Monday, May 14, 2007

Don't Let the Lending Industry Off the Hook

If you want absolutely authoritative commentary on student aid policy, turn to Barmak Nassirian, a giant of the field, director of the American Association of Collegiate Registrars and Admissions Officers. Here he is in Inside Higher Ed on the Spellings sideshow.

"The postmodern moment was at hand when the Republican Congressional leaders — whose previous 12-year tenure in majority will forever be remembered as the Gilded Age of loan industry rapacity — indicated that they, too, would introduce legislation to restore integrity to the system they had done so much to create. They even joined the Democrats to pass emergency loan legislation, if only to quickly declare the endemic problems of the loan program resolved and to prevent more meaningful reform of the corporate welfare program they have set up for their political supporters in the loan industry. The point of this street theater of contrition, atonement and conversion, of course, is not real change, but a sufficiently convincing appearance of reform."

Student Loan "Sunshine" is not enough. Reforming the relationships between lenders and college aid officials is a miniscule portion of the real problem.

1 comment:

Anonymous said...

Anya, thank you for writing Generation Debt. We have it on our bedside table right now!

My husband did not understand how widespread this problem really is -- his family was one of the few who managed to scrimp and save enough to send their three kids to college and, while not rich, they've never had the electricity cut off, either.

My family, on the other hand, was not so fortunate -- my father had cancer when I was young and was barely able to work. The small family oil business was one of the hundreds forced to close in the '80s. We kids learned to check that the lights still worked when we came home after school. We made it through that, but with no savings or extra income of any kind.

Both of us were expected to go to college. (That's where we met.) My mom had worked for a few years and was able to pay for my first two semesters of school. When she told me that there was no more money, I remember sitting in the financial aid office, crying, just 18 years old, believing that my future had gone down the drain unless I could get some financial aid.

I could not have been more right. My future DID go down the drain, but not because I was denied aid: because it was given to me. The financial aid officer took advantage of my ignorance and desperation and condemned me to a fate worse than poverty: enslavement. They did not explain what getting into this kind of debt would mean.

Fast forward ten years and a graduate degree later (a semester off here and there to do internships, try out a field I ended up not liking, and having 2 kids). I was self-employed at 28 as a commercial photographer, gaining critical praise and becoming a respected artist. However, it's a hard field if you're a new player and the loan payments were now due, WAY more than I could ever expect to pay.

My husband, a computer whiz, easily got a great job and could not understand how I was not able to just rake in a paycheck like he was doing. The calls disturbed him more than me (I'd gotten used to them as a kid when my parents were down and out) and he began to pressure me to find a job so that I could make the payments. The children were only 3 and 4 and I could not get a job that would pay enough for childcare AND the loans. Lord knows I tried.

My options were limited: work as a wage slave at an all night convenience store, then come home and care for the kids all day (sleep when?), work for no pay (it would all go to the loans and day care); go back to school (NO WAY! I had enough debt); or try to make a living being self-employed.

I decided to open a retail gift shop, thinking that after a few years I could sell it and return to art. The bottom had fallen out of the commercial photography market after 9/11 and I was broken down (my debt load was a constant obsession and the phone calls didn't help) with little confidence in myself by this point so the time for a change seemed right. I had that business for 3 years, every month seemed that it would be the month that it would just take off and become self-supporting (meaning I could get a paycheck rather than having to reinvest), but then summer of 2005 the price of gas shot up to $3/gallon here and business declined to the point that I had to close.

In order to get the small business loan for my shop, I had to have my student loans either current or in forebearance. I had no more deferment left and was running out of options to forebear. I had talked with Sallie Mae about grouping my numerous loans into four consolidation groups, so that I could actively pay on one group while putting the others into forebearance. They were quite willing to do that and said they would send me the paperwork. I would have the option to decline if I didn't like the rates.

Next thing I knew, my loans were consolidated into one huge amount, with a higher interest rate than I had been paying. I did not authorize that and the amount seemed wrong -- way wrong. This was in 2002.

I have been asking for them to show me the math ever since, protesting that the consolidation was not what we had discussed, and I have had no response despite sending registered letters to their legal department, making phone calls to the Ombudsman, state regents, etc.

Furthermore, I took out some loans before I got married and they don't show up anywhere on my records at

Attempts to hire an attorney to sue for well, I don't know what to call it, wrongful billing?? Messing up my credit and my loan accounts? Racketeering? Whatever, I couldn't find an attorney to take my case -- they said the loan companies were exempt from lawsuits. I felt I had no other choice but to give up and just let my loans slide into default, which is where they are now.

Doing more research about suing the loan company led me to I have made a companion yahoo group, I would be honored if you would join us on that list. Anyone reading this is also welcome.

Thanks, RaNDoMLeiGH