Monday, November 21, 2005

Hunting the Hunters

This website, Student Loan Justice, sheds light on the cruel practices and obscene profits of student loan collectors.

According to Harvard Professor Elizabeth Warren in a Wall Street Journal piece by John Hechinger last year, "Student-loan debt collectors have power that would make a mobster envious."

A refreshingly militant air to their language as well.


Anonymous said...

Anya, does this plight you outline in Generation Debt only happen to genius kids? I'm asking because at the age of 31 I make around 80k/yr and will probably hit 6 figures in the next year or so. If I saw anyone over the age of 25 with a name tag job, I'd have to assume they liked the drugs too much, or had a mental disorder.

As for your indictment of corporations and their lack of 'benefits' for certain workers, I'd like to point the barrel just a few degrees to the left and ask you why you spent so little time on the 'output' sides of the greatest threats to 'our' generation: Social Security and Medicare?

While you're at it, please let me know your thoughts on illegal immigration, socialism, the welfare state, and regulation of industry. Please let me know how you feel about the tax code and it's deep negative effects on capital investment and business ventures.

Please explain to me how one can end up 20k in debt from student loans, and even deeper in debt in credit cards. That didn't happen to me, and I want to know why I was so lucky.


Anya said...

Hooray, my first troll! Greetings to you!
Chapter Six of my book is all about the youth-cheating effects of Social Security and Medicare, and wasteful federal spending in general. I spent plenty of time on that.

Congratulations on having such a great job and no student loans. It doesn't change the fact that college is out of reach of the average family. It's not as if I pull the $20,000 figure out of thin air; it's what the student lenders themselves, as well as the government reports. And you're right, that debt burden does not affect the 50% of young people with absolutely no college experience. All they have to worry about is their minimum wage jobs.

Anonymous said...

Anya, if you're going to flag everyone that doesn't agree with you a troll, then you're going to be living in a world where 75% of the people have purple hair and round bellies.

I know a little bit about what you wrote in your chapter, but I'm asking specifically about the output. Please don't define a reduction in taxed rates as spending. Focus on the blatant redistribution of wealth that SS perpetrates, and how the value of the money put in, adjusted for inflation is nowhere near what the boomers want to take out. Talk about the abomination that is the ADA under Johnson. I'm glad you wrote a chapter on it.

You haven't answered any of my questions. I've read some of your Voice columns, as well as some of the other easily-Google-able(ablablabl...) articles. I get a very strong sense that to you the answer is to 'shore up' Social Security instead of abolishing it, or reducing its obligations. Since you didn't flesh out any of the real threats that I asked you on, let's knock it down to one question: Would you destroy the SS system as we know it for the under 40 crowd, and replace it with private investment accounts? A why or why not would be welcome as well.

Do you feel that minimum wage is harmful? I do. It should be abolished.

As for the situation with college kids with no jobs, I respectfully submit that certain majors are more conducive to a strong income than others. I don't know if someone who majored in Russian poetry from the 1500's through 1750 should be too surprised when he's flipping burgers because the only job opening on the planet for his area of expertise happens to be held by someone else.

BTW, if I was a troll, I'd point out that you never ever start a sentence with 'and', 'but', or 'or.' But I'm not a troll.

Please do not touche' me on my inevitable errors, as I am typing this whilst talking on the phone, and I'm not really very good at doing two things at once.

Anya said...

You're right. I apologize. You're not a troll, just a conservative.
To answer your questions, I am a big old progressive liberal in most things. This should not be a surprise since I am a columnist for the Village Voice. So we would disagree on just about every issue you mention.
I don't recommend a particular Social Security scheme. I do talk about the $8 trillion odd "windfall benefits" reaped by generations before X and Y from the Social Security program. It's not popular with liberals, but it needs to be discussed.
The idea of tying higher education financing to the likely earnings of each major has been bandied about. See the proceedings of this conference last week, for example:
On the other hand, I actually studied 19th century Russian literature, so we "superfluous people" can occasionally make something of ourselves.
And of course, I understand that your errors are inevitable. You're a conservative. :)

Anonymous said...

I thought liberals were supposed to be open minded. I'm as Liberal as you get, in the traditional sense. It's a shame that the Left has taken the term and used it to frame a philosophy that is so very non-Liberal. I'm enthusiastically pr- gun, pro-abortion, pro-gay rights (it ain't marriage, because marriage is a social/religious term that the gov't has seen fit to put its dirty paws on, but they should have ALL the rights of married straights, including marital exemptions for transfer of assets.), pro-legal immigration, anti-quota, and anti-big government. I believe individuals are more capable than bureaucracy. I worship at the altar of the individual. That frightens those among us who feel they are elite and would like us to simply follow.

BTW, there's a specific concern about Gay marriage that isn't talked about very much. There's a fear that if Gays get the right to transfer assets to a spouse tax-free (the aforementioned marital exemption) without going through the other legal entanglements of marriage, it will be a path to tax-free distribution of assets to future generations, circumventing the current code. Interestingly enough, the evil Bushitler has designed a tax code that will alleviate this concern to a startling degree, while giving Gays the same tax break that everyone else gets. I'm sure you've looked at 2001's tax cut, and understand what I'm talking about. If you don't, then please take a look when you have the time, and focus on the whole 'you-don't-pay-taxes-until-you-sell-something-at-a-profit-so-don't-worry-about-losing-your-house-just-because-your-life-partner-died' part.

On the same front, for discussion: Why is the government involved in marriage in the first place?

Conservatives, as you call them, are not demons. It's a shame that your 'liberal' faction seems hell-bent on making them so. It's hard, very hard, to make progress if you keep seeing your fellow Americans as the enemy.

You started a sentence with 'and' again :(.

Anonymous said...

Hi, I'm anonymous #2 (please don't confuse me in any way with anonymous #1).

Let's get back on topic. I'm no political or economic expert by any means, but I think that anonymous #1 is ignorant in his/her attitudes toward student debt.

First, there is the issue of the amount of debt. I think that, as Anya points out, it's agreed by all sources that a large percentage of students are hampered by "unmanageable debt."

If we can agree that this is the case, then it is ignorant to believe that this debt is no big deal. More debt can lead to more personal bankruptcy filings, and increases in interest rates due to defaulted loans and debt. In addition, grads who have high debt and/or low incomes have less money to spend on purchases, harming our entire economy. In other words, it is short-sighted to believe that indebted college grads simply made a mistake and must now pay a personal price. When grads have too much debt and college costs, it hurts everybody. Anonymous #1, and those like him, play right into schools' and banks' hands; anonymous #1's attitudes are exactly the attitudes that schools and banks want everyone to have, so that they can keep fleecing society. But when college students/grads lose, everybody loses. That is why all of us need to take a stand against high college costs.

Anonymous said...

Anonymous 1 here. I'd bristle at the suggestion that I am ignorant, except that my esteemed fellow anonymous is, well ignorant of who I am or what I do.

Let's just say that I have an intimate understanding of debt, debt structure, competitive yields, and the many problems that banks and other institutions have with lending to unproven credit candidates. I do not work on student loans. Personally, I have no debt other than a mortgage, which I keep for the write-off and because the rate is super-low.

Please understand something: The banks are regulated to all hell. Most of the 'loans' that you're talking about, such as Sallie Mae, are limited in both the penalties they can impose and the rate they're allowed to charge. I have doctors and doctoral candidates who walk into my office every day, and we look at their student loans as benevolent liabilities. These people have debt to the tune of $300k, but the rate is fantastic to the point where it's almost free money. At least, to those of us who have a bead on the debt markets it is.

I think what crushes the young students is the credit card companies. You guys go out and take cash advances, buy clothes to go out in, get that flashy iPod, whatever, and then look on in shock as your interest APY goes up to 19% the first time you're late making a payment. You don't have to bite. You don't need to buy. I sold shoes like Al Bundy to get through college. I didn't take a single loan, nor did I get help from my parents. I also didn't go to Yale or NYU, although with my 1500ish SAT's I may have had a shot at the Ivy.

Perhaps the problem is caviar tastes in colleges, with Burger King budgets.

Anyway, you guys have no idea what a risk the average student is to lenders. There's a reason why Sallie Mae exists. Regular old banks aren't going to loan some kid $100k to go to college and learn to be an adjunct. The risk premium they'd need to charge would be in the 20's. Do you have any idea how many people default on those loans, how many times the banks get stuck with what should have been a loan that started paying in 5 years, that starts paying in 15? Does money grow on trees? Should you be allowed to just change the contract as you wish, and if you and 10,000 others do it, and the bank bellies-up, that's ok?

I can hear your boss trying to pull that one on you. "Yeah, well, I know you worked a full week, but I can't pay you until mid-year next year, but I expect you to keep working. I'm trying hard to pay you back, and that makes it ok, right?"

Come on, guys. Academia hasn't prepared you for this? How can that be?

Anonymous said...

Anonymous #2 here. Anonymous #1, you seem to have proved my point. You seem to understand that student loans are risky, and I agree.

However, I think that we disagree about the consequences of that risk. You think that college students are morons, and should be punished for borrowing too much money. I say that, as a society we encourage college students to borrow too much money. Also, as a society, we all lose out when students borrow too much. Therefore, as a society, we need to come up with a solution -- not just talk about endentured college grads in a condescending way, as you do. Don't hate the students; hate the schools and banks that have encouraged the students to borrow large amounts of money, under the mythical pretense that the borrowing will lead to an easy one million dollar payoff.

Anonymous said...

It takes as much to train a mathematics student as it does to train someone in pottery techniques of ancient Peru. I guess what you're saying is that we should abolish the option to take a ridiculously specialized course in a useless concentration, so that everyone takes majors in profitable areas. If you love something, then take it for the love of it, and accept the consequences of that love. You might not get a job at NASA no matter how much you know about dances of the ancient African tribes.

Look, college at the top universities is expensive because of the demand by its clients. The students are clients. Supply/demand. If you're worried that your area of study won't pay very much, then perhaps you should look at a cheaper school instead of blowing a wad on something no one will hire you for. Why is this so difficult?

Now, what's an endentured person? Is that someone who has dentures jammed into their mouth against their will? Indentured I would get. Endentured threw me.

Anyway, it's kind of lonely in here. Where's everyone else? Didn't she send invitations?

Anyway, I need to go play World of Warcraft for a bit. Cya.