What Now -- Student Lenders Stealing Food from Borrowers?
The latest slant on student loans: private lenders essentially steal food off borrowers’ tables.
A woman who earns only $200 more a month than she pays toward her student loan is not a representative example, yet it’s the one ABC chose for its June 17 report.
“World News” used the example of Nicole Gibson, a graphic designer making $1,400 a month, who pays $1,200 a month toward her student loans.
“I’ve got to sacrifice food on my table and I don’t think that’s a fair option,” said Gibson.
ABC Correspondent Gigi Stone didn’t explore whether Gibson could renegotiate her payment plan with her lender, or whether she had looked into loan consolidation or any options that could lower her payments. The report also left out key facts such as where Gibson lived, how much debt she had, and what type of loan or loans she had.
Gibson chose to get her degree from the Rochester Institute of Technology, but ABC’s Stone didn’t mention tuition there costs nearly $25,000 a year. The average annual cost of undergraduate tuition is much less – $5,836, according to an October 2006 U.S. News and World Report. But the story showed Gibson saying her payment wasn’t “fair,” instead of acknowledging it was a result of choices she made.
The segment provided further proof of media support for liberal New York Attorney General Andrew Cuomo’s crusade against the student loan industry.
Stone’s report relied heavily on Cuomo’s slanted perspective – that the student loan industry is “victimizing” poor students.
“They’re being victimized when they go to those private lenders and that’s wrong,” Cuomo told ABC. Cuomo has been actively leading a movement in past months against the student loan industry.
Stone promoted his perspective, saying “In the past few months, investigations led by New York State Attorney General Andrew Cuomo turned up deceptive and possibly illegal business practices in the student loan industry.” However, as of June 18, no charges had been filed.
But then Stone mentioned “new revelations” in the investigation. “What we’re finding is that many lenders actually use the school that you are attending as one of the factors in the equation and this is startling to me frankly,” added Cuomo.
Stone used Cuomo’s comparison with mortgage “redlining” – charging different interest rates for different populations – implying that poor and minority students would be the ones to suffer from student loans.
“World News” was cut short before an opposing perspective was included. The video cut out just as Stone was going to Harrison Wadsworth of the Consumer Bankers Association. However, an ABCNews.com story included Wadsworth’s comment about practices Cuomo called “unfair.”
“Remember, these loans are not guaranteed by the government,” said Wadsworth. “The lender is completely on the hook for them, so they have to try to judge what the risk is on the loan.”
