| Quite true about the confusion of regulatory agencies. My comments about the abrogation of regulatory responsibilities was aimed at the USDOE in regards to SMC and other companies. But keeping track of which governmental entity isn't doing it's job is getting difficult. And the intertwining of these companies does make it difficult to trace out the spiderwebs. And given the long list of SMC subsidiaries its very possible that one of their entities is involved where the OFHEO/SEC would have venue.
USDOE is so co-opted by these companies that any serious investigative activity is unlikely. Usually the ethical regulators at USDOE have to resign or retire before they can comment on the whole situation. And so the information we lowly mortals can get about the situation is often too late or is simply more disinformation brought by those bought by the lobbyists.
For example default rates have been assessed at artificially low percentages, by various tricks including not tracking past 2 years or by considering deferments a form of default conciliation. But there has been some interest in revising the default data to indicate true rates. If this is done there is an expectation that actual default rates will increase considerably.
"An analysis of default rates by the Department of Education found that a longer-term snapshot could show that default rates are as much as 60 percent higher than with the two-year window. Under the proposed change, public schools would see their average default rate go from 4.7 percent to 7.2 percent, while private schools would edge up to 4.7 percent from 3.0 percent.
The biggest increase, however, would be at for-profit institutions, which would see their average default rate increase from 8.6 percent to an estimated 16.7 percent. Even more troubling, though, is the fact that were the cohort window extended to four years, for-profit colleges would have an average default rate of 23.3 percent. In other words, after four years, one out of every four for-profit students would likely have defaulted on their federal student loans. (Miller 2008)
In 2002, the Department's IG raised a giant red flag. Sallie Mae's relationship with USA Funds, the IG's office wrote, presents "a conflict of interest" that needs to be cured. Because Sallie Mae effectively controls the guarantor, the IG pointed out, there is no independent agency ensuring that the loan giant is doing all it can to ensure borrowers don't fall behind on their payments. By working hand-in-hand, the two entities actually have a perverse incentive to let borrowers fall behind so that the USA Funds can collect the generous subsidies the government provides guarantors for keeping delinquent borrowers out of default. (2008 Higher Ed Watch, Basken, Burd) "
The whole situation is morally sick, insofar as the influence peddlers had initially peddled fraudulently high default rates when that wasn't the case in order to get the regulations bent in their favor. Now potential defaults are climbing because of economic strains (including abuses by the edudebt industry) they want that information constrained because it illuminates too many shady business practices on their part.
For those who graduated in the 80's. 90's and those who will graduate in the 00's the whole situation with student loans is economically disasterous. And with the layers and layers of shell games its impossible for the average student borrower to know why they probably will never be able to pay for their education. And if the actual numbers on both the incredible profits and the shear number of people adversely affected were released, methinks there'd be a hue and cry for reform that no lobbyist would be able to quell.
The irony of it all is the profiteers are about the wreck their own party. And as a result of their intrusion into older more equitable systems higher education has become itself a means of lowering status rather than raising ones condition. And the result its a weird dichotomy within academia. Many profs are now little more than educated sharecroppers for the edudebt industry. But part of their jobs persona is to make students believe that education will elevate them? In my case I have a terminal degree, which was a massive economic mistake, but that is what permits me to be an academic. But increasingly I advise students in my field not to obtain terminal degrees...
It seems the 'life of the mind' is going suffocate in corporate cash boxes...
So yeah SMC and other companies are over levered but the amount of damage they've caused by their games could further wreck a shaky economy and other consequences could last for generations. |