Guilty until proven innocent – that was the verdict for the student loan industry on CNN’s “In the Money.”
The show’s anchors turned a story on investigation of college financial aid offices into a diatribe on corporate scandal and an approval of more government control of student borrowing.
“This kind of a scandal is the kind of thing you think about when you think about Enron and, y’know, Wall Street firms and chop shops …” said panelist Jennifer Westhoven on the April 14 program.
“And this is higher education,” agreed Christine Romans, who then decided to smear yet another industry. “And when you look at sort of the business plan, you look at what some of the allegations are in this – in this industry scandal, you see that these sound like drug companies. ‘Let’s get our representatives into the financial aid office, let’s give gifts, let’s get people owning stock, let’s get them on our boards, so that our student loan can be right up there, preferred student loan for students, whether or not it may be the best fit for students.’”
The “scandal” the reporters continually mentioned was actually an investigation by New York Attorney General Andrew Cuomo, and Romans sounded like a prosecutor.
“Some of our nation’s most well-known universities are under investigation for the ties between the financial aid office and the for-profit companies selling student loans,” Romans said. Her report condemned the financial aid officers as well as loan providers – and she did not feature any individuals from either profession to answer the accusations or explain educational funding.
Romans’ report began with a study on college costs, saying that “increasing fees and tuition at America’s universities are pushing middle class and lower-income American students right out of some schools.” She added that “tuition increases make college unattainable for millions,” though she neglected to show how millions more benefit from the variety of financial aid and loan options available.
For perspective, she turned to Robert Shireman, executive director of the Project on Student Debt, which is part of the George Soros-funded Institute for College Access & Success. Shireman’s organization advocates more government involvement in student loans, including lowering debtors’ payments. A press release on the Project’s Web site showed the group advocating “regulatory changes that would limit required loan payments to a manageable proportion of income, and forgive certain debts after 20 years of repayment.”
The Saturday CNN business crew, headed up by regular host Ali Velshi, then blamed college officials for encouraging students to patronize lenders who might not have their best interest at heart, parroting Cuomo’s investigation.
As the Times article explained, the issue is what some might call a battle of the lenders. Private lenders are seeking to compete against the federal direct loan program “championed by the Clinton administration.” One of the ways private lenders have sought to do this is by providing universities with additional money on top of those loans they arrange directly with individual students. The Times article used the example of Indiana University, where “Sallie Mae, the nation’s largest lender,” offered $3 million that the university could use for “opportunity loans” to some students if it left the direct loan program.
Romans came down on the side of government intervention as she piled on the liberal talking points: “Two-thirds of students are now saddled with debt.” “There is a need for more money for kids to go to school. There’s no question about that.” She didn’t mention students and parents exercising personal responsibility in determining the amount of money they could afford to borrow – or the fact that it is a private individual decision to pursue higher education, not a function of the federal government.
Students don’t have to use “preferred lender” programs, as the Times noted. In fact, they can use those offers as a bargaining chip. The Times quoted Yvonne Hubbard, director of student financial services at University of Virginia, whose preferred lender is Bank of America. On the matter of using other lenders she suggested, “Take the terms we have negotiated with Bank of America and use this as your baseline, and try get your vendor to at least match it. It’s a good deal.”
The Business & Media Institute has previously documented slanted media coverage of tuition increases. In its 2006 Trends in Higher Education publication, the College Board pointed out positive trends in student debt. According to the report, 2003-2004 graduates did not have greater debt than those who graduated four years earlier.