There are some things that we need ruined from time to time. “Adam Ruins Everything” does a great job of elaborating on the issues facing modern audiences, on everything from dieting to dog breeds. One of the newest episodes of this hit TruTV series deals with the student loans, including how and why there are so many problems facing college students now.
Adam Conover names one specific event as the tipping point which changed how student loans function in American society. This was the deregulation and privatization of Sallie Mae in the 90s. Sallie Mae was created in 1972 as a government institution charged with offering standardized loans to aspiring college students. In 1996, legislation was passed that transformed this government agency into a private corporation.
It is still private to this day, just like any other bank.
Private means profits
After the privatization of Sallie Mae, there was a concerted marketing effort to encourage students to take out more loans, as well as collecting on government fees. Sallie Mae even offered incentives to schools, if the institutions would use Sallie Mae as their financial aid company of choice for loans for their students.
The lack of fair competition and transparency led to a degradation of an idea that could otherwise provide a lot of benefit to society. Sallie Mae is cited as perpetrating many trespasses, including:
- Bribing financial aid officers with cruises
- Masquerading private representatives as college employees
- Encouraging students to take out more debt than they needed
All of these, and more, became common practice, and directly led to today’s student loan crisis. Students are tempted to structure monthly payments so low that they subsequently fail to cover accruing interest, which causes principal balances to balloon, to the tune of some $1.3 trillion in recent years.
Now, a quarter of college students and graduates are falling behind on their student loans, with no end or hope in sight. Even bankruptcy is off the table; student loan obligations cannot be wiped clean upon a declaration of bankruptcy. Over 8 million student loan borrowers are currently listed as in default.
So, “How College Got So Evil” might not be such a bad title for a new segment from the sensational show that ruins everyday perceptions.
“Unlike other types of debt, if you default on a federal student loan, the government can garnish up to 15% of your wages, tax refunds, and social security benefits… And if your parents co-signed your loan, their income can be garnished, too…”
Sallie Mae, Gone But Not Forgotten
“In 2010, the government finally cut out middle men like Sallie Mae,” Adam says in this episode, “but it wasn’t enough. A generation of Americans have had to financially cripple themselves with debt just to get the basic education that will allow them to survive in today’s economy.”
For more information about the sources Adam’s team used to put this episode together, you can view their source list at their website. To watch the segment and hear it for yourself, check it out on YouTube.