portland independent media center  
images audio video
newswire article reposts united states

economic justice | education

the war on the educated and social mobility: the debtor's front and Sallie Mae

The corporatists are pushing to destroy the potential of the poor and lower classes to elevate their life conditions by created an enslaved society to student loans. You want to know what those Detention Camps being rennovated by Halliburton are being made for? Debtors, both credit card debtors and student loan debtors. Want to know who will Rex-84 is for? Debtors, both credit card debtors and student loan debtors as well as envirnomentalists, non compliant cheap labour, gays, lesbians, free thinkers and anyone labeled "enemy of the state".

Rex84  http://en.wikipedia.org/wiki/Rex84

Detention camp  http://en.wikipedia.org/wiki/Detention_camp
From Wikipedia:

A "60 Minutes" segment (originally aired May 7, 2006) examined Sallie Mae including it's business practices. [1] A professor of law at Harvard Law, Elizabeth Warren, has questioned the Sallie Mae's dual role as both a lender and collector. [2]


[1]  http://www.cbsnews.com/stories/2006/05/05/60minutes/main1591583.shtml
[2]  http://www.cbsnews.com/stories/2006/05/05/60minutes/main1591583_page2.shtml

SLM Corporation (NYSE: SLM), commonly known as Sallie Mae, is the United States' number one college student loan company, managing more than $126.9 billion in debt for more than 9 million borrowers, and employing 10,000 individuals at offices nationwide.

The company primarily provides federally guaranteed student loans originated under the Federal Family Education Loan Program (FFELP), and offers comprehensive information and resources to assist students, parents and guidance professionals with the financial aid process.

The Student Loan Marketing Association was originally created in 1972 as a government sponsored enterprise (GSE) and began privatizing its operations in 1997, a process it completed at the end of 2004 when Congress terminated its Federal charter, ending its ties to the government. The company remains the country's largest originator of federally insured student loans. Through its specialized subsidiaries and divisions, Sallie Mae also provides debt management services as well as business and technical products to a range of business clients, including colleges, universities and loan guarantors.

Sallie Mae operates "Servicing Centers" in Mesa, Arizona; Panama City, Florida; Indianapolis, Indiana; Mt. Laurel, New Jersey; Wilkes-Barre, Pennsylvania and Killeen, Texas, as well as 72 other offices in the United States.

Sallie Mae is listed on both the Fortune 500 and the Forbes 500. The company also has been recognized as one of the 100 Best Corporate Citizens according to Business Ethics magazine, and one of the top 30 companies for executive women by the National Association of Female Executives.

Wiki entry on Sallie Mae  http://en.wikipedia.org/wiki/Sallie_Mae

Debt bondage

From Wikipedia, the free encyclopedia

Debt bondage or bonded labor is a means of paying off loans with direct labor instead of currency or goods. It is either a kind of indenture or truck system, and is technically a form of unfree labor. Historically, in the USA, it is also sometimes called peonage. (Note, however, that the word peon has broader implications and usage in Latin America.) Where children have to work due to debt bondage, this is considered a worst form of child labor.

Historical background to bonded labor
Prior to the early modern age, feudal and serfdom systems were the predominant political and economic systems in Europe. These systems were based on the holding of all land in fief or fee, and the resulting relation of lord to vassal, and was characterized by homage, legal and military service of tenants, and forfeiture. Many historians have argued that this system was also established in some Latin American countries, following European settlement.

A modernization of the feudal system was "peonage", where debtors were bound in servitude to their creditors until their debts were paid. Although peons from a technical point of view are only obliged to a creditor monetarily, from a practical perspective, the resultant relationship of a peon to the creditor is destructive of basic personal autonomy within the society.

Historical peonage
Peonage is a system where laborers are bound in servitude until their debts are paid in full. Those bound by such a system are known, in the US, as peons.

Employers may force laborers to buy from employer-owned stores at inflated prices in order to keep them in debt. This method is an unjust variation of the truck system (or company store system), in which workers are exploited by being paid only in insufficient amounts of goods and/or services. In these circumstances, peonage is a form of unfree labor.

Such systems -- just and unjust -- have existed in many places at many times throughout history.

Historical examples
In Colonial America, some settlers used indentured service to obtain passage or an initial settlement, then continued working independently after completing their bonded labor.
The American South - Such a system was often used in the southern United States after the American Civil War where African-American and poor white farmers, known as sharecroppers, were often forced to purchase seed and supplies from the owner of the land they farmed and pay the owner in a share of the crop.
In Peru a peonage system existed from the 1500s until land reform in the 1950s. One estate in Peru that existed from the late 1500s until the end of peonage had up to 1,700 peons employed and boasted its own jail. Peons were expected to work a minimum of three days a week for their landlord and more if necessary to complete assigned work. Workers were paid a symbolic 2 cents per year. Workers were unable to travel outside of their assigned lands without permission and were not allowed to organize any independent community activity.

Modern views
According to Anti-Slavery International, "A person enters debt bondage when their labor is demanded as a means of repayment of a loan, or of money given in advance. Usually, people are tricked or trapped into working for no pay or very little pay (in return for such a loan), in conditions which violate their human rights. Invariably, the value of the work done by a bonded laborer is greater that the original sum of money borrowed or advanced."

At international law
Debt bondage has been defined by the United Nations as a form of "modern day slavery" [1] and is prohibited by international law. It persists nonetheless especially in developing nations, which have few mechanisms for credit security or bankruptcy, and where fewer people hold formal title to land or possessions. According to some economists, for example Hernando de Soto, this is a major barrier to development in those countries - entrepreneurs do not dare take risks and cannot get credit because they hold no collateral and may burden families for generations to come.

Where children are forced to work because of debt bondage of the family, this is considered not only child labor, but a worst form of child labor in terms of the Worst Forms of Child Labour Convention, 1999 of the International Labour Organization.

Despite the UN prohibition, Anti-Slavery International estimates that "between 10 and 20 million people are being subjected to debt bondage today."

Modern example: prostitution
News media in western Europe regularly carry reports about one particular kind of debt bondage: women from Eastern Europe who are forced to work in prostitution as a way to pay off the "debt" they acquired when they were illegally brought over the border. This form of debt bondage also takes place in other parts of the world. See article on the trafficking in human beings.

Marxist analysis
According to Marxist economists, debt bondage is characteristic of feudal economies, where families are considered the responsible unit for financial relationships, and where heirs continue to owe parents' debts upon their deaths. Fully capitalist economies are characterized by the individual taking all responsibility, and such mechanisms as bankruptcy and death taxes reducing creditors' rights (while increasing the power of the state). Heirs are freed from the creditor, but at the cost of a drastically increased power accruing to the state itself. [citation needed]

Debt bondage is often a form of disguised slavery in which the subject is not legally owned, but is instead bound by a contract to perform labor to work off a debt, under terms that make it impossible to completely retire the debt and thereby escape from the contract.


Sallie Mae in the news 24.May.2006 03:17


Generation Debt

By Chris Gaylord, Christian Science Monitor. Posted May 22, 2006.

As college tuition prices and interest rates continue to rise, more
students are walking away from government, nonprofit, and teaching jobs.

Helen Lowery graduated from Boston University last Sunday with a
bachelor's degree -- and $22,000 in loans. But that $22,000 isn't stopping
the psychology major: She plans to attend American University's Washington
College of Law this fall, where she expects to borrow money again - this
time, $120,000.

"It's daunting," says Ms. Lowery. "I'll be putting myself into debt for 15
years after law school. It just bothers me that there are so few other
options if I want a good education."

Student-loan debt encumbers almost two-thirds of the Class of 2006,
according to federal statistics. With tuition costs continuing to rise far
faster than inflation and interest rates on federal student loans about to
increase, the debt load for future graduates is set to become so heavy
that it's likely to turn more students away from low-paying occupations
like teaching.

"Student debt is something that's grown very quickly and under the radar,"
says Anya Kamenetz, author of "Generation Debt," which characterizes
student-loan debt at a tipping point. "The demand for a college degree is
rising and the price of tuition is rising. So student loans are really the
only path for a lot of students."

Nationwide, the student-debt picture has fluctuated somewhat in the past
decade and a half. The average student-loan debt doubled in the 1990s, but
the situation improved after that, says College Board analyst Sandy Baum:
Among recipients of bachelor of arts degrees, both the percentage of
students taking out loans and the amount they borrowed dropped between
1999 and 2004, according to the College Board.

Now, however, student indebtedness may be turning again for the worse, Ms.
Baum says, although there is no comprehensive data for this year and last.

"In the past few years, tuition prices rose a lot and Pell grants have
not," she says, referring to the federal program that gives funds (which
do not need to be paid back) to undergraduates based on financial need.

For Zachary Pedigo, tuition costs made him drop out of the University of
Texas at Arlington after only a year, and he later pulled out of the
University of North Texas. He's still working to pay off a $10,000 student

"There are a lot of reasons I'm not in college right now, but the biggest
is the cost," says Mr. Pedigo, who hopes to open a recording studio in
Granbury, Texas, with friends. "College was just too expensive, and
getting more expensive every semester. It just seemed like a lot of stress
to make it through school just to be paying off debt until you're 30."

For those who do graduate, the average loan debt was $17,600 in 2004 --
$22,581 in the case of private colleges, according to the Center for
Economic and Policy Research. Ms. Kamenetz says those averages are too
close to the $23,000 maximum that undergraduates may borrow from the
federal Stafford loan program over four years.

"If students need to go over that maximum, it means they need to take out
private loans with higher interest rates," she says. "That means they'll
likely be paying more over a longer period of time, which slows down life
even more."

Of the three major variables affecting student debt -- tuition costs, the
job market, and interest rates -- the latter has the gloomiest forecast,
says Jacqueline King, director of the American Council on Education's
Center for Policy Analysis.

While tuition prices continue to rise, the acceleration slowed this year,
Ms. King says, offering a positive projection for future college students.
And the job market is relatively healthy, she says, opening up more doors
for graduates. But interest rates will increase on July 1, when federal
loan programs move from a variable rate system to a higher, fixed rate.
Stafford loans will jump from the current 5.3 percent rate after
graduation to 6.8 percent. PLUS loans, designed for parents, will rise
from 6.1 percent interest to 8.5 percent.

"The class of 2006 will not be affected by this increase, but the entering
freshman class will borrow under this new rate," says King. "This could
certainly have an effect on future graduates and how much they need to pay
back once they are out of college."

Interest rates on private loans can climb well over 12 percent. But
lending companies, such as Sallie Mae, attract students by offering them
far more money than the cap placed on the federal loan program, thus
allowing many to attend more expensive schools.

With hefty repayments in their future, however, many students, including
Boston University graduate Lowery, are walking away from low-paying
government, nonprofit, and teaching jobs.

"I really want to work in advocacy law," she says, "but from a practical
perspective that's not going to happen. I just won't be able to pay back
my loans."

Income for teachers is simply too low for many graduates, according to a
report released last month by the State Public Interest Research Group.
The study found that more than a third of borrowers who graduate from
private, four-year colleges would face "unmanageable" debt on a starting
teacher's salary, meaning they would need to set aside more than 8 percent
of their pay to cover student loans.

More than half of black and Latino graduates would fall into this level of
"unmanageable" debt, set by the lending industry.

Accumulating loan debt even pushes back many of life's milestones,
according to a survey that Baum conducted in 2002 for Nellie Mae, a major
student lender, which is now a subsidiary of Sallie Mae. The report found
that 38 percent of graduates held off buying their first house because of
student loans, 14 percent put off marriage, and 21 percent delayed having

"We are the first society in history to take our brightest and start them
out in debt," says Allan Carlson, president of the socially conservative
Howard Center in Rockford, Ill. "That's just stupid public policy. We
should encourage them to grow, not hold them back."

Despite the uncertain forecast, college can be affordable if students and
parents understand the potential pitfalls and plan wisely, Kamenetz says.

"People need to approach college like they approach purchasing a car," she
says. "Different people can afford different models. Don't be deterred
from going to college, but students need to be smart shoppers."


Sallie Mae student loan policies unfair
By Nancy Fay

STUDENTS from all over Southern California got more than they bargained
for when they attended a Sallie Mae seminar in Los Angeles on how to pay
for college. They got the truth.

"Fortune Magazine says Sallie Mae is a predatory lender," said Jennifer
Cassidy, "and they get away with it because they do not have competition.
In fact, competition for many of their loans is illegal. But not many
students or parents know that. And it is costing them a lot of money."

Sallie Mae is America's largest student loan lender - and the second most
profitable company in the country. But they do not operate in a free
market, instead holding an almost monopoly on the more than $120 billion
of student loans in its portfolio.

Critics say this lack of competition stops borrowers from getting a better

So Cassidy and about a dozen other students stood outside the seminar with
signs that read: "What do Sallie Mae and Tanya Harding have in common?
They both want to eliminate competition." Another read: "Sallie Mae is
number one because she got rid of everyone." And another read: "Less
Sallie Mae and more competition."

And, as cameras from the ABC Nightly News and other stations captured it
on video, they passed out articles from Fortune, the New York Times, and
nationally syndicated columns from Dick Morris, Froma Harrop and Ken Moser
all talking about what students and parents should know about abuses in
the student loan program.

"Some people were amazed when we told them about what they were getting
into," said another member of the protest. "But others knew about it
because they had already read some of the articles."

Sallie Mae is by far the largest student loan company in America, about
four times bigger than its next largest rival. What Cassidy and a growing
number of people know is that student loans are a lot different today than
they were 10years ago.

And students have a lot less control over them.

Student loans, for example, are the only consumer loans in America where
it is almost impossible to refinance more than once. "They call that the
single- holder rule," Cassidy said. "And it is the single most
anti-competitive, anti-consumer law in the country. It says that once you
have all your student loans from one company, such as Sallie Mae, you
cannot change. No matter if a different company offers you a better deal
or better terms."

As a result, lots of students cannot take advantage of lower interest
loans because they are not allowed to change lenders.

Suzanne Cox recently made such a discovery. "I have $50,000 in student
loans at 8 percent from Sallie Mae," said Cox, a special education teacher
from San Diego. "But other folks with the same kind of loans are paying
interest as low as 3 percent - all because we are only allowed to
refinance once. That is not fair."

It's the only loan in America where refinancing is restricted so severely.

"If your bank tried that with your mortgage or your car loan, they would
either go out of business or go to jail for breaking the law," Cassidy
says. "But our largest student loan companies do it, and they end up on
Fortune Magazine's list of the most profitable companies in America. And
not because they are better, but because their business is protected from

Columnist Dick Morris calls the anti-refinancing scheme an "obnoxious
rip-off." Terry Savage, financial columnist for TheStreet.com, says there
is "no way" borrowers should support this plan. The New York Times calls
it "robbing Joe College to pay Sallie Mae." The Times Union of New York
calls plans to outlaw refinancing a "student loan shame."

The Chronicle of Higher Education said the single holder rule legislation
is designed to "force out of the market."

Southern California has become the epicenter of efforts to reform student
loans and make them more competitive, because Los Angeles Congressman Buck
McKeon was recently appointed head of the House Committee on Education and
the Workforce.

McKeon says he is against the single holder rule, but, so far, it is still
the law of the land.

Nancy Fay is a freelance writer and is a resident of San Diego.



CHARLIE MITCHELL: Students, beware of owing Sallie Mae
5/16/2006 7:28:09 AM
Daily Journal

My record is intact: I still haven't been asked to impart advice at any
high school graduations. But if so, my counsel, at least to the
college-bound, would be this: Do whatever it takes to avoid borrowing.

I've written before about what I see as a crisis: People, usually in their
early 20s, saddled with $25,000, $40,000 or more in installment debt,
usually to Sallie Mae, now a private corporation whose profits put Exxon
to shame.

Guaranteed Student Loans - so-called because taxpayers pay them if
borrowers default - were created by Congress in 1972. The modest goal to
make two- and four-year degrees more attainable by students from
middle-income families. The loans have been helpful to millions. They've
also become a nightmare to tens of thousands.

Payback usually starts six months after graduation on a 10-year schedule.
At a flat rate of 5 percent, it would take 120 monthly payments of $265 to
pay off $25,000.

That might not seem exorbitant, but consider all the other expenses a
young person faces from the ages of, say, 22 to 32.

In rough terms, it's a dime of every dollar a Mississippi teacher would
make for a decade.

And that's just if everything goes well.

If a borrower can't get a job or becomes ill or injured, Sallie Mae will
put the loan into abatement, at least for a while - but interest will
continue to accrue. As for young borrowers not savvy enough to ask for an
abatement when needed (and this would be most), late fees and penalties
start kicking in for missed payments. It's not unheard of for a student
who has borrowed $25,000 to be facing double that much in arrearages -
even after making sporadic payments for four or five years.

Bankruptcy not a option

Bankruptcy is not an option for two reasons.

First is that if a person files bankruptcy, the odds of getting most
better-paying jobs flies out the window. Most employers run credit checks
on applicants. People shown "unable to manage money" are usually deemed
poor risks.

Second is even more overpowering. Since Sallie Mae was deemed by President
Bill Clinton in 1996 to be a fully private business, it has created a
tremendous lobbying presence for itself on Capitol Hill. And guess what?
By federal law, bankruptcy does not excuse or diminish in any way a
person's student loan debt.

Things get even more insidious, so much so that "60 Minutes" aired an
investigative report on Sallie Mae's holdings.

If a borrower absolutely resists all attempts by Sallie Mae to force
repayment, the corporation can declare the borrower in default and, in
turn, collect what's owed from taxpayers. (That's the "guarantee" part.
Sallie Mae faces no risk in granting loans.) But that's not all. Sallie
Mae then turns the defaulted loan over to a collection agency. And,
wouldn't you know it, Sallie Mae just happens to wholly own several
collection agencies. So Sallie Mae gets paid - and gets paid again.

(Recouped principal must be repaid to the government, but not interest,
costs or fees).

The last and sneakiest factor is that many colleges earn fees from
processing Sallie Mae loans they don't make from other lenders (including
other government lenders), so, naturally, students are steered into
signing up for Sallie Mae's seeming generosity.

A lot going

In Mississippi, high school graduates attending public community colleges
and universities this fall have a lot going for them. There are more
scholarships and aid programs than ever. The amount of money available in
Pell grants (which do not have to be repaid) is higher than ever.

But tuition is also up again - some 45 percent or more in the past 10
years. And so are the costs of everything from books to housing, fuel,
insurance - you name it.

Tuition is actually a small part of the expense of attending college in
Mississippi. Many students on scholarships and grants still borrow, and
often for "extras" such as a better car or apartment. Sallie Mae will
gladly provide the cash for a pretty good lifestyle.

It's unrealistic to think any 18-year-old lining up for a diploma today
will fret about the prospect of turning 30, having a spouse, two children,
a house and two car notes - and years of student loan payments still

It should be a happy day. No problem with that.

The next graduation will be happy, too, if student loan debt is kept to an
absolute minimum.

Charlie Mitchell is executive editor of The Vicksburg Post. Write to him

at P.O. Box 821668, Vicksburg, MS 39182, or e-mail  post@vicksburg.com.




Monday, May 08, 2006

by Ken Moser, Chairman of the Adam Smith Society

If the beginning of wisdom is the definition of terms, as Aristotle said,
then the head of America's largest student loan lender is quite the

As I recently found out.

As head of the Adam Smith Society of California, I wrote an article for a
couple of dozen newspapers talking about how Sallie Mae is the chief
beneficiary of a whole host of laws that outlaw competition for student
loans. And how that costs student loan borrowers billions of dollars a

Not good.

Worse, Republicans were the ones behind many of these anti-competitive
arrangements. As a result, Sallie Mae had become what Fortune Magazine
calls the second most profitable company in America -- complete with CEO
Al Lord making more than $200 million over the previous 5 years.

Not because Sallie Mae was better, faster or less expensive; but only
because it was largely protected from competition. That is not what Mr.
Lord wanted to hear.

Soon after, I received several puzzling missives from the mysterious and
elusive Mr. Lord where he redefined all the terms and pretty much said
everything I thought I knew about student loans was wrong.

Let's see.

The so-called Single Holder Rule is the best - or worst - example. It says
that if all of your student loans are with one company, you cannot
refinance with another company.

Congress was set to outlaw Single Holder in December. But in the wee, dark
hours of a cold December morning a few days before Christmas, that
provision mysteriously disappeared from the budget deficit reduction bill.

And along with it, any hope of more competition, better rates, and better
service for the 30 million student loan holders.

Then Congress went two steps step further.

Led by Congressman John Boehner, then head of the House Education
Committee, now House Majority Leader, Congress effectively banned students
from locking in low rates for longer terms while still in school and took
the Single Holder Rule, single most anti-competitive provision in all of
American law since the enactment of wage and price controls in the earl
70's, and made it worse.

They said that one you refinance your student loans, you cannot do it
again. No matter if a different company offers better rates, longer terms
or better service. All at no extra cost to the government.

Imagine if someone tried to get away with that in the home mortgage
market. They would either go out of business, or go to jail for price
fixing. Or both.

Sallie Mae celebrated. Spokesman Tom Joyce told reporters the new laws
would make smaller companies "think twice" about getting into the student
loan business, and that student loans were never meant to be refinanced in
the first place.

It may be the Single Holder Rule to us, but to Sallie Mae, it is the
Golden Rule.

So that is what I wrote. I have to confess: I was not the one who figured
this all out. Everything I wrote had been reported in lots of other

Fortune Magazine called Sallie Mae "predatory" and documented how Sallie
Mae is the largest contributor to Boehner and other key members of
Congress and depends on them to protect them from competition.

Dick Morris, yes that Dick Morris, wrote in his column that the lack of
competition for student loans was an "obnoxious rip-off."

Terry Savage, the financial columnist of TheStreet.com, says there is "no
way" borrowers should support Single Holder.

The New York Times calls it "Robbing Joe College to Pay Sallie Mae."

The Times Union of New York called it a "student loan shame."

And on and on and on. Then my own humble contribution: Where I wondered
how Republicans could be part of this anti-market scheme.

Then Lord spoke: Everything I knew was wrong! Starting with his salary:

"In the 8 years I was SLM's CEO my best salary and bonus year aggregated
$3.75 million and averaged less than $3.0 million annually," he told me in
an email.

"This was very generous compensation paid by SLM's shareholders, but less
than 10% of the 'more than $200 million salary and bonuses you cited I had
received over the last 5 years. Even a "big picture" economist can get
closer than that!"

Lord the philosopher redefined his compensation. The remaining 90 percent,
of course, was paid in stock options that are listed in all sorts of
public records and web sites. I felt embarrassed to point that out to Lord
in a later email, since he already knew. Heck, he was even using the money
to try and buy a professional baseball team, the Washington Nationals.

Perhaps I could get Lord to do my tax returns.

We at the Adam Smith Society do not begrudge profits. Far from it, we love
them. As long as they come from free competition in free markets. Which in
this case, they do not. Another point of contention between Lord and me.

So, in reply, I asked him all the questions: What about competition? What
about Single Holder? What about refinancing? What about all the sweetheart
deals with schools to buy their student loans? What about all the students
who cannot repay their loans because they cannot refinance them?

He wasn't buying any of it:

"You asked many questions in your recent E mail premised principally on
the notion that borrowers should be able to refinance their taxpayer
guaranteed, taxpayer subsidized, below market rate loans in the open
market without limitation and presumably without regard to the
government's ongoing economic interest in that loan."

In college rhetoric classes, we call that the "straw man" argument. I said
no such thing. But that did not stop Lord from setting his straw man on

"I disagree with your premise. So long as the government retains that
economic interest it rightfully sets loan terms. The student signed loan
documents to acknowledge and agree to those terms that you find so
objectionable. Those contractual terms formed the basic economic
understanding between borrower and lender when the loan was made. Now you
want to change the fundamental terms of the deal! Do you also endorse
retroactive changes in tax law?"

No, it's more like we caught you and your buddies in Congress using
federal law to give you and unfair advantage. Now we would like you to

Lord continued:

"The terms of that loan allow the borrower to refinance the loan at any
time without a government guarantee, just like the refinancing
opportunities you cite in your article that are available on their car
loan and their mortgage loan."

In other words, new graduates can pay off their $100,000 student loans all
at once any time they like. They might as well buy a professional baseball
team while they are at it.

"I must say you seem to have a remarkably low anguish threshold for
economic inequality, (worst government policy since Nixon's wage and price
controls?!!!). Please help me understand who is the victim of this
dastardly government policy?"

That's easy: The 30 million parents and students who are paying more for
student loans than they should. How students not only have record levels
of student loan debt, today they are less able to manage it because you
and your allies have outlawed competition, largely for the benefit of the
large student loan lenders, of which Sallie Mae is the largest by a factor
of four.

"I volunteered to answer your questions yet they all stem from the faulty
premise upon which you based your entire article so there is little else
for me tosay. Ironically, though I support the government's right to
regulate the transferability of its guarantee, we have not lobbied to
retain the single holder rule, of course you asserted otherwise."

This is quickly going from disagreement to disingenuousness. Then what are
your 70 lobbyists doing back in D.C. when they play golf with Boehner and

In an earlier email, Lord chided me for not trying to contact him when I
wrote my article. So I apologized.

"While I thank you for your apology, it is not lost on me that you had so
prejudged the character you seek to defame, that you never tried to
contact me or my colleagues. And you probably wonder why the public
distrusts the media."

Defame? As the good book says, "speak the truth and fear not." Telling
unpleasant truths is not defamation. As to the public distrusting the
media, the only thing keeping this weird arrangement intact is the fact
that most reporters do not understand that competition for student loans
is illegal and costly.

As soon as they figure it out, Sallie Mae is going to have to compete for
business just like any other company. Get smarter, faster, better, less
expensive. Or go out of business.

We were getting nowhere. Even so, I tried again, asking about the lack of
competition, his monopoly power over his borrowers, and the like.

He was having none of it.

"I tried," Lord responded. "Obviously you do not want facts to cloud the
brilliance of your fiction. Please tell me you don't consider repeating
the diatribes of other equally uninformed writers of journalism. Yet that
was the extent of your research. Your search for truth ended with your
source, a source with economics dependent on retroactive legislative
change. Perhaps it was folly to hope a member of the Adam Smith Society
would actually attempt to examine the basic economics of the student loan
business before writing so transparent a political piece. "

"I did not appreciate your interpretation of my words. You might consider
the words of a great coach and sportsman, John Wooden, "We can disagree
without being disagreeable."

Or how about the words of that little know political philosopher: Me: "We
can disagree without being disingenuous."

As long as we do it in a free market.




Thursday, May 11, 2006

by C. Victoria Patrick

Can you imagine the uproar if homeowners were suddenly told that if they
want to re-finance their home, with a different lender, they can't; -- or
even worse, if they were informed that they cannot re-finance at all?

Sallie Mae pretends to have the best interests of their customers at
heart, while they covertly work behind the scenes to pass anti-competitive
legislation that will end up costing students and parents billions of

Specifically, I'm talking about Sallie Mae's recently successful effort to
add to and solidify the restriction-of-trade laws that have dogged the
federal student loan program for decades. This collection of laws make it
difficult, if not impossible, for student loan borrowers to shop around
for the lowest available rates when they wish to consolidate their
education debt.

Put another way, Sallie Mae and a few other big lenders don't want the
lure of lower rates tempting their customers to switch to competitors.
That's why they ve lobbied so hard for these restrictions. And as of now,
they are winning the battle -- and perhaps, even the war.

For years participants in the federal student loan program have converted
their variable-rate federally guaranteed college loans into fixed-rate
federal consolidation loans, to lock in favorable interest rates, in much
the same way that homeowners do with their mortgages. And for the same

But under the new laws, the vast majority who have consolidated will be
legally barred from ever re-financing again, no matter what other lender
later might have offered them a better deal. And no matter how many times
you read this paragraph, its meaning will remain the same.

Some would argue that because the government is subsidizing student loans,
open market re-financing is not appropriate. But the fact is that under
the just repealed laws that heretofore allowed reconsolidation, lenders --
and not the taxpayers, absorbed the cost of lower rates offered to

Also, you should know that borrowers whose loans are owned by a single
lender have always been prohibited from shopping around for the best of
rates and terms when it came time to consolidate. Congress had been
promising to repeal that anti-competitive law, known as the Single Holder
Rule, but the proposal was mysteriously dropped from the Budget Deficit
Act at the very last minute.

The dollars lost to higher interest rates resulting from this collection
of restriction-of-trade legislation will never show up in the
Congressional Budget Office cost estimates that everyone in Washington is
forever quoting. And if you are wondering where those dollars will end up,
you need look only so far as the bottom line of Sallie Mae's income

And to add insult to injury, Sallie Mae, like a football player spiking a
ball after a game-winning touchdown, has begun celebrating. Their VP, Tom
Joyce, was quoted in USA TODAY as saying, "The consolidation loan program
was never meant to be a re-financing bonanza for students." And later, his
crowing grew even louder when he told the Orlando Sentinel, "Smaller
corporations will now think twice about getting into the student loan

Those ugly statements by Sallie Mae's chief media spokesperson graphically
emphasize the immediate necessity of Republicans and Democrats joining
forces to restore open competition in this very important marketplace. The
cost of college is just too high to protect Sallie Mae's profits any


what difference? 24.May.2006 19:39

dropped out in 1960

between debt peonage, forced labor and compliant debt maximizing gluttony onm the installment plan?

Read the fine print idiot, use that "educated" noggin.

And it still is true- NO FREE LUNCH, lender beware. If it looks too good to be true: its not true and its never as nice as you think it looks (JOY of advertising, smell that steak sizlin in your own back yard? your own flesh and kiddies smilin at Daddy the Provider? pen drops from the agents hand, lands in the mark's hand, somehow that hand finds the place to sign right up.

Wouldn't you- by the 100 thousands? so sorry

cchwnn: on the right track. 04.Jan.2007 17:56

daniel lopez, the creator. cchwnn@netscape.net

wow. the structure of these comments really dont matter. the main point is that i have been preaching this same thought since 1985 and then again 1997 when the government tried to push the william d ford loan program as majority holder of student loans. come on now. lets be real, even now 2007. just visit or listen to how many secondary loan companys are joining forces and marketing its loans.. the government has enough probblems now why get them more ..... i wish i had a job like yours in being able to use my 17 years experinces in fin aid and who knows how many years as a student and an advocate for migrant workers.. just plain fact mister thats what people need to know and some many of us dont want to say anything.. i dont i'll tell the way it should be and how to pay your education con not far in debt..

student loans the new trend to get you out of the main stream of america.....