Reveal: Who got rich off the student debt crisis?

https://revealnews.org/article/who-got-rich-off-the-student-debt-crisis/#:~:text=

Federally guaranteed student loan programs began to help disadvantaged students pay for tuition has become a moneymaker for the federal government, private banks & lenders and colleges & universities.

Progressive political policies over last few decades have made it impossible for most people to ever pay off student loans. Like innocent labratory mice, student laon borrowers ttead a seemingly endless trteadmill they cannot get off that

This treadmill creates profit for US Government, banks & private lenders, billling & accounting services, collection agencies and, of course colleges & universities.one of these instittions , including your own federal government, and, have any incentive to unravel this unfortunate mess.

The net affect of this student loan system /cabal is

1) these institutions, including US government, make big money, and have no incentive to change the system.

2) Student loan borrowers will be so debt burdened during their most financially struggling years that home purchase & retirment investing may be off the table indefinitely.

3) Their very quality of life during their most vibrant years will be undermined often required 2 jobs just to keep up.  most period of their life by student loans that their very lifestyle is under mind, including the fantasy of buying a home

4) Even sustaining our vital national birth rates may be undermined because constant (?) student loan debt payments  will compete with tyeh high cost of raising 1 child.

Why Parents & students take these loans?

For perhaps 100 or more years the Golden Fleece for your child's success was a college education.

Corporate America demanded a college diploma for its lucrative management & professional career positions. College & Universities willingly pledged to ‘educate & prepare’ America’s youth  … who could pay.

State governments & US Federal government subsidized higher education institutions and created various students loan programs including the early WWII vets programs.

So, ____ parents justifiably ‘drove’ their children down the college trail

But most parents & students were & are financially illiterate , thus …..

1) Blinded by total faith that a college education would near-guarantee their child’s future financial success.     is worth it blinded by the false light of,

2) ignorant that the U Dept of Education MADE money off their child’s loans.

3) lulled into the ‘faith’ by well indoctrinated & even well meaning teachers & hs counselors, themselves financially illiterate.

4) ignorant of federal loan’s advantages: lower interest rate, more protection repayment options

5) lulled by bank & private lender’s loan officer’s endorsement / assurances and easy loan qualification.

6) ignorant of banks & private lender’s self-serving higher interest rates & fewer protections and their longterm borrower’s negative implications.

7) Dependent on banks & private enders because maxed out federal loan limits.

8) Lack financial literacy to compare federal loan vs private lender loan features.

9) Lulled by college advisors 1) promtion of diploma’s longterm career opportunities, 2) assuring that most students have student loans.

10) Naively UNaware that colleges & universities anticipate & exploit ’switching’ subject majors.

11) lulled into additional loans to finance ’switching’ subject majors (EX: from history to fine arts) for a 5^th or 6^th additional year.

12) no warning or knowledgable evaluation of the downstream loan burdens & opportunity costs,

… to enllighten your financial literacy a bit lets take a quick look at …

Who profits ($s) from student loans?

Federal Government:

Feds conversion of most student loans from a fixed interest rate loan which avoids risk of increasing loan payments over time — TO —

1) a very low monthly payment plan that may fluctuate based on student’s post-graduation income AND

2) a resulting loan payment often less than the interest due so that

a) no principle gets paid off, but

b) any unpaid loan interest increasingly compounds higher thus increasing the loan balance so those loans can never be paid off.

3) To insure the ‘sheep’ cannot escape, private lenders lobbyists convinced Congress to exempt student loans from bankruptcy relief.

Department of Education borrows money at a lower interest rate than it lends to student borrowers, benefiting from that interest ‘spread’ allowing the Dept of Ed to apparently admit Federal government can earn an 20 % on each loan with little incentive to fix the core problem.

Ironically, everything President & Congress have done recently exacerbates the issue.

Congress privatized Sallie Mae’s allowing to often do what it could not do before, … to:

1) issue private federal guaranteed loans with higher interest rates & profits

2) acquire & operate other student loan issuers,

3) acquire & operate back-office operations

4) acquire & operate billing, accounting, premium proicessing loan services

4) acquire & operate collection agencies.

5) each of the above with related penalties & fees

Also Sallie Mae could make private student loans not guaranteed by the federal government.

Colleges & universities:

The lofty and noble College and universities goals of the past have morphed in the last few decades into a cynical income generating machine pandering to corporate directed research grants; pandering, obeisance apparently without oversight to WOKE ideology and, finally, rapidly increasing tuition in near-lock step with the increase in total student loan debt.

IOWs as long as parents/students are willing go deep in future debt, and US government, banks and private lenders are willing to loan more, & more to parennts/kids,  the colleges & universities will gladly & rapidly increase tuition costs to rake in the max income.

The 1^st 2 undergraduate classes are economically efficient production line of huge classes numbers (100s > a 1000) often taught by lowest paid department’s Assistant Professors or Lecturer residents. Such university Undergraduate pedagogy epitomizes the fraudulent memorization & destructive testing of K- 12.

Banks & other private lending institutions:

Banks & other private student loan lenders also profit from this trough of naive parents & students by high lending interest, billing service fees and debt collection penalties & fees.

Lending Profit springs from:

1) Borrow ignorance of Federal loan’s lower interst and more protections./

)interest rate “Spread” or difference between bank’s % of interest cost of borrowing money and the interest % it charges borrowers.

2) Usually fewer borrow protections than Federally guaranteed loans, so presumably easier to attack defaulting borrowers.

3) Typically charges a higher interest rate than Federal Student Loans perhaps because not Federally guaranteed.

4) Any ‘full disclosure’ is lost in the small print & lender’s positive assurances.

5) Borrow dependence on private lenders when Fedral loan access is maxed out.

2) loan processing fees, late charges etc.   

3) Without the same perks given by government loans.

States higher education funding reduction.

Many/some states have dramatically reduced their financial support of the state, educational system, shifting that reduced support to the borrowers burden before of increased tuition… I think

Debt Servicing, billing & accounting and debt collection:

“a student debt slave.”

Federal Student Loans bt Servicing, billing & accounting and debt collection may be done each by one of 3 groups of contractors:

1) _________________: guiding them thru thicket of choices, & you can be confidant renforcing to students of loans value to their future

2) Loan Servicer companies: billing and other services on your federal student loan on our behalf, at no cost to you. Billing & Accounting Service companies

3) Late pay & default loans: private collection agency program companies are paid commissions and bonuses based on amount recovered from defaulted students. (2016, paid $2.1 billion in commissions). Student debt cololoection, in particuoar, is an industry ‘hot’ spot for profit

In sum, not too cynical to alledge thaht studnt loan borrowers are like sheep captured in a pen, attcked & controlled from every direction.