. Or to whom we might prefer our tax money to go…but since students and families have virtually no voice in the poisoned atmosphere of the congressional or USDOE chambers…I expect it will go to the same people. </p>

<p>That little NNC over billing would have paid the tuitions for every two year college student in a state like Colorado. But since that money was diverted, taxpayers will effectively pay more than once for what could have actually benefited students. </p>

<p>And these kind of abuses have been rampant in the SL industry, as has repeatedly been written about in Chronicle, Higher Ed Watch and by the IG’s within the USDOE. So the SL system was broken well before Kennedy and Pelosi began their activities. </p>

<p>Kennedy and Pelosi will break it by misapplied liberal reform, but such as Lord, Enzi, Boehmer and McKean have already sledge hammered it in the interest of corporate sweet heart agendas. </p>

<p>So on both the right and left there’s more than enough moral slime to be distributed in the student loan debacle.</p>

<p>Todays student loan debt…544,785,950,800 and…</p>