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Trish DeLuca Headshot

Student Loan Crisis - Unconscionable Extortion

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When I sit down to write, the words often flow so quickly I have to check my Merriam Webster (yes, I have one that I use, not the online version: just a quirkiness with which I'm comfortable) to ensure my use of the word is right. Most often it is, and I thank the wonderful English and Literature teachers throughout my life that instilled a love of language. Of course, listening to music voraciously never hurt either. Both vehicles -- reading and listening to music -- gave me a conscience.

The word unconscionable always throws me: I want to write out the entire word conscience. As explained earlier, I like using the dictionary. I am a visual learner. So looking up a word not only satisfies my need to see the entire word, pronunciation and definition, it often brings my (truly diagnosed) ADD brain great delight as I see more words to think about! There, in the third definition under the word unconscionable I saw "extortion." Extortion: "the unjust extraction (as by the misuse of authority); the extortion by dishonest officials of fees for performing sworn duty." That is today's word of the day. Now I'd like to share a little about Sallie Mae.

Now known as SLM (Student Loan Marketing Association), Sallie Mae started decades ago and in the past 6 or 7 years, they have become embroiled in what I personally hope to see become an onslaught of viable, practical, and necessary lawsuits that may bring SLM to its' collective knees. They are both lenders and collectors of debt. Yesterday we were talking at a family gathering and one of our funny family members (he happens to be my "ex" and yes, he's really funny) suggested the word "veg" would be a more appropriate description of SLM's interest on loans - as well as the penalties and fees they add on to students who beg forbearance or hardship. These "vegs" that have ballooned one young person's loans for an undergraduate degree from $50,000 to over $70,000 in 3 short years cannot possible be responsible economics. In simplest of terms, the "veg" is the money assured the bookmaker on every bet placed. Regardless of outcomes, the bookmaker is making his "veg" - his "cut" - whether the horse runs, places, or loses. The slot machine is going to take 1 to 10% as winnings, regardless of how bad the player needs to win.

And the interest and fees - or veg - on student loans I am suggesting is as murky and unconscionable as the bookies' veg. We can be certain that SLM does not explain in understandable terms what a student is really signing on for when they sign their student loans, terms that will ultimately become clear as day when they appear in the form of a graduation present. Meaning that the student will lean upon graduation that in a few short months statements will begin to arrive that will have numbers that will rock the student to their core. How could they owe this kind of money? Some, like my son, were working the entire time they were taking loans to get a "great job" after graduation. Maybe, like my son, they graduated Summa Cum Laude, on the Dean's List every semester, President even of the local chapter of the Honor Society for the major they chose. With equal certainty I can assure anyone that when the student graduates, the repayment of that money will not hinge on whether they win or lose: meaning whether they find viable employment or not. This son is not working in the field in which he majored. Why? Because now this field truly requires a Master's Degree to enter at a respectable salary (I'm saying $30 to $35 thousand here, not $90,000).

However, there are some absolutes within the ranks of SLM's corporate governance, and there are ways to turn small dollars into large dollars at every level. Let's take, for example, the 2012 salary of SLM's President - John (you can call him "Jack") F. Remondi's. Excuse me, not salary: compensation package. His base salary was $850,000. His restricted stock awards were $2,064,814. His "all other" compensation (?) was $236,562, and the stock options awards were $749,999. His non-equity incentive plan compensation was $564,825, bringing to a grand total his annual "compensation package" in 2012: $4,466,200. That is a mega-millions payout that people dream of winning one day. Can we say with a straight face that he earned 4.4 million in one year? For what - what would be grounds for earning this kind of money? I will admit that reading those figures did allow for a brief kumbaya moment: how do people like this do it? I mean, how do you keep track of restricted and incented, and non-equity and "all other "income?

For most Americans, it's just a couple of three bucks an hour and 20% of it is going to your student loan. Fear not! Your knees won't get broken if you don't pay the bookie. Your veg is safe with Sallie Mae, SLM, and Mr. Remondi's associates. Of course, you may never own a home; your credit may be destroyed before you've had an opportunity to establish it; you may consider jumping from the windows of Wall Street houses to prove a point. I challenge us not to jump: I challenge us think, to consider our options, and to educate ourselves about educating ourselves. I challenge us to challenge this unconscionable extortion of money from people who were following the dictate of not just their parents and teachers, but the President himself when they believed the words "you have to, at any cost, get a college education". I add one heart felt thought here: I thank those, like Elizabeth Warren (in D.C.), Bill Maher (cable t.v., media publications) and many others for your outspoken and tireless battle against the tide of this crisis.