. . . . As president of the United Negro College Fund, the country's largest provider of minority scholarships (we're the "A mind is a terrible thing to waste" people), I have spent my career helping students get college educations. A majority of our students are low-income and the first in their families to attend college. If anyone deserves help in going to college, they do.
Unfortunately, their need makes them the prime targets of a private student loan industry whose business model is to take advantage of their youth, vulnerability and lack of financial literacy to turn an easy profit and saddle these young borrowers with debt that will take them much of their careers to repay.
The sponsored link on Google for Campusdoor.com, for example, tempts students with promises to approve loans of up to $120,000 in 60 seconds and deliver cash within five days. There's no mention of scholarship opportunities like the federal Pell Grants or low-interest, federally subsidized loans.
This is a problem that will only get worse. If current trends continue, tomorrow's students will need to borrow more than today's students and will graduate with even larger debt burdens.
Where can they go to learn to make the prudent financial decisions that will enable them to get the education they need without taking on a debt load that will burden them for years? They need a voice of their own.
The task force that Spellings has announced and the bill the House has passed are good places to start. But the task force needs to look at all the factors that combine to exploit student borrowers, not just the current scandals; and it should include representatives of a range of stakeholders, not just federal employees. We need to give students the financial education they need to choose the financial assistance package that makes the most sense. We need to require that lenders provide balanced advice, not commercials or get-money-fast pitches, to college-bound youngsters.
The financial services industry will discover that what's true in retail is true in lending: The educated consumer is their best customer.
"A child's learning is the function more of the characteristics of his classmates than those of the teacher." James Coleman, 1972
Monday, May 21, 2007
UNCF Speaks Out on Loan Company Parasites
Michael Lomax in the Atlanta Journal-Constitution: