An amazing piece, which I wish I'd written, in Business Week about the rise of subprime credit. Part of the reason is better technology that helps companies find rich targets in people without much money. And part of it is about unregulated interest rates.
Sidebar on how many poor students who study at for-profit schools get stuck with high interest private loans--presumably through deceptive tactics because they should qualify for Pell Grants and federal loans. I'm looking at you, Sallie Mae.
Some borrowers say they were unaware that private loans are different from less expensive federally guaranteed loans. "When you hear Sallie Mae,' you think of somebody's favorite aunt baking them a pie," says borrower Molly Cosgrove of Portland, Ore. "You don't think of high-interest loans." Once a federally sponsored organization, Sallie Mae became a fully independent corporation in 2004. It offers both private and federally backed loans.