Wednesday, June 17, 2009

Two things

Anonymous. It's a title that cloaks people who are not brave enough to state their opinions and ideas and attach a name; it affords them the ability to attack at a whim people who are not hiding and who are publicly stating their ideas and opinions. It's an act of internet cowardice and I have decided to no longer respond to it.

This is the last post I will make regarding comments from anyone who attempts to post as "Anonymous". In his/her last comment, you could feel the hate spew from the screen. It is always a sign you have won a debate when the other side resorts to name calling, rash generalizations, sexism and stereotypes.

I am a stickler for grammar- particularly your and you're and the like. I am not perfect, no one is, but if you are going to attempt to insult someone, it is best you use proper grammar. Another thing I assume someone in the South isn't expected to understand.

This is the end of Anonymous. If you have something to post and would like to comment, find the courage to post under your real name and engage in thoughtful, calm, rational debates, in which no name calling is tolerated. I do not tolerate childishness, sexism or stereotyping.

It's my blog; I make the rules. If you can't stand behind your ideas and opinions by posting under your true name, then perhaps you shouldn’t post at all.

Thursday, June 04, 2009

FFELP comments

I had a recent comment on my post about Obama and his socialist plan to take over not only the auto industry but the student loan industry. Instead of just sharing the comment and it likely going unread, I am going to publish it in a new post along with my comments. I appreciate the alternative point of view but disagree whole heartedly as someone who use to work in the industry and who is married to someone who still does.

Kudos to the President, the first president who actually had student loans.

The student loan industry is ripe with greed, arrogance, and corruption. The Sallie Mae CEO has taken nearly a half billion dollars personally as a middleman. He now owns three mansioned estates (annapolis, MD / Harwood, MD / Naples, FL), one with a private 18 hole golf course - although an old photo and the golf course is still under construction, you can see where taxpayer subsidy dollars go via Google Maps at coordinates 38°51'38.52"N, 76°40'4.47"W

I know of no industry that is not ripe with greed,
arrogance or corruption. When people are involved, these negative aspects
pop up. It’s not an excuse but it isn’t a reason for the government to
control the industry either.

Sallie Mae owns two private jets - they used to own three. The jets are tail numbered N50FD and N188AK.

And the President of my company, no doubt, owns a boat and a lovely house
but it doesn’t mean he shouldn’t.

That is where the taxpayer subsidies are going, private golf courses and private jets.

When a FFELP loan defaults, the taxpayer pays nearly twice the amount of the loan. Sallie Mae is allowed to attach fees, penalties, and crank the interest rate up to above credit card rates. After a period, they capitalize those fees, penalties, and interests and put the loan to the taxpayer for payoff. So, a 20k loan becomes more than 40k cost to the taxpayer. In the direct program, the 40k might still be the receivable, but it does not effect cash flow as we see with the middlemen involved. Why are we funding this madness?

When a loan defaults, the loan is turned over to the DOE. The DOE will add
additional fees and increase the rates in order to pay to collect the
debt. When you promise to pay a loan back and fail to do so, the lender
has the right to charge a fee. Unlike a mortgage, Sallie Mae and the like
cannot take away your education like a lender can take your home. Everyone
is a taxpayer- the CEO of Sallie Mae as well as you and me. So the
taxpayer who defaulted on their student loan will have to pay more than
borrowed; that is the nature of a loan a defaulted loan is even more
expensive. Student loans are the only loans that allow you to apply a
forbearance or deferment to your account. Try deferring your mortgage
payments because you have an economic hardship let alone your credit card

Let's not forget the corruption that the subsidies fund. The following student aid administrators got into more than a little hot water for taking kickbacks and other inducements from the student loan industry - most lost their jobs:
Ellen Frishberg - Johns Hopkins
Catherine Thomas - USC
David Charlow - Columbia
Lawrence Burt - University of Texas
Walter Cathie - Widener University
Tim Lehmann - Capella University
Daniel Pinch - Emerson College

Yes, there is corruption in some schools but you don’t cut down the apple tree because it produces one bad apple.

In the investigations of 2007, many Universities were fined for revenue sharing schemes. Specifically, University of Pennsylvania, New York University, Syracuse University, Fordham University, Long Island University and St. John's University have agreed to reimburse students a total of $3.27 million for inflated loan prices caused by revenue sharing agreements.

Perhaps we should nationalize those schools also…

And it just seems to never end. In May of 2009, "District attorney's investigators raided City College of San Francisco on Wednesday, seeking evidence that college officials had illegally spent public money on donations to education-related political campaigns. A copy of a search warrant served on the college shows that investigators are scrutinizing the actions of former Chancellor Philip Day, who left the college last year to work for an education lobbying firm in Washington, D.C." (from San Francisco Chronicle) Mr. Day happens to be CEO of the NASFAA, the organization that represents financial aid directors.

Again, this is a college with corruption not a lender and not even corruption-
they were “seeking evidence” meaning none had been found as of yet.
Corruption exists from the White House to the taxpayer house. We are
imperfect people and cannot expect to have a perfect world or system.

CHOICE? Choice is a myth or a lie depending on how you look at it. In 2008, more than 100 Universities were under investigation for more than 90% of their FFELP loans going to one provider. The notion that there is competition in this "market" is ridiculous - the student loan companies pay or induce schools for preferred lender status resulting in nearly all loans at any one school going to one provider. In the above instances, those inducements were to the administrators themselves. From "School as Lender" to call centers to printing - the inducements to schools are great and the payoffs for the middlemen even greater.

There is competition; in most schools, you can choose from a multitude of
lenders. Have you had a different experience? Some schools however, do not allow the student to choose; they are forced to go with Direct…the government run lender. My personal experience is any student that enters these doors can choose from any lender who agrees to make the student loan for them.

Of course, some in congress receive so much cash from the student loan industry, they will try to derail this improvement. Particularly, Buck McKeon and John Boehner receive the most from the student loan industry. Buck and Boehner have been the champions of the industry for years and are responsible for much of the elimination of competition and stripping of consumer protections for student loans - all to the benefit of the middlemen lenders. There are no student loan companies in Buck or Boehner's districts and no meaningful employment by student lenders in those districts. Now, Lamar Alexander is joining in with them. This is pure pay for play.

And Barack Obama received a lot of money from Fannie Mae and Freddie Mac yet
bailed them out- Kudos to the President? Fannie Mae….sounds a lot like
Sallie Mae another of Obama’s favorite GSEs?

Regardless, it appears my point has been missed. The employees of these companies will be unemployed; where will they work? Will Obama help or is this the change he promised? There is more corruption in the government than in the private industry, as your comments proved; so why would we want to turn this industry completely over to the government?