The $1.7 Billion Student Loan Deal That Was Too Good to Be True

J

Jeni

Senior Member
https://www.yahoo.com/news/1-7-billion-student-loan-130410844.html
After years of struggling to make payments that hardly put a dent in the loans she took out to attend a now defunct arts school, Victoria Linssen saw a glimmer of hope. A deal last month between 39 states and Navient, a student lending giant accused of unfairly ensnaring borrowers like her, would wipe away $1.7 billion in private student loans.

Then she read the fine print: People like her who made their payments on time were disqualified from the relief.

Even though prosecutors said Navient had made predatory loans to hundreds of thousands of borrowers it knew could not afford them, the settlement covered only about 66,000 who were in default. Those who managed to make the payments on their deceptive, high-interest debt — mostly to attend for-profit schools that left them with worthless degrees — would just have to keep paying.

Sign up for The Morning newsletter from the New York Times
“I was stunned,” said Linssen, 57, who has sent Navient about $500 every month — sometimes skipping groceries to do it — after graduating from Brooks Institute, a for-profit arts school in California that abruptly folded in 2016. She has struggled to put her degree to use and now works as a digital marketing director in Muncie, Indiana, where her paycheck stretches further.

“It’s incredibly unfair,” she said. “If you were defrauded by your school, you were defrauded, and your loans should be released whether you’ve paid on them or not.”
The settlement resolved nearly a decade of state investigations into the role Navient, the lender and loan servicer that has long been a linchpin of the educational lending market, played in a bleak cycle of vulnerable students, dubious for-profit schools and taxpayer money.
State prosecutors said Navient, which did business as Sallie Mae until 2014, was willing to give private loans to borrowers it knew could not pay them back because they were a money-losing lure for a far more profitable product: federal student loans.

This is OUTRAGOUS we are rewarding those who chose NOT to pay at all and punishing responsibility ......
If anyone wonders WHY personal responsibility is seemingly a thing of the past THIS is a prime example.....
Those who tried to pay even if school was a fraud because they SIGNED up for loans should have gotten relief FIRST.
 

Last edited:
Jeni said:
“It’s incredibly unfair,” she said. “If you were defrauded by your school, you were defrauded, and your loans should be released whether you’ve paid on them or not.”
Click to expand...
If they got the education they went to school for how were they defrauded? Understandable that not paying the rest of a loan off would be great.
 
Knight said:
If they got the education they went to school for how were they defrauded? Understandable that not paying the rest of a loan off would be great.
Click to expand...
the schools often were more of a scam then real education.... but regardless i think people should pay as well ...
it was their decision to vet the schools or programs ... most of this type school promised short cuts like 8 months instead of the 2 years for degree ...

My point is even if these folks made bad school choices ... those who tried to do right by paying should get relief BEFORE those who left all loans to be picked up by someone else.
This whole promise of paying off loans that these students signed up for should IMO help those who at the very least TRIED to do the right thing and pay.
 

I think fairness is the key in this. My take on fairness would be to identify all who had loans thru Navient, then divide that 1.7 billion equally among that amount of outstanding loans.
Obviously that isn't happening to those that were being responsible. A lower outstanding debt that could be more manageable by all makes sense to me.

I'd bet there would still be some that wouldn't pay:cautious:
 
People who took student loans need to be responsible for them. That includes making sure they are investing in an education that will lead to a more lucrative career than if they don't take the loans.

I do however believe that we have cut education funding too much, young people should not have to pay the full cost of their educations. If they lead to high income then more taxes will be paid. Funding education, in a smart way, pays for itself in the long run. So I think student loans should not be as necessary for an education as they have been.

That said I have to agree, something seems off in this settlement. Benefiting deadbeats and not those who managed to figure out how to pay their debts doesn't seem right.

I had a student loan to make it through engineering school. I paid it off and looking back it was a good investment. However it was a lot less money than some have to borrow today.
 
Last edited:
Knight said:
I think fairness is the key in this. My take on fairness would be to identify all who had loans thru Navient, then divide that 1.7 billion equally among that amount of outstanding loans.
Obviously that isn't happening to those that were being responsible. A lower outstanding debt that could be more manageable by all makes sense to me.

I'd bet there would still be some that wouldn't pay:cautious:
Click to expand...
i agree across the board relief is a better solution then just letting deadbeats off the hook
 
I think the missed point here, is that higher education in this country should be free to all, if we don't want to fall behind the rest of the world. In Finland, any one from any country in the world can go their university's for free. Everything in this country is about making money at the expense of everything else, and has much to do with the sorry state we're in.
 
Geezer Garage said:
I think the missed point here, is that higher education in this country should be free to all, if we don't want to fall behind the rest of the world.
Click to expand...
I don't think it should be free, but I do support subsidies. When we were college age it was more subsidized than it is now. My first year as an undergraduate tuition was under $1,000 total for the year. Total cost, room, board and books included was around $2,000. That was in state at a decent state University. Even adjusting for inflation back then tuition was more affordable, and scholarships more available. In California Junior Colleges tuition was free. I think we need a return to something more like that.

Students should still have to pay something, otherwise the education is less likely to be valued. And the student should benefit with a higher paying career.

We throw an awful lot of government money down rat holes, this is one thing that I believe deserves a higher priority.
 
Geezer Garage said:
I think the missed point here, is that higher education in this country should be free to all, if we don't want to fall behind the rest of the world. In Finland, any one from any country in the world can go their university's for free. Everything in this country is about making money at the expense of everything else, and has much to do with the sorry state we're in.
Click to expand...
We can and should have both free and private. As a kid I lived at home, rode a motor scooter to UC Berkeley, my parents paid the tuition (very low), I purchased text books that were cheap, and I graduated with a 4 year major in economics. Today the cost of an education has grown to meet the capacity of the loans to pay for it. College students are paying $1,000 a year just for textbooks. Do we need college presidents making more than $1 million a year? 100 ft towers, stadiums, and acres of lawns? Offer quality free on-line degrees to anyone who wants to participate. Those who wish to attend in person can pay for it, but please no college loan programs. In person colleges should be forced to compete with free and each other in both quality and cost. BTW -- In the day of the ebook and the internet do we really need physical public libraries?
 
Alligatorob said:
Students should still have to pay something, otherwise the education is less likely to be valued. And the student should benefit with a higher paying career.

We throw an awful lot of government money down rat holes, this is one thing that I believe deserves a higher priority.
Click to expand...
we throw a ton of money down this education rat hole as well......
In a program designed for single moms on assistance i had an acquaintance who was a professional student.... the programs chased what jobs they though were in demand and had her change her major 4 times wasting time and TONS of money all on taxpayers.

I agree students will NOT value an education they did not have ownership of.
The real Expansion ... in cost evolves all around the federal student loan program......
the schools found they could raise their tuition over and over and the feds would back up loans for bigger and bigger amounts.

A friend of mine has a child who went to one of these fly by night schools ITT and spent 80,000 for a certificate not a degree or credits that would transfer to another school etc..... all because these programs would loan the money.... his "major" was criminal justice yet none of the "education " was accepted as such ...so he is a security guard that owes 80k for a useless certificate.

I agree with other posters as well administrators and deans and associate dean and on and on all at 6 figure salaries? Highest paid state employee in my state is a university football coach ....that alone is all one needs to see to know the priority is screwed up.
 
Alligatorob said:
I don't think it should be free, but I do support subsidies. When we were college age it was more subsidized than it is now. My first year as an undergraduate tuition was under $1,000 total for the year. Total cost, room, board and books included was around $2,000. That was in state at a decent state University. Even adjusting for inflation back then tuition was more affordable, and scholarships more available. In California Junior Colleges tuition was free. I think we need a return to something more like that.

Students should still have to pay something, otherwise the education is less likely to be valued. And the student should benefit with a higher paying career.

We throw an awful lot of government money down rat holes, this is one thing that I believe deserves a higher priority.
Click to expand...
That's what it was for me, too, when I went to university during the '90s. From what I remember, my first semester was just over $400, but every year it went up by like 20%. It was still relatively affordable when I graduated, but every year since, it's gone up by another 20% or so, and now it's no longer affordable for a lot of people.

Housing is the biggest expense when going to college. That was the case when I went, but even more so now. I shared a house with some other people and rent was only $175 a month in the early '90s. It wasn't too difficult to come up with that plus the money for utilities and beer and a few luxuries. These days, housing is so expensive, it wouldn't be worth it for a lot of people. If you don't have parents you can live with while in school, you're screwed.
 
Jeni said:
we throw a ton of money down this education rat hole as well......
Click to expand...
Yes, we probably do. It seems to me a part of that is spent on non-educational things, like a luxurious campus, sports, etc. It would help to figure out what the real minimum required for an education would be.

Perhaps the shift to more online courses will help, though I am not certain what that is like. I went to college back when you had to sit in a classroom and listen to a professor live. I think I got a lot out of that...

However I still believe this is a better rat hole to throw money down than many...
 
Last edited:
Alligatorob said:
Yes, we probably do. It seems to me that a part of that is spent on non-educational things, like a luxurious campus, sports, etc. It would help to figure out what the real minimum required for an education would be.

Perhaps the shift to more online courses will help, though I am not certain what that is like. I went to college back when you had to sit in a classroom and listen to a professor live. I think I got a lot out of that...

However I still believe this is a better rat hole to throw money down than many...
Click to expand...
online is a good alternative for a focused and driven student not for everyone.
online/ remote learning due to covid clearly shows that students that put in the effort were not affected those not serious or not watched by parents are about a grade behind...
 
You must log in or register to reply here.

Back
Top