The Student Loan Scam
by Alan Michael Collinge
Nothing could have prepared me for the shock and rage I experienced when I first read this book.
I thought I knew how bad it was. I already knew that student loans were a debt trap. I already knew that many people had had their lives ruined by student loans which they could barely repay.
Collinge's book showed me, in great detail, how much I didn't know. Here is some of what I learned from reading it:
- Members of the Department of Education have been found to own stock in the very student loan companies they're supposed to monitor. Many DoE members are also ex-employees of student loan companies.
- In 2006, the U.S. Department of Education was caught inappropriately paying hundreds of millions of dollars to NelNet, a Nebraskan student loan company. NelNet's quasi-legal accounting methods allowed them to overbill the government by more than $250 million.
- Many lenders also give kickbacks to colleges for making them preferred lenders.
- Lenders may also run call centers on a university's behalf. At these centers, people answering the phones pretend to represent the university's financial aid office when in fact they're employees of the lending companies.
- Companies will often buy loans from each other, wiping out many of the benefits promised to students when they sign, like reduction of interest for on-time payments.
At the moment, you'd probably get a better deal from Paulie Walnuts than Sallie Mae. Under current laws, anyone who takes out student loans:
- can't consolidate their loan with anyone except the original company
- can't discharge their loans through bankruptcy.
- have no recourse if a lending company decides to "un-forgive" a loan. In one case, described in The Student Loan Scam, a man given total and permanent disability was told to pay up for loans he was explicitly told were forgiven.
In addition to providing eye-opening accounts of corruption and greed, Collinge describes the psychological effects of massive, unforgivable debt.
Collinge begins by describing the impact that student debt has had on his own life. This debt led him to work 92-hour workweeks just to keep his head above water, endure harassment from loan officers and collection agencies, and give up his hopes for marrying and raising a family.
As one former student says in the book, "when you are under that kind of pressure, money avoids you. It's tough to get clients when you seem desperate for them."
Student debt leaves many people feeling like failures, and seeing their education and life as a waste. As one borrower said,
My life is ruined. If only I would have worked my way through college slowly and paid for it as I went––or not gone at all. Maybe the factory work wasn't so bad after all––at least there I had my dignity.
Alan Collinge's crisp, simple prose would be a joy to read if the subject matter was more pleasant. He shows you how we came to the current mess, who was involved and who is responsible.
I highly recommend this book to anyone who wants to learn more about the American student loan scam. If these companies preyed on you, this book will help you feel less alone.
If you want things to change but don't know how to change them, this book––as well as Collinge's website, StudentLoanJustice.org, will give you ideas of how to fight back.
If you are thinking about going to college, or any type of expensive education past high school, do yourself a favor and read this book. You'll be glad you did, and it may help you save your time, your money, your future and your dignity.
Buy The Student Loan Scam
Student loan debt infographic by owsposters.
More Books on Education
EAU's Guide to Completing Your College Degree
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