<p>Parents, students, did not create the monster, although by careless decisions, or being simply unaware of the consequences they are certainly part of the problem. </p>
<p>The monster, as it were, has been created by a long campaign of lobbying by special interests. Which began at the point when it was decided to privatize systems which had worked well for the preceding generation. </p>
<p>And the first moves in this campaign were manifestly premised on falsehoods. If you recall the propaganda blitz based on the image of the doctor defaulting on student loans whilst buying his Mercedes etc. At the time this was at best a statistically negligible manner of incident. But that what was used to strip basic consumer protections from these loans. Ironically at the time this was done, default rates were much lower than they are today. Granted the USDOE manipulates the stats to make them work well for their proxy controllers in the industry…but defaults in certain categories are now past 15%. </p>
<p>So obviously it didn’t work, but the reason it stays in place is because these companies benefit from the situation via outrageous reconciliation fees and enhancements. </p>
<p>And concerning the concept that privatizing what had been a workable system was somehow more efficient, no. It has not been so for either the government, students or their families. To the extent that massive and repeated over billing of the US government has been a norm. </p>
<p>"Student Loans Still a Problem, Says Outgoing Ed. Dept. IG</p>
<p>The Federal Family Education Loan (FFEL) program remains extremely vulnerable to waste, fraud, and abuse, says John Higgins Jr., the Department of Education’s outgoing Inspector General. In a recent interview with The Chronicle of Higher Education, Higgins, who is retiring this month after serving in the government for 40 years, said that because the FFEL program is so complex, the Department often turns to people inside the student loan industry to regulate it. Putting lenders in charge of overseeing the loan program almost inevitably leads to potential conflicts of interest, he said. Under Higgins’ watch, the IG’s office has often criticized the Department’s lax oversight over the lenders and guarantee agencies that participate in FFEL. He also found himself at odds with the Department’s political leaders over his recommendations to require lenders to return hundreds of millions of dollars they received in improper 9.5 percent subsidy payments. An investigation his office conducted into the student loan company Nelnet’s efforts to overbill the U.S. Treasury won the Alexander Hamilton Award, a prize the government gives to inspector generals for “outstanding achievements in improving the integrity, efficiency, and effectiveness of Executive Branch agency operations” [Higher</a> Ed Roundup: Week of July 7 - July 11 | New America Blogs](<a href=“http://www.newamerica.net/blog/higher-ed-watch/2008/higher-ed-roundup-week-july-7-july-11-5074]Higher”>http://www.newamerica.net/blog/higher-ed-watch/2008/higher-ed-roundup-week-july-7-july-11-5074)</p>
<p>Concerning the concept that parents and students should know better than to be involved, or carelessly involve themselves with these companies. Yes the information is out there, but much of it is not adequately distributed. And a fair amount of research is needed, often well beyond what the average parent knows how to preform. Some of this information is quite hard to find, as both the USDOE and the loan industry have a vested interest in keeping it
from being distributed. Which leaves much of the available information accessible through activist press such as Higher Education Watch, or Paul Baskin at the Chronicle. Sources which the media giants tend to ignore, and many parents and students simply do not know even exists. </p>
<p>Schools may provide some information as in many states and salient federal statutes require that they do so. But, this information is often provided in a manner which is superficial simply because to give the full story could give students pause to even consider college. Wouldn’t want the numbers to go down would we? </p>
<p>And despite the NYS AG’s expose and the deal cut with certain of these companies to cease inappropriate activities, the controlling presence of these companies on campus is still very much in evidence. </p>
<p>As a result the information often given to students is hardly balanced. For example at the school where I work, a financial aid seminar was ‘sponsored’ by outside interests. On the poster announcing this seminar, the logos looked like a who’s who of the corporate loan industry. Now students may have been able to divine it was a agenda driven meeting by all the logos plastered all over the poster. But since it was placed on the schools notice boards, it would have been read as being run by the school itself. Another example, in our schools Fin Aid office brochures are provided from a ‘non profit student debt counseling service’. Guess what, it isn’t really. The organization providing this brochure is an effective subsidiary of the second largest for profit loan provider working in (or on) Colorado. And finally at one of Colorado’s larger University systems any scholarship application is first being processed through that same company. </p>
<p>So although information is out there, and school officials do try to protect student interests. The core reality is that academic systems are so pervaded by the edudebt industry that its unlikely many students will know what’s being done to them until its too late. And since they tend to trust their colleges (perhaps they should not) students will take the advice from this system without the level of critical thinking they perhaps should. </p>
<p>Which brings us back to the concept which began this discussion, that of students making stupid financial decisions in regards to student loans. Yes, there is a proportion who do so simply out of laziness. Others do so because they so badly desire to improve their education that long term consequence is set aside. But a more distressing group would be those students who intuitively know our educational funding system is corrupt, but go along because they have no choice or perceive there’s no pointing in trying to work around it.</p>