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Alan Collinge goes after the Student Loan Industry
The book is really about putting basic consumer protections into student loans: bankruptcy, the right to refinance with another lender, and statute of limitations on collecting. Also, interest rates can be as high as 30%, student loan companies don’t have to get a money judgment in court to start collecting the debt, they are exempt from the Truth in Lending Act, and state-run non-profits are apparently exempt from the Fair Debt Collection and Practices Act (explains the harassing phone calls).
But of course this book is also about digging up the nasty stuff, the whistleblowers, the horror stories, the corruption of student loan industries, Attorney General investigations, the million dollar lobbyists, how they “went to bed” with the federal government and universities. One email was sent to a student loan company reminding them that a certain financial aid worker "likes tequila." The problem of universities receiving kickbacks from student loan companies was so big that Congress passed the Student Loan Sunshine Act of 2007 to stop it. If you don't remember "choosing" who to borrow from when you went to college, you were part of it.
It’s unfortunate that the author’s personal story, while sad, contains one glaringly bad life decision. In order to pay off his student loans better, he quit his nice UC Berkeley job to look for a higher paying job. He didn’t have a job lined up. Ouch! Well, we know how that goes—there were no jobs, he defaulted on his loans, and his life was ruined. But Alan Collinge is no joke. He started studentloanjustice.org, got the attention of the likes of Hillary Clinton and Michael Moore, and has make significant change in the laws since then.
Part of the root cause of this problem, of course, is the cost of college in the first place. (check out Strapped: Why America's 20 and 30 something's can't get ahead) Why does tuition keep going up? Collinge argues that at some point our government decided to shift the financial burden from the federal government (investing in college directly with taxes) to the students (loans). Have you heard someone say “college is a business”? And why do they keep you so long? Remember the idea of a “four year degree”? Well, only 37% graduated in four years in 2003. Why did I need a Master’s degree to be a librarian? We have a lot of good books on higher education.
The Student Loan Scam