Battle of the Student Loan Scams


This US election can best be understood in terms of a ‘Zombie Smackdown’!

Yes, dear reader. One candidate supports one group of zombies. The other supports another group of zombies.

But many zombies – retirees, bankers and the military – have it made. They’re backed by both candidates. No matter who loses, they win.

For example, Romney sounds like he might go hard on the little zombies – those who get a few bucks for doing nothing.

On the other hand, Obama sounds like he might go hard on the big zombies – those who get big bucks for doing nothing worth doing.

Neither candidate can win this election without zombie support. So both favour more money for retirees, the Pentagon and the banks.

Which zombies will lose? Which will get smacked down? The unemployed? The farmers? The education industry?

‘Last summer, it was announced that student debt achieved the distinction of being greater than that of credit card holders and even the victims of subprime mortgages.

… ‘Shares of the University of Phoenix parent Apollo Group, the largest for-profit college chain by enrollment ($4.9bn – yes, that’s billion), soared when GW Bush’s administration eased regulation to get things in motion a few years back.

‘A much smaller group, Capella, with an enrollment of 38,000, got 78% of its $335 million in revenue from government loans and grants in 2009.

‘Why are for-profit schools important for us? These colleges received $26.5 billion in US loans and grants in 2009. Even though they educate less than 10% of all college students, they get 25% of all Pell grants and make up 44% of federal student loan defaults.

‘Stephen Burd, the editor of the New America Foundation’s Higher Ed Watch blog, has written that Sallie Mae has often allied itself with for-profit colleges—not all of them reputable—thereby helping fund private student loans “with interest rates and fees totaling more than 20% per year, to financially needy students who normally wouldn’t qualify for them because of their subprime credit scores.”

‘As reported by Mother Jones, the new Consumer Protection Bureau – created to crack down on shady real estate loans and predatory lenders – was not given that same authority to deal with student loans, described by the then New York Attorney General Andrew Cuomo as the ‘Wild West’ of lending.’

Which candidate will keep the student loan hustle going? Probably both of them.

Mr Obama? Almost certainly. Mr Romney? Yes again!

Yes, dear reader, most zombies have nothing to worry about. Both candidates are on their side. And that probably won’t change soon.

But sooner or later the money will run out and then the student loan scammers will have to fight with the ethanol scammers…and the ‘War on Terror’ scammers… and the Food and Drug scammers… and the Securities and Exchange Commission scammers… and the food-stamp scammers…

…and all the scammers from A to Z in the federal directory.


Bill Bonner
for The Daily Reckoning Australia

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Bill Bonner

Bill Bonner

Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail The Daily Reckoning.
Bill Bonner

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2 Comments on "Battle of the Student Loan Scams"

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3 years 11 months ago

I really enjoy Bill’s tales of reckoning, such doom but still so upbeat!

3 years 11 months ago

Student debt is stunting the growth of the economy. Student loans have increased by 275% over past decade. As the next generation graduates from college, they are plagued by insurmountable debt that places demands on their income, limiting their ability to spend their earnings in ways that stimulate the economy.

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