Student Lenders Crying Wolf

If you spend enough time reading about the higher ed community it’s easy to become a cynic.

Learning what really motivates schools, for instance, to drop SAT requirements or to offer certain types of kids tuition breaks and not others can make you incredibly skeptical.

I am even more skeptical about anything that the student loan industry says. Lately, lenders, which would love bailout money from the federal government, have been frantically arguing that their financial situation is dire.

Give me a break. Lenders have enjoyed many years of a cushy business arrangement: They generate profits when families make loan payments and they often pocket even more money when families go into default.

Now they have convinced many in the media and Congress that kids are getting cut off from access to federal college loans. Nonsense.

If you believe that line, you need to only look at the latest federal loan figures from the U.S. Department of Education. During the 2007-08 school year, $51 billion was handed out in federal student loans versus $59.7 billion for current school year.

You can learn more about the faux crisis at Higher Ed Watch.

Lynn O’Shaughnessy is the author of The College Solution.

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