Think college costs too much? Add the cost of predatory loans and misleading payback schemes to the balance and it's not affordable.
That's what the nation's largest student loan company, Navient Solutions, allegedly did to millions of students across the country. The practices were so common that the federal Consumer Financial Protection Bureau filed a case against Navient in January.
Pennsylvania Attorney General Josh Shapiro filed suit this month on behalf of borrowers who may have been ripped off by the company through its large service center in Wilkes Barre. If Shapiro is successful, he could give welcome relief to students struggling to pay off their loans.
And they could use some relief. Almost 1,100 Pennsylvania students and their parents have filed complaints against Navient since March 2012.
According to the suit, the company marketed subprime loans to students whom it should have known couldn't pay them back. It then slapped them with 9 percent origination fees and jacked up the interest rates to almost 16 percent.
Navient apparently profited from the bad loans by using them to weasel its way onto schools' preferred lender lists. That gave it almost exclusive access to schools' student bodies, a lucrative customer base.
Once students left school, Navient steered them into expensive payment plans instead of the more affordable plans they qualified for under federal law. That added $4 billion to Navient's bottom line. But it was so hard for students to keep up that they fell behind in payments. That left them with lousy credit ratings, which will cause trouble when they try to take out a car or home loan or apply for a job.
Meanwhile, the colleges acted like accessories to a crime. By placing Navient on their preferred lender lists, they were recommending the firm to students who foolishly thought their schools were looking out for their best interests. They weren't. The colleges wanted to increase their enrollments, even if it meant looking the other way as their students were exploited.
It seems everybody but the student borrower gets a financial advantage from this setup — and that is a disgrace. Instead of investing in college students, this country allows them to become marks for greedy lenders.
There is no good reason to permit profit-hungry lenders to feed on the dreams of students and their parents.
The unprecedented student debt load, now at a cumulative $1.4 trillion, slows the ability of graduates to become self-sustaining contributors to the economy at large. College is a gateway to the middle class, and a way to stay in it. But few will have those opportunities if they can't survive the loan sharks in the waters just off campus.
They're not getting much help. The federal Department of Education isn't asking Navient to play fair. Instead, it continues to refer student borrowers to the company. The one federal agency that could help students, the CFPB, is under attack in the Republican-controlled Congress, which is eager to kill it to please the lending industry.