|"Be sure to drink your Ovaltine"|
When the "Little Orphan Annie" program comes on the air, Ralphie anxiously uses the ring to decode Little Orphan Annie's secret message to radio listeners. Ralphie thinks the message might have something to do with one of Little Orphan Annie's adventures.
But he is wrong. When he finishes decoding the message, the disillusioned Ralphie finds that it just an advertisement for the program's sponsor. "Be sure to drink your Ovaltine."
"A crummy commercial?" Ralphie wails. "Son of a bitch!"
I felt a bit like Ralphie when I looked at the online collection of Inside Higher Ed articles that Inside Higher Ed produced recently on the future of student loans. I was expecting some hard hitting pieces on the student loan crisis. But what I found was a booklet of tepid pieces that was produced in partnership with Inceptia, a nonprofit company that cryptically describes itself as a "leader in default prevention and financial education solutions."
What does Inceptia do to prevent student loan defaults? I'm not sure, but I'll bet its activities include contacting students who are at risk of default and encouraging them to sign up for economic hardship deferments. Senator Tom Harkin's committee report on the for-profit loan industry pointed out that putting at-risk students into economic hardship deferments is good for the colleges because those students will not be counted as people who default on their loans within three years of beginning repayment--even though they are not making payments on their loans. And if those students officially default after DOE's three-year default measurement period expires--who cares?
Inceptia is a unit of the National Student Loan Program (formerly the Nebraska Student Loan Program), which is located in Lincoln, Nebraska. Randy Heesacker, Inceptia's CEO, is well paid. I couldn't find out his current income, but I found the Nebraska Student Loan Program's 2011 federal tax return. According to that tax filing, Heesacker received total compensation of $378,457 when he was CEO of the Nebraska Student Loan Program (including bonuses and deferred compensation).
Does that sound like an extravagant salary for a non-profit oranization's employee? Don't worry. The Nebraska Student Loan Program's tax return assured the IRS that "[o]utside legal counsel undertakes a comprehensive evaluation of the compensation and benefit packages for officers and other affected employees of the organization, comparing the same relevant industry and other market comparables."
Oh, that's a relief.
And if Heesacker made $378,457 in 2011 as CEO of the Nebraska Student Loan Program, what do you think he's making now as CEO of Inceptia?
I think it is a safe bet that the articles Inside Higher Ed chose for its online booklet were acceptable to Inceptia. And not surprisingly, most of the articles quoted various student-loan organizations that basically support the status quo.
One writer advocated larger Pell Grants. Someone argued for lower interest rates on student loans. And one organization wants lending standards loosened for Parent PLUS loans.
No one in the Inside Higher ED's collection of articles advocated for revising the bankruptcy laws to make it easier for distressed student-loan debtors to discharge their loans in bankruptcy. No one recommended elimination of the Bankruptcy Code provision that makes private student loans very difficult to discharge in the bankruptcy courts.
No one recommended tighter restrictions on the for-profit college industry or regulations to stop abusive collection practices or the garnishment of of Social Security checks.
No--almost everyone who participates in the public conversation about the future of the student loan program is an insider--an organization that benefits directly or indirectly from the $100 billion that the federal government spends each year to subsidize the higher education industry, which has been raising the cost of attending college every year for the past 30 years.
I'm sorry Inside Higher Ed and Inceptia--your vision of the future of student loans is not sustainable.
Someday--and I hope that day comes soon--we will have to introduce radical remedies for the student loan mess. Those remedies--to be effective--will have to include bankruptcy relief for distressed student loan debtors, strict regulation of for-profit colleges, and a candid reporting on what the student-loan default rates really are.
Inside Higher Ed (with support from Inceptia). The Future of Student Loans: A Selection of Higher Ed Articles and Essays. May 2014.