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Millions of Americans can apply to recoup between $10,000 and $20,000 in unpaid student loans now that the federal government has opened its student debt relief website .

The announcement is welcome relief for American households with student loans, which hold on average almost $59,000 in promissory notes. Black and Latino Americans are most burdened. They have more student debt than whites and more difficulty repaying it, research shows.

But the news comes with asterisks:

*Only the poorest borrowers can receive up to $20,000.

*Anyone earning more than $125,000 a year ($250,000 per married couple) is excluded.

* Hundreds of thousands of Americans with private loans outside the purview of the Education Department are ineligible.

*No one gets anything if Republicans get their way.

Six Republican-led states are suing to stall payments indefinitely or block them entirely. Though they lost the first round Thursday, their appeal was immediately accepted when the judge ordered the government to stop processing applications.

No surprise there.

Free market lawmakers in both parties have for decades followed a familiar playbook to saddle Americans with student debt. Cut student tuition subsidies. Award fewer grants. Encourage borrowing. Pass laws forbidding bankruptcy.

When lawmakers made it easier for families to finance degrees with money borrowed from private lenders, colleges raised tuition and created pay-to-play financial aid, stuffing “award packages” with loans that they sold to unsuspecting teenagers and their families.

As one student-debt holder nearing 50 put it: “What’s the award? That you won indebtedness and financial servitude for the rest of your life?”

The lenders paid the colleges. The government paid the lenders. The losers are Americans who borrowed too much to pay over-inflated college costs. Tuition at private colleges has increased 800 percent since 1980 and 230 percent at public universities since 1988. Almost 33 percent of enrolled students leave college without degrees. Americans hold $1.6 trillion in student debt. Why?


Answering that question requires time travel to the 1980s, deregulation, the decade-long “Loan War” of the 1990s and the financial aid corruption scandals of the 2000s.

With billions of dollars at stake, the lending industry came up with “one scheme after another to gut the taxpayer-friendly government loan programs,” U.S. News & World Report said in a 2003 expose, Big Money on Campus. “Like political ward bosses, private lenders used money and favors, along with their friends in Congress and the Department of Education, to get what they wanted. They wanted those checks made out to them.”

Colleges charged what the market would bear, doubling and tripling tuition. For every dollar students and their families borrowed, schools raised tuition 60 cents, a Federal Reserve Bank of New York study found.

Student debt kept “enrollment up and tuition flowing,” U.S. News reported.

In exchange for millions of dollars in kickbacks, and lured by the promise of a quick buck, colleges steered students to preferred private lenders. While lenders flooded the market with cheap money, schools got millions in kickbacks. Corruption was rampant among private lenders, financial aid officers at scores of colleges, and senior officials in the George W. Bush White House.

Executives at the publicly traded lenders Sallie Mae and Citibank were skimming billions from families and the government while Bush administration officials looked the other way. Private lending to students soared from less than $2 billion to $25.5 billion in a decade. A government analyst stumbled on the worst financial aid fraud in modern history in the early 2000s.

“I’d seen fraud,” he said. “But this was the most audacious. I hadn’t seen anything like this one before.” America’s secretive pay-to-play financial aid system is “a national disgrace,” Jon Oberg told a Senate hearing. “If students and families knew how their aid packages were put together, they would march on Washington. The reason they don’t march is that the information is not available.”

In 2007, New York state uncovered what the attorney general called “an unholy alliance” between financial aid officers and private lenders. Fraud, misconduct, and widespread conflicts of interest between colleges and the $85 billion lending industry had infected the entire system.

Bribing colleges to put their companies on preferred lists, lenders guaranteed them hundreds of millions of dollars in loan business. Some colleges even required students to use the very lending companies showering financial aid officers with payola.

Lenders paid financial aid officers to market directly to students at elite colleges, including Columbia University, the University of Southern California, the University of Texas at Austin, Johns Hopkins, the University of Pennsylvania, and New York University.

Congress and dozens of states passed reforms, forcing colleges to adopt strict codes of conduct. But after the economy crashed in 2008, news of the reforms barely registered. In 2010, Congress forced commercial banks out of the federal student loan market and limited federally subsidized student loans.

In the last week, 22 million Americans have applied for loan forgiveness, President Joe Biden announced Friday.

A few hours later, acting on a request from Nebraska, Missouri, Arkansas, Iowa, Kansas, and South Carolina, an appeals court ordered the government to stop processing applications. Biden blamed “MAGA Republicans” for “doing everything they can to deny this relief, even to their own constituents,” and vowed not to let “them get away with it.”


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