Friday, August 3, 2012

Mark Kantrowitz Argues That Six-Figure Debt Is Uncommon

Mark Kantrowitz claims that six-figure debt is a rarity, and says that journalists are sensationalizing the problem. While it might be true, based upon his findings, that there is not a huge percentage of people with that sort of student loan debt, the fact remains that we are in a full-blown crisis. Journalists and activists are not the only ones who acknowledge the crisis. Higher education policy analysts, politicians, and other experts recognize the problem. More importantly, those who are being crushed by their debt, and also realizing that their window of opportunity for financial security in the future is narrowing, know all too well that the crisis is worsening. Those stories matter.

Furthermore, there is no debate that the dramatic increase in default rates on student loans is worrisome.  This is an obvious sign that people are failing to pay back their loans, and that more Americans are falling off the grid. For what reason? Pursuing higher education.

So, while Kantrowitz's findings might be accurate, it does not change that fact that we are still in a deep, long student lending crisis. It also doesn't change that fact that our leaders aren't doing anything substantial to change that fact. When it comes to leaders, we could use some more Browns and Harkins on the Hill.

I also take issue with Kantrowitz's claim that the stories are all sensationalized. Interestingly, a few months ago, he was quoted in a NYT article, and his tone was quite different. I was glad to read his comments in that piece, because it was the first time I heard him express public sympathy for borrowers. Now, I could be mistaken, perhaps he's done it in the past, but his remarks were notable.

What do you think about his findings?

Tuesday, July 31, 2012

Higher Ed Watch: Steve Burd - "Why the Harkin Report on For-Profit Colleges Really Matters"

Higher Education Policy Analyst Steve Burd, at the New America Foundation, published a piece on July 31st about Senator Harkin's report on for-profit colleges. The findings offer damning evidence of how these schools mislead students and defraud them. It is clear, based upon Burd's analysis, why Harkin's findings matter. The report, as Burd notes, is "voluminous" and accurately documents systemic abuse among for-profit schools. This abuse turns students into indebted, and oftentimes unemployable citizens. AEM has also documented these sorts of abuses in the past (here's a sampling - here, here, and here, and it doesn't stop there).

Sentoar Harkin is a rarity on the Hill, especially when it comes to critiquing the predatory nature of higher education, and the way in which these higher education institutions - for-profits in particular - make money by turning students into permanent debtors. He is one of the few who truly cares about prospective students, their families, and those who have graduated and struggling with large amounts of student loan debt. Harkin has received a lot of heat for these investigations. That's unfortunate, because he should be praised by groups who supposedly advocate for students. Sadly, so many of these "pro-student" groups have been co-opted by the lenders and the higher education industry that they fail to properly offer support to leaders like Harkin.

The report has come after a 2-year investigation, and Burd calls it a "major development," because "[the report] will make it extremely difficult for the industry and its Congressional champions to continue to deny that abuses have occurred at their schools that have caused – as Senator Harkin said at a press conference yesterday -- 'lasting harm to the students they enroll.'"

Burd admits that lawmakers can ignore the report and its pages and pages of documentation that prove the truly deceptive and fraudulent practices of these institutions. However, they can no longer assert, as Burd notes, "with a straight face," that these operations are run in a transparent, ethical, and fair manner.

As so many of us have known all along, and I would include Burd in this camp, these schools do not have the interests of the students at heart. On the contrary, they are driven by maximizing profits. In so doing, students pay a terrible price and are turned into permanent indentured educated citizens. The borrowers aren't the only ones paying the price: taxpayers who fund these schools are also being hurt. Unfortunately, the lending system is so complex and bureaucratically layered to confuse the public - especially when it comes to the way these schools allocate funds - that few taxpayers truly understand how they are also being defrauded. 

As for the findings in the report, it of course remains to be seen if it will lead to any actual change, such as enforcing strict regulations and penalties for their predatory nature.

Photo Credit: Johnathan Ernst/Reuters

Monday, July 30, 2012

Did you graduate from a prestigious law school, unemployed, and deeply in debt?

Help A Reporter: Are you a law grad from an Ivy League or prestigious school (Georgetown, Stanford, U. of Chicago, etc), can't find a job, and have a lot of student loan debt? A major broadcasting company is doing a show and asked for assistance on finding people who are willing to be interviewed.

Email me -

"Woman's on the Hook for a $25,000 Student Loan She Never Knew Existed"

Mandi Woodruff put out a recent article about a woman, Alice Cortes, who somehow owes $25,000 to Sallie Mae. What's the main problem? She co-signed for a person who seems to not exist.

I have heard from a number of people who paid off their loans, only to later learn that the loan was somehow turned over to collections and still existed. Several of them learned about these loans after they tried to buy homes, and they discovered that their credit was ruined.

In this case, Cortes never took out the loan for this individual, so she is at a loss to determine how to solve the problem.

Have you ever discovered a loan in default when you pulled your credit score, even though you paid it off years earlier? Has a lender ever pursued you for a loan that you never co-signed on?

In my view, this is another example of how out of control the lending industry is - there is essentially no oversight, so lenders have full power over people. In this case, they are apparently tracking down a woman who never even signed for a loan.

Saturday, July 28, 2012

Higher Ed Watch: "New Financial Aid Shopping Sheet Standardizes Award Letters—But Will Anyone Use It?"

Rachel Fishman recently wrote an article at Higher Ed Watch about the new financial aid shopping sheet that the Department of Education and the Consumer Financial Protection Bureau (CFPB) are now offering to prospective students. The resource will enable students to decipher financial aid letters sent to them once they have been admitted into college(s). The CFPB provided a prototype - or "draft" - of this tool last October. But there's a catch to this new sheet: institutions don't have to offer it to incoming students. Since schools are not required to adopt the tool, Fishman raises valid concerns about its potential efficacy.

Indeed, it is not only unfortunate but somewhat troubling that schools are not required to offer the sheet. Instead, as already mentioned, it's voluntary. In addition, a recent piece published by The Huffington Post - and referenced by Fishman - includes an interview with U.S. Secretary of Education Arne Duncan. He made it clear that if schools do not opt to use the sheet, there will not be any "sanctions" against them. Duncan is, however, confident that most schools will "do the right thing," and provide it to students. But on what grounds does Duncan believe schools will actually use the sheet? Is that some gut feeling he has? In a word, what evidence does he offer to make that assertion?

Fishman is also right in saying that the voluntary option to use or not use the sheet is "one glaring, fatal problem." Even if the sheet will provide more transparency to borrowers, what will actually motivate schools to implement the measure? Again, there is no a shred of evidence that suggests schools across the U.S. will use this new resource to help incoming students understand their financial aid packages. Furthermore, schools control all funds disbursed to borrowers, and this is precisely why transparency is, overall, sorely lacking. The lack of full disclosure should disturb the public. When pundits and politicians, lenders and school authorities continually rant against the millions of borrowers who have defaulted on their loans or fallen behind on their payments, and pull the "personal responsibility" argument, it is important to remember that these institutions of higher learning are not regulated in any way when it comes to the way in which they allocate funds.

As for the interest in and commitment to using the financial aid sheet, a few institutions have already pledged to offer it. But with over 6,600 institutions in the U.S., the likelihood is that the tool will not be offered to the millions and millions of incoming college students. If that is the case, then why was it designed in the first place? Obviously, money and labor were put into its design and creation. So, does this mean that it will be another case in which invested time and labor will be wasted?

In some ways, it is reminiscent of IBR (Income Based Repayment program). While I do not have numbers on how many borrowers are now enrolled in IBR, last Fall - when I was on a press call with the White House - Melody Barnes, Director of Domestic Policy, admitted that only 450,000 people were part of the program. There are over 36 million Americans who have federal student loans and are no longer in school, which suggests IBR has not been properly implemented and promoted. That is one of the reasons the President spent time promoting the program when he visited college campuses at that time. The Department of Education did a poor job of advertising IBR. Even worse, lenders are not required to even disclose the program to struggling borrowers.

Will this also be the case for the financial aid shopping sheet? Will only a few borrowers have access to it, because schools will not offer it? 

The optional factor has gotten the attention of some politicians who are concerned about students and the skyrocketing cost of college. Senator Al Franken (D-MI), for instance, has realized the inadequacy of the sheet being optional. Fishman notes, "Franken understands the importance of a model financial aid letter for students, which is why he has introduced bipartisan legislation that would mandate its use. He wants to ensure that all students, not just those lucky enough to apply to schools that voluntarily adopt this letter or those using military benefits, understand the true cost of college. A scattershot approach will not help a student and her family line up and compare four different award letters on the dining room table."

The big picture, that is, the depth of the crisis, cannot be overlooked when discussing these sorts of plans and programs. Indeed, we need to be remember that outstanding student loan debt has now surpassed $1 trillion. Despite this troubling figure, the dramatic increase in default rates, and the lack of jobs for graduates (especially recent grads), there are currently no short-term or long-term solutions to solve the crisis. The severe hemorrhaging continues, and more borrowers are slipping off the grid and being sucked down a financial tube towards total and permanent ruin. The emotional cost is tremendous and is mercilessly hitting countless grads with debt - these painful truths should not be forgotten. Some, as I noted in a recent article and in an interview on NPR, are suicidal. When will there be viable solutions implemented? That remains to be answered.

Thursday, July 26, 2012

NPR Interview - The Story: "Suicide and Student Debt"


Guest Host Sean Cole spoke to John Koch and me, as the founder & executive director of All Education Matters, about suicide, student loan debt, and the student lending crisis.

Listen to the podcast here.

Guest Host Sean Cole

Saturday, July 7, 2012

Interview with Host Michael Castner, Wall Street Journal's Dail Wrap


The Economic Hardship and Reporting Project provided me with a grant to write an in-depth article about suicide and its relationship to student loan debt. The piece was  published by the Huffington Post early last week. Thanks again to authors Barbara Ehrenreich and Gary Rivlin for being editors on this important project.

Also, listen to AEM's interview with Michael Caster, host of the Wall Street Journal's Daily Wrap.

Here's the link to the podcast - - the interview took place on July 5th (jump to the seventeen minute mark to listen).