Student Loan Business: An Ethical Dilemma in the Credit Crunch

Last Updated Jun 3, 2008 2:33 PM EDT

The student loan business is going through a credit crisis, and some of the nation's largest lenders are responding with a new business model that may be sound business but is ethically questionable.

Students at the top-tier schools are being taken care of, but those at the lower-rung -- community colleges, and other less-competitive institutions -- are being dissed in the lending game, whether by being dropped by lenders or being forced to take packages that are far-less appealing than their ivory tower peers.

The thinking is simple: the better the school, the more money that student is likely to make in the long-term, which means you'll get a more solid return on the loan. But what about the ethics here? Are these large lenders discriminating against a large economic chunk of the population? I think so, because the nation's neediest students are the ones most likely to be hurt. Community college may not be a stepping stone for the corner office, but it is an invaluable stepping stone to a better job and a better life for the less fortunate.

The tag line for this blog is "right and wrong in a for-profit world." This is exactly that kind of dilemma. What's right for profit may not be ethically sound. So, are these large lenders in the wrong here?[poll id=50]Is this right, wrong, or simply inevitable? Leave your thoughts in the comments section.

  • William Baker

    William Baker is a freelance writer living in Cambridge, MA. His work has appeared in Popular Science, the Boston Globe Magazine, the New York Daily News, Boston Magazine, The Weekly Dig and a bunch of other places (including Field & Stream, though he doesn't hunt and can't really fish). He is a regular contributor to the Boston Globe, where he writes the weekly column, "Meeting the Minds." He holds a master's degree from the Columbia University Graduate School of Journalism, and is at work on his first book.