Everyone has a story about student debt – either their own debt, or perhaps a partner’s or a family member’s.
After all, some 42 million people owe $1.3 trillion, a number that’s doubled over the last eight years alone.
We have a new story of our own to add to the conversation. Today, we published a deep examination of how the student loan system – originally created to alleviate poverty and inequality – became a profit center for Wall Street, private investors, even the government. This all happened as the cost of higher education was rising and states began to invest less and less in their colleges.
The story, which you can read here, comes from two decorated investigative reporters, James B. Steele and Lance Williams. They set out to understand how this crisis happened and who’s benefiting from it.
Here are the highlights:
* The privatization of Sallie Mae in 1996 had a dramatic impact on student lending.
During the Clinton administration, the federal government relinquished direct control of the student loan program, opening its bank to corporations concerned with profits, not diplomas.
* If states had continued to support public higher education at the rate they did in 1980, they would have invested at least $500 billion more in their university systems.
That’s an amount roughly equal to the outstanding student debt now held by those who enrolled in public colleges and universities.
* The student debt crisis is a microcosm of America – a tale of the haves and have-nots.
The imbalance between those with debt and those without will exacerbate income inequality for decades to come.
* Congress has enacted one law after another to make student debt the worst kind of debt for Americans – and the best kind for banks and debt collectors.
Student loans are virtually the only consumer debt that cannot be discharged in bankruptcy except in the rarest of cases – one of the industry’s greatest lobbying triumphs.
* One of the winners in the profit spree behind this debt: the federal government.
The federal loans issued between 2007 and 2012 currently are projected to generate $66 billion in income for the government, according to a Government Accountability Office report.
Now, here are some options for what you can do:
- Read the full story. And please share it.
- Subscribe to the “Reveal” podcast. The audio version of this story will be available in our feed on Monday.
- If you like this work, please donate. We’re a nonprofit and rely on donations to do this kind of work, which isn’t cheap.
Thanks for reading.
Andrew Donohue can be reached at adonohue@cironline.org. Follow him on Twitter: @add.