Higher Ed Watch has a hunch that media scrutiny of student lenders is going to intensify, fast. A story in this weeks Fortune magazine by Bethany McLean describes how Republicans have shaped the student loan industry and how the Democrats plan to alter many Republican policies and "make student loans student friendly."
Last December, another student loan story in Fortune by McLean detailed Sallie Maes aggressive, highly profitable tactics. McLean criticized Sallie Maes political maneuvering and "predatory lending." The take-home message: Sallie Maes outrageous profits were coming at the expense of students and taxpayers.
60 Minutes saw a story developing and began to track Sallie Mae. Five months later, the show aired a segment highlighting criticism of Sallie Maes profits that caught the attention of the media world. It included profiles of individual borrowers who had been subject to Sallie Maes predatory tactics. Higher Ed Watch staff helped explain how the current student loan system works in Sallie Maes favor.
McLeans new article is likely the beginning of similar scrutiny, this time focused on Republican ties to student lenders. The article starts by describing how a Democratic Congress may influence the student loan system: cutting interest rates in half, expanding the Direct Loan program, reducing subsidies for student lenders.
But then it wades into controversial territory worthy of further media investigation. McLean discusses the student loan industrys connections to the Department of Education and Republican members of Congress (and mentions Higher Ed Watchs investigation of Nelnet campaign contributions). She questions why many of the student loan policies instituted under the Republican Congress were not in the best interests of students or taxpayers. And she leaves plenty of those questions unanswered.
Student loans are a hot topic right now, and will only continue to get hotter as Democrats attempt to cut student loan interest rates. Watch for other news outlets to dig further into McLeans story.