Sallie Mae Is the Poster Child for the Student Loan Crisis
NEW YORK ( MainStreet) Liberals and Conservatives, inside the Beltway and out, disagree on immigration, monetary policy, the Affordable Care Act and a host of foreign policy issues. But when it comes to student loans, particularly the private lender Sallie Mae now Navient they are very often of one mind. Navient, a publicly-traded company established with government money has been portrayed by the Left and Right as a blight on its customers and taxpayers.
The Right wing Reason Foundation, funded in part by what are known as the Koch Family Foundations, run by David Koch and his older brother Charles, published "Sallie Mae and Uncle Sam: Cronyism in Higher Education Finance" in July 2013, a scathing critique of Sallie Mae . Last February Kenric Ward posted a similar article on the Libertarian Watchdog.org, complete with his support for Massachusetts Democratic Senator Elizabeth Warren's opposition to Sallie Mae.
Watchdog.org vice president Steve Greenhut says his organization works from a "free-market, pro-liberty perspective." The story, "Sallie Mae: How Feds Fuel Student Loan Fiasco" is not far from the Left-leaning studentloanjustice.org, which argues that the entire student loan industry federal and private is predatory and doesn't discriminate when it comes to its victims: they are students of all kinds and taxpayers from every income bracket.
And in January, the progressive-left leaning National Consumer Law Center released Deanne Loonin's study "The Sallie Mae Saga: A Government Created Student Debt Filled Profit Machine," which wasn't any less damning and was cited by Watchdog.org.
"Most borrowers fall behind on student loan payments because they are unable to complete their educations, suffer from serious disabilities or earn so little money that they cannot afford to repay their loans," said Loonin. And the long arm of Federal government lurks, which can grab payments from a borrower's bank accounts without a court order.
"The stakes are high for borrowers due to the draconian government collection powers, including the seizure of earned income tax credits and Social Security payments ."
The Reason Foundation and NCLC both focus on the Federal government's role in making the student loan market safe for the Sallie Mae-Navient enterprise. The NCLC attributes this lender/loan servicer's excesses to both Big Government and market capitalism. The Reason report doesn't punt on the failings of the free market.
Sallie Mae was created in 1972 during the Nixon administration, originally with the modest aim of providing a secondary market for student loans that would increase liquidity and attract investors. The Reason report claims Sallie Mae played Uncle Sam from the gitgoobtaining cheap money from the Federal Financing Bank while leveraging low capital requirements as a government-sponsored enterprise (GSE)