Generation Debt

The main story in student loan news these days is growing coverage of the student loan payola-style scandal. It basically breaks down into this: Lenders and schools have/had deals whereby schools would push students to a certain lender or lenders in exchange for kickbacks from the lenders.

For those of you wondering if this scandal has or had any impact on those of us with consolidation loans we're now stuck with, the answer is a resounding yes. I remember heading to the financial aid office as a first year law student, asking about financial aid, and being given paperwork from two lenders. I remember not being specifically advised that I could or should shop around (yes, I was naive, and yes, many students are, making them a ripe target for this sort of thing). I remember going with one of the two proffered lenders. I remember having to then consolidate with that lender when I consolidated in 2001, as the single lender rule was still in place then. And now I'm locked in a loveless marriage with a lender that takes my high interest payments and hands them over to a CEO who uses them to fuel a private jet to fly Congressmen to vacation spots. Yes, I can see a connection between this scandal and the way things are now.

More on the scandal from The Tomah Journal, Campus Progress, US News, Medill Reports, OnPoint Radio, Guardian UK, The Times-Gazette, Salon, Reuters, and Reuters again (Senate hearing on student loans is today, by the way).

It's also interesting to note that the Department of Education has now changed its rules regarding federal student loan programs, requiring "universities to include at least three lenders on any list recommended to students and that would ban many of the incentives loan companies have been offering colleges and university officials to win student business."

In more general loan news, here's an opinion on debt burden from the Asbury Park Press, a piece on candidate stances on student loans from the Yorktown Patriot and one from Inside Higher Ed, an article on Obama's loan stance from Reuters, a story on debt from the Patriot Ledger, a story on debt from Gloucester County Times, a column about previous consolidation from CNN, a story on rising debt from the Portland Press Herald/Maine Sunday Telegram, commentary on another way to pay back loans, a plea for loan relief from someone writing in to the LA Times, an analysis of Sallie Mae using racial politics from CNN, and a feature on being young and in debt from USA Today.

Finally, for all of you out there who have thought of filing an antitrust lawsuit against your lender, the Supreme Court just made it harder. "By a 7-2 vote in Bell Atlantic v. Twombly, the Court said 'a bare assertion of conspiracy will not suffice' to get beyond the summary judgment stage in claims under §1 of the Sherman Act." Which essentially means that plaintiffs will have to have proof of conspiracy in the pleading stage, not an easy thing to get early on in a case against a big corporation.

Student Loan Debt Clock: $477 billion - growing faster than a duck pouncing on a Junebug.