Blog Post | January 8, 2008

Student Loans and Direct Marketing

Author: By Shannon Gallegos

I graduated from college last June, and I still use my mother’s house as my permanent address for important mail. I got a call from her one day yelling at me for not taking care of my student loans, because Nelnet had sent me letters with an insignia that resembled a government seal, and bright red “2nd attempt” and “final notice” warnings emblazoned on the front. I didn’t even know what Nelnet was six months ago other than “those people that keep sending me bogus offers.” She couldn’t open my mail, and the “notices” kept piling up, so she was understandably concerned. The only problem? I hadn’t taken out any student loans through Nelnet. They were just using scare tactics to get me to consolidate my loans through them.

Fast forward to now. I’ve been working at the Institute for four months, and since I’ve been here, learning about the misleading marketing practices of some lenders has prevented me from becoming a victim. I know that it’s not a good idea for my roommate to cash the check he received in the mail as an enticement to consolidate his student loans, but others might not be so aware.

A college degree does not equal a B.A. in Common Sense, much less Financial Literacy. While the entrance and exit counseling that financial aid offices provide to borrowers during college orientation, and just before graduation does not fully prepare most students for the onslaught of direct marketing they will receive about student loans, or all the decisions they’ll need to make during repayment.

New York Attorney General Andrew Cuomo’s Direct Marketing Code of Conduct, would curtail many of these issues. It would prevent lenders from misrepresenting themselves as the government or as a student’s current lender. It also mandates that lenders mush inform borrowers of their federal loan options before taking out high interest private loans. Figuring out what to do with the rest of your life is surprisingly time consuming, so a little extra help from Congress would be a greatly appreciated protection on behalf of graduates everywhere.