US Government 'Warns' Debtors, Never Lenders
The story focuses on the consequences for individual borrowers, framing their failure to pay as the central problem. It’s a classic misdirection. The real 'warning' should be to a system that burdens millions with inescapable debt while the financial industry reaps billions. Back in 2005, Congress, heavily influenced by banking lobbyists, passed the Bankruptcy Abuse Prevention and Consumer
Protection Act, making student loans virtually impossible to discharge in bankruptcy – unlike, say, casino debt or luxury yacht repossession. This legislative gift to lenders ensured a constantly replenished pool of indebted Americans, cementing profits without risk. So while Newsweek dutifully 'warns' those struggling to pay for their education, perhaps they could also report on the institutions
that lobbied hard to make that struggle a permanent feature of the American economic landscape. The average taxpayer's refund is fair game, but the multi-billion dollar profits of federal student loan servicers like Nelnet and Sallie Mae (now Navient) – often the same companies involved in shaping those punitive laws – remain largely uncriticized.