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Betsy DeVos Wants Students to Borrow Money Using Their iPhones

November 28, 2017

On November 28, 2017, US ed sec Betsy DeVos spoke at a training conference for financial aid officers.

When it comes to students’ career paths, DeVos wants (wait for it…) choice.

When it comes to borrowing the money, though, DeVos throws choice out of the window because it’s too confusing, wasteful, ad complicated.

She uses the mortgage industry as a model (gulp)– because now, one can file for a mortgage using an iPhone. From her speech:

Well-established in her career, Lauren felt overwhelmed trying to navigate the disjointed maze of programs and plans. She found the aid process to be essentially another job. Worried she’d pick the wrong repayment plan, she defaulted to the standard one. It cost her hundreds of dollars more a month than she can afford.

This meant Lauren had little left for daily expenses, so she ran up even more credit card debt. For her, it has become a vicious cycle and a grand distraction at a time she should be focused on furthering her career.

We must simplify the process for students like Lauren. When barriers to entry are high, fewer students – especially those from disadvantaged backgrounds – even attempt the journey, let alone succeed.

This need not be the case. And we’re working with our friends in Congress to accomplish the changes students deserve.

Simplification is possible — just look at what innovators are doing in the mortgage industry. With a few swipes and taps on a phone, the complex process behind securing a loan to own a home has suddenly become simpler for everyone.

Why can’t it be that way for students?  The answer is, it can!

Thus, Lauren and thousands like her can sink into student loan debt with greater speed using a hand-held device. And perhaps America can return to the subprime mortgage crisis (this time via student loans) notably faster than it took for the previous crisis to come to a head in 2008.

DeVos is not one for holding the lenders accountable. But she sure does like a good business metaphor.

Indeed, DeVos’ fondness for comparing education to business (i.e., Uber, food trucks) is well known. Now she wants to make the ease of filing for federal student aid on par with “the commonplace activity” of “finding a soulmate” using one’s phone:

As one student told us “the FAFSA is really complicated for an 18-year-old who has never done taxes or anything like that before.”

Just “figuring out the right number to call,” the student said, “is a nightmare.”

Another student told us that trying to use a servicer’s mobile site was “a tedious process, and I just gave up.”

These experiences are far from world-class and I think they are far from acceptable. You can order food, get a ride home, check your bank account, send money to a friend, or, as I’m told, even find your soulmate on your phone! The FAFSA should – at minimum — keep pace with these commonplace activities!

It is not that I disagree that the FAFSA process could run smoother. It’s just that fine print looks even finer on a small screen, which likely would not bode well for the one signing on the virtual, miniature dotted line.

Still, student loans and the iPhone are becoming acquainted as a market. In fact, I have my own student loan story that involves my phone.

When I completed my PhD, I took out student loans. About 14 years ago, I consolidated these loans by working directly with the lender (the loans had since then been sold to another lender, who honored the consolidation).

About the time that Betsy DeVos began to loosen controls over federal student loan servicers (August 2017), I began receiving solicitous text messages that read, “Your account is flagged for possible student loan forgiveness. Call 866-574-7210 or visit studenthelpcenters.com Reply STOP to cancel.”

I visited the website out of curiosity. The site is actually an unnecessary, leeching middle-man that calls itself a “professional student loan service” that will “help” me consolidate my student loans. No specific contacts are named on the site, and there is no physical address. There is also no disclosure of the cost of this “service.”

I texted “STOP” and received the reply, “You have been unsubscribed and will receive no more messages.”

In September 2017, I received another notification, presumably from another such “helpful” company: “Your account has been flagged for possible student loan forgiveness. Call 866-758-1116 for more information about the payment reduction programs. Reply Stop to Cancel.”

I replied, “Stop,” and received this response: “Trusted Leads Promo Alerts: You have been unsubscribed and will no longer receive messages 1-888-816-6931.” But I did receive yet a third contact, presumably from another loan consolidation company. That one I deleted, so I do not have the specifics.

Until August 2017, I had never received any solicitation regarding my student loans via text messages on my phone.

My loans had been consolidated for over a decade, and my payments have been on time.

I wonder how these companies learned that I had federal student loans.

The sales pitch is a good one. Anytime one reads, “your account is flagged,” one pays attention as though this might be some fraud alert (ironic, isn’t it?), and then one sees “loan forgiveness,” the timing of which coincided with the federal student loan forgiveness for public servants being up in the air under Trump/DeVos. Thus, the “loan forgiveness” puts one in mind that this text might somehow be connected to the US Department of Education (for better or worse). But it is not.

DeVos celebrates the ability to apply for loans via phone, but I do not, and I do not appreciate being solicited by student loan mongers via text messaging.

Loans via iPhone are a bad idea, period. Consider this 2013 NPR piece entitled, “I Applied for an Online Payday Loan. Here’s What Happened Next.” An excerpt:

Payday lenders made about $49 billion in high-interest loans last year. More than a third of those loans were made online. I wondered what happens when you apply for such a loan, so I decided to find out.

In the course of reporting a story earlier this year, I logged on to a site called eTaxLoan.com and filled out an application.

I asked for $500 and, to be safe, I made up an address, a name (Mary) and a Social Security number. The site asked for more sensitive stuff — a bank account number and a routing number — and I made that up, too.

In spite of the made-up information, in less than a minute, I got a response.

“Congratulations. Tremont Lending has been selected as your lender and you have been pre-approved for a loan up to $750.”

If I wanted to borrow $750 for a week, I would have had to pay $225 in interest. The site said that was an annual percentage rate of more than 1,300 percent.

I did not agree to take the loan. …

For months, I got dozens of calls. Many of the callers had strong foreign accents. One caller, who said his name was Kevin, told me that Mary had been approved for a loan of up to $5,000 — 10 times what I initially asked for.

Kevin said he was from a company called Cash 4 You, which was unconnected to eTaxLoan.com. By this point, I was wholly confused. ETaxLoan had said it was a secure site, but now, many different companies had my application — and, presumably, my personal information.

It turns out there’s a huge online bidding process for such loans.

Of course, the NPR article is about payday loans; however, it is not far-fetched to imagine that money-lending vultures cannot smell the same financially-strapped vulnerability in college students that the do in those desperate for payday loans.

And that there is someone marketing personal information in order to target those who might be prime marks for an unnecessary-yet-costly “student-loan-middleman.”

As for Betsy DeVos: Well, she wants to help vultures get at the students more efficiently via smart phone.

Not so smart. But expectedly Betsy.

betsy devos 12  Betsy DeVos

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Want to read about the history of charter schools and vouchers?

School Choice: The End of Public Education? 

school choice cover  (Click image to enlarge)

Schneider is a southern Louisiana native, career teacher, trained researcher, and author of two other books: A Chronicle of Echoes: Who’s Who In the Implosion of American Public Education and Common Core Dilemma: Who Owns Our Schools?. You should buy these books. They’re great. No, really.

both books

Don’t care to buy from Amazon? Purchase my books from Powell’s City of Books instead.

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