Review of "The Student Loan Scam"

Last year a book was published that is probably one of the most important books that no-one has ever heard of. The Student Loan Scam blows the lid off a system that enriches a few and saddles millions of students with burdensome debts that will take decades to repay.

If you want to know how and why the system works that way, read the book, but there is more to the problem than The Student Loan Scam uncovers. Over many years, while the student loan system has grown, there have been other changes in society that make things far worse.

During the Great Depression, a time when many Americans had to endure economic privation that touches few today, the Social Security system was born. There were those at the time that were uncomfortable with the idea of issuing a number to every working American and it's safe to say that a law calling for mandatory ID numbers for citizens could never have been passed.

But voters and legislators were assured that this would never be used as a national identification number. Social Security cards themselves carried a printed warning that they were not to be used as identification. But bureaucrats love numbers and as the years passed the role of those nine-digit numbers expanded. Where once a social security number would be issued to anyone who requested one with no questions asked, the process became stricter.

As the numbers were used more and more for an expanding range of purposes, criminals discovered that, if they could access the numbers, they could steal identities. Victims found themselves liable for charges in states that they had never visited, for merchandise they had never purchased. In some cases these problems took years to resolve and involved hefty legal fees.

But it got worse. Virtually every document an individual was asked to sign had a place for the Social Security number. Even the word "social" which once applied to a disease, became shorthand for the number. No matter what you wanted to do, everyone wanted your number. First, of course, it was required for loan applications, then rental applications, and even job applications.

The word privacy remained in the dictionary but meant less and less as the years went by. Meanwhile the student loan juggernaut began to roll. Years ago, everyone knew that college was an important step on some career paths, while for others, the best approach was to roll up your sleeves and learn on the job.

Many so-called "blue-collar workers" earned salaries and wages sufficient to comfortably support families of five or six with only one wage earner. But other things started to change. Manufacturing jobs drifted overseas. We were told this was good news and that we had evolved into an information society. We would do the brainwork while grunts overseas would do the dirty jobs like manufacturing. But those overseas workers turned out to make fine engineers and computer programmers,  so many were stuck here at home in the new "service economy." Americans could earn $10 an hour greeting customers in a Big W superstore where they could buy merchandise manufactured everywhere but here.

The solution was more education. Pretty soon everyone needed to go to college. For many it was a good move. But more and more, employers started filtering job applications by weeding out those without college degrees. So, a declining economy continued to shrink, more and more college graduates filled the ranks of parking lot attendants, cashiers, and restaurant wait staff.

But there was another new wrinkle in the job application process. Employers became interested in the credit of new employees. Fortunately for the morbidly curious employer, a whole new industry had evolved to keep tabs on the economic life of every American.

So, if your credit score was too low, you might not get the job for which you had studied for four years and for which you were highly qualified. If this happened too often and your score continued to spiral downward, you might not be able to get anything other than a low paying menial job in the burgeoning service economy.

How then were you going to make those payments on the six-figure debt you pile up in college? As The Student Loan Scam makes clear, missed payments cannot be forgiven or negotiated away and, of course, they apply downward pressure to that bad credit score that is already keeping you from work in whatever profession you trained for.

Where does it all end. Unfortunately it doesn't end. Although the law, for centuries has recognized that debtors should have a way to return to being productive members of society, the provisions of bankruptcy law are suspended for student loan borrowers. These are debts that cannot be forgiven, discharged, or renegotiated in any way.  

The same can be said for credit scores. Even if the reason for financial problems was totally out of the debtor's hands, even if they were devastated by a protracted battle with cancer, for example, the credit rating industry is not interested. Whether you are a good or bad person, honest or dishonest, is determined by computer analysis of the numbers using algorithms that are proprietary. So there is no way to even verify the accuracy of the numbers that may condemn you to a lifetime of debt.

If you're looking for a simple solution, there isn't any. All the elements of this problem are intertwined. There is the death of privacy and the subordination of our lives to decisions made with computing algorithms. There is devastating debt created by foreign wars and corporate welfare. There is the trend in colleges to spend, spend, spend because the students, after all, have loans to pay for escalating tuition charges and $150 textbooks. There are politicians who will promise voters anything and everything. Only after the election do the voters find, not so much that the politicians lied, but that the elected officials ignored reality while on the campaign trail and made promises that no-one could possibly keep.