The Third Theory Is Monopoly Capitalism - 1433 Words

The third theory is Monopoly Capitalism. Monopoly capitalism can help explain how the government created Sallie Mae and others like it. It says that the government is allowed massive growth and becomes the deep pocket for guaranteeing profits for large corporations through government contracts and other forms of corporate welfare. It also favors the growth of large corporations at the expense of smaller ones. Sallie Mae had a huge hold on congress. Sallie Mae allowed for the government to make profits off of the loans that Sallie Mae received. They even offered nice vacations, parties, etc. When the government started to dish out money, they gave it to Sallie Mae and passed everything it wanted to help the business grow to a for-profit†¦show more content†¦As an example, the U.S. Department of Education had been inappropriately paying hundreds of millions in subsidies to Nelnet. This complicated scheme involved a provision in the Higher Education Act that guaranteed lenders a 9.5 percent rate of return for loans funded through nonprofit bonds that had been issued prior to 1993. Held at least a hundred thousand dollars in stock from a student loan company, Student Loan Express, while he was employed at the U.S. Dept. of Education. Money would go out, but more money came in from defaulted loans and these back door deals with lower companies, congress, and schools. The Dept. of Education would back companies like Sallie Mae and make sure that they receive money and what they need to be a top company. The Dept. of Education did not make them change anything when allegations came out about all the wrongs they have done. This way the Dept. of Education and Sallie Mae could share on the massive amounts of profit being made. The next theory is the Educational Industrial complex. Each loan company, guarantor, and collection agency is intertwined. They have contacts between each other so that they can commit fraud with the smaller business as the larger ones stay safe and exploit, harass, and threaten the borrowers. The larger companies, such as Sallie Mae, exploit their smaller companies to keep the profits at the top. When the smaller ones go