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  • Michael Markey Press

Michael Markey: It’s Time for Greater Accountability for Student Loans

We need to implement accountability measures that ensure that loan providers aren’t able to take advantage of students willing to borrow.


Our higher education system is broken. With, among other things, a student loan crisis and university presidents refusing to condemn anti-Semitism, we need bold disruptions to the status quo that can begin addressing these issues at their core.


During political campaigns, you hear a lot of rhetoric about how our education system is broken, how this politician is going to do this, and how this other politician is going to do that.


What you don’t hear is a diagnosis of the issues with defined solutions. That’s where I come in.


I’m a numbers guy. I have spent nearly 20 years working for middle-class Americans, helping them prepare for their retirement. When you’re a financial adviser, you often have to be blunt and forward with your clients—their entire life savings is on the line.


The same must be done when addressing our country’s education system.


Right now, there are millions of Americans graduating from college with hundreds of thousands of dollars in debt. Not only is this affecting their ability to live comfortably after college, but it’s also affecting just how comfortable they will live in retirement.


With the federal government bailing out loan borrowers while simultaneously loaning out money without accountability, millions of Americans are graduating from college behind instead of ahead.


Some Americans are taking out loans, never finishing college, and still being held accountable for their debt and interest payments.


I worked my way through college. I earned a baseball scholarship that helped pay for some of my school, but I also started a business when I was 14 years old that propelled me into a position where I could get a quality education without having to rely solely on loans.

I was fortunate—and I’m thankful for that.


But I also earned a degree that was worth the investment. Many students will borrow money that they will never be able to repay because their degree fields don’t earn enough. That’s where the accountability aspect comes in.


Think about it this way:


It would be like the federal government saying everyone deserves the chance to drive a really nice car. When you drive a nice car, you feel better, and you do better. Therefore, the government is going to make a lending program ensuring that everyone, regardless of their ability to pay it back, has this opportunity to borrow and buy a nice car.


Then they tell the lender, “If the borrower doesn’t pay you, don’t worry, we’ll guarantee the loan.”


What would happen to the price of cars? They would go through the roof, and the quality would suffer.


Once lenders start to lose money on defaulted loans, they will stop lending absurd amounts to universities, or they will also charge higher interest rates for universities that have a higher percentage of their attendees default on loans, forcing universities to then take action.


For both colleges and loan services, this is a big payday. Schools get their tuition, loan services get their interest payments, and students get shammed out of a comfortable life. This lack of accountability has led to subpar curriculums, zero life skills, and limited pathways toward success.


For many students, a loan is the only way they can attend college—and loan servicers know that. We need to implement accountability measures that ensure that they aren’t able to take advantage of students willing to borrow.


When colleges have higher default rates, they will have higher payments because the lender’s risk of loss will be greater. When institutions don’t focus on employable skills, they will likely see reduced enrollment because of higher monthly payments—even if the total cost is comparable—because borrowers will be highly influenced by monthly loan payments rather than the total cost of the loans.


Thus, similar institutions with a greater focus on employable skills will have lower default rates and, by de facto, lower future payments.


This means less money from the federal government, fewer loan bailouts, and no more endless loans. Predatory universities and loan companies know that many students are desperate to borrow, so they continue to distribute the money because, for them, it’s payday.


It’s time we put Congress to task and stop allowing students to be taken advantage of, risking their financial well-being for a poor investment decision.

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