For decades, government-backed student loans, like home mortgages, helped define the American dream, enabling ambitious teens to pay for college in exchange for a career of higher earnings. Now, the $1 trillion in outstanding student loans has become a nightmare, imprisoning students in a lifetime of debt. Bloomberg reporters John Hechinger and Janet Lorin, in a year-long series of articles, exposed abuses in higher-education finance. Their reporting contributed to new federal rules on debt collection, the introduction of several Congressional bills, and reforms by the colleges themselves. It shed light on a long-unaccountable sector in the American economy: higher education.
The Series
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With $67 billion of student loans in default, the Education Department is turning to an army of private debt-collection companies to put the squeeze on borrowers.
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Joshua Mandelman made $454,000 in a single year as a student-loan debt collector -- more than twice the pay of the U.S. secretary of education.
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When Linda Brice defaulted on a college loan she had taken out more than 30 years, lawyers drained her bank account and seized a quarter of her take-home pay.
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Susan Romano read her son’s financial-aid letter and her eyes jumped to the highlighted line: “$13,442 expected payment” for the first year.
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The financial-aid odyssey of two generations of Brezlers tracks the history of U.S. student loans, which helped define the American dream.
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Terry Williams borrowed about $7,000 to earn a degree from Spelman College 38 years ago. For her youngest child she will take on almost $40,000 in parental loans.
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JPMorgan Chase & Co. charges Mirella Tovar as much as 10.25 percent annual interest on her student loans -- a rate as high as a credit card.
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J. Paul Robinson, chairman of Purdue University’s faculty senate, is leading a faculty revolt against bureaucratic bloat at the public university in Indiana.
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Marco Rubio, the son of a bartender and the first in his family to go to college, just finished repaying more than $125,000 in student-loan debt from the University of Florida and the University of Miami law school.
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Laura Sayer, unsure of what she wanted to do after graduating from college in 2006, figured a master’s degree was “a safe bet.”
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Cornell University and Massachusetts Institute of Technology are scaling back financial assistance to students, adding to the burden of families already coping with climbing college costs.
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The Impact
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Congress will consider overhauling debt collection in the $100 billion-a-year U.S. student loan program, replacing it with automatic withdrawals from borrowers’ paychecks tied to their income.
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The Obama administration proposed requiring that debt collectors let student-loan borrowers make payments based on what they can afford, rather than on the size of their debt.
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House and Senate Republicans asked Congress’s investigative arm to examine the U.S. Education Department’s student-loan program, saying the agency may not be doing enough to help borrowers in default.
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The U.S. Education Department must step up its oversight of private student-loan debt collectors, improving the tracking of borrower complaints and changing its commission system to reward customer service, a report found.
The News
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More than one in 10 borrowers defaulted on their federal student loans, intensifying concern about a generation hobbled by $1 trillion in debt and the role of colleges in jacking up costs.
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Students grew indebted and went into default at the hands of a “subprime-style” private loan market that contracted amid the 2008 financial crisis, a U.S. government report issued today concluded.
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Almost two-thirds of U.S. student- loan borrowers misunderstood or were surprised by aspects of their loans or the student-loan process, a study shows.
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Students who take out loans from private lenders to finance their education should have the same right to discharge their debt in bankruptcy that other borrowers enjoy, Illinois Senator Dick Durbin said today.
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U.S. student-loan debt reached the $1 trillion mark, as young borrowers struggle to keep up with soaring tuition costs, according to the initial findings of a government study.
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About $85 billion in U.S. student loan debt, or 10 percent of the outstanding balance, was delinquent in the third quarter of 2011.
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Tuition and fees at U.S. public universities rose 4.8 percent this year to an average $8,655, as the smallest increase in 12 years still outpaced inflation, a College Board report found.
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