BY ALAN M. COLLINGE – 05/13/16 07:00 AM EDT
When he announced his candidacy in 2007, Barack Obama looked like he could be the one to finally stand up to the student lending system. He was one of only two members on the Senate Health, Education, Labor and Pensions (HELP) committee not to have taken money from the Sallie Mae PAC. In this position he was privy to HELP Committee and other reports detailing a broad swath of illegal and deceptive activities by the lenders, the universities, and even the Department of Education.
His rhetoric about making college “affordable” sounded great. The deletion of most every standard consumer protection (like bankruptcy and statutes of limitations) from student loans had caused a hyper-inflationary market, and a systemically predatory lending system that was lives and livelihoods of millions of people. The nation’s student loan debt had skyrocketed to $450 billion, and the Department of Education had actually begun turning a profit on defaults.
So when Obama was elected, largely due to overwhelming support from young people, it was assumed that he would make things right. But he did nothing to bring back any standard consumer protections. His administration did nothing to curb the predatory collection powers of the student lending system. College prices increased faster than previously, and today the average undergraduate is now leaving school with $35,000 in debt, up from about $17,000 when Obama announced.
By the time Obama leaves office next year, the nation will have added $1 Trillion to its student debt tab.
What the Obama administration did do was great for the federal government, not the students. Obama federalized the system to where the government now profitsimmensely from both interest on loans it makes directly to students, and defaults. To say that the federal government now sits atop the most predatory lending system in our nation’s history is not an understatement.
