Student Loan 'C

Student loans make a college education possible for many people, but some of the companies offering loans to students are under attack by the media.

“For weeks, an investigation of the student loan business has been scrutinizing whether close ties between lenders and colleges have enriched them at the expense of debt-laden students,” explained the May 29 USA Today.

That investigation has been an anti-industry “crusade” waged by New York Attorney General Andrew Cuomo, and the media have been fighting alongside him.

The Washington Post called Cuomo’s findings a “crisis enveloping the loan industry” on June 2. NBC’s Brian Williams said “a growing scandal has rocked the multibillion-dollar student loan industry” in a May 10 “Nightly News” report.

In the past couple months, print and broadcast media have accused the student loan industry of bribery, kickbacks, payoffs, and of cozy relationships with financial aid administrators “at the expense of students.” Evidence of wrongdoing has been limited to only two lenders and a handful of college administrators who have resigned, fired or been put on leave.

No criminal charges have been filed. Still, the media act like all lenders and colleges have done irreparable harm to all their students.

At first, Cuomo’s investigation was limited to the Federal Family Education Loan Program (FFELP), the federal student loan program that works with private lenders to guarantee loans and cap interest rates for students.

But after getting a number of lenders to agree to a new code of conduct – and getting a state and federal law passed – he expanded the search to look for wrongdoing in the “unregulated” private loan sector.

Most media coverage characterized the few examples of unethical behavior as evidence of widespread wrongdoing on the part of lenders. Several also left out the identification of liberals like Cuomo and “consumer advocates” U.S. Public Interest Research Group (PIRG).

The media also didn’t prove any students were harmed; ignored the responsibility of borrowers to make informed decisions; and left out benefits private lenders bring to the program.