What Now -- Student Lenders Stealing Food from Borrowers?
The latest slant on student loans: private lenders essentially steal food off borrowersâ tables.
A woman who earns only $200 more a month than she pays toward her student loan is not a representative example, yet itâs the one ABC chose for its June 17 report.
âWorld Newsâ used the example of Nicole Gibson, a graphic designer making $1,400 a month, who pays $1,200 a month toward her student loans.
âIâve got to sacrifice food on my table and I donât think thatâs a fair option,â said Gibson.
ABC Correspondent Gigi Stone didnât explore whether Gibson could renegotiate her payment plan with her lender, or whether she had looked into loan consolidation or any options that could lower her payments. The report also left out key facts such as where Gibson lived, how much debt she had, and what type of loan or loans she had.
Gibson chose to get her degree from the Rochester Institute of Technology, but ABCâs Stone didnât mention tuition there costs nearly $25,000 a year. The average annual cost of undergraduate tuition is much less â $5,836, according to an October 2006 U.S. News and World Report. But the story showed Gibson saying her payment wasnât âfair,â instead of acknowledging it was a result of choices she made.
The segment provided further proof of media support for liberal New York Attorney General Andrew Cuomoâs crusade against the student loan industry.
Stoneâs report relied heavily on Cuomoâs slanted perspective â that the student loan industry is âvictimizingâ poor students.
Stone promoted his perspective, saying âIn the past few months, investigations led by New York State Attorney General Andrew Cuomo turned up deceptive and possibly illegal business practices in the student loan industry.â However, as of June 18, no charges had been filed.
But then Stone mentioned ânew revelationsâ in the investigation. âWhat weâre finding is that many lenders actually use the school that you are attending as one of the factors in the equation and this is startling to me frankly,â added Cuomo.
Stone used Cuomoâs comparison with mortgage âredliningâ â charging different interest rates for different populations â implying that poor and minority students would be the ones to suffer from student loans.
âWorld Newsâ was cut short before an opposing perspective was included. The video cut out just as Stone was going to Harrison Wadsworth of the Consumer Bankers Association. However, an ABCNews.com story included Wadsworthâs comment about practices Cuomo called âunfair.â
âRemember, these loans are not guaranteed by the government,â said Wadsworth. âThe lender is completely on the hook for them, so they have to try to judge what the risk is on the loan.â