Students thought they were being offered an incentive: borrow today, study the right things tomorrow, and we'll pay back your loans in future years. They have explained what they expected over and over, including here, here and here.
The Student Loan People can argue that they never made that promise. Press releases (here and here, for example) only invited people to apply for help with their current payments, with no promise about the future. Plus, the releases included a notice that:
Benefits may change or be canceled without notice, at any time, by operation of applicable laws or by The Student Loan People, for any reason at its sole discretion.Legally, that probably covers them. Courts will likely accept the Loan People's argument that they could cut the program off at a moment's notice. [UPDATE: THIS IS NO LONGER MY VIEW, FOR REASONS SHOWN HERE, HERE, AND HERE.]
Morally, that doesn't cover it at all.
The borrowers were young adults part way through their education. The lenders were veteran professionals with fiscal and legal training on these issues. When they sent out the press releases, they used a smaller font for the disclaimer, literally relying on fine print. They put the disclaimer at the end of the releases, where any newspaper that was short on space would leave it out. They surely saw summaries like this one from Asbury that didn't say the program might vanish overnight.
The Student Loan People had options that could have prevented the debacle. They could have announced the program each year as a one-year program. They could have started all announcements with words like: "For 2003 and 2003 only, the Student Loan People will pay back up to 20% of the loans owed by people in the following situations. " They could have followed that with large print, bold print, underlined print, to say "There is absolutely no guarantee that we will offer to do this ever again. No one should borrow money expecting we will have this program in 2004."
One lesson here is for anyone borrowing money. If you don't get a written, signed promise about how it will be paid back, you don't have a deal. Look out for yourself. That's the the small lesson.
The big lesson is for anyone lending to students. Your job is to make your borrowers stronger and smarter by providing trustworthy information in ways that systematically discourage misunderstanding. Look out for others, especially those you were created to serve. The "Best in Class" program did not meet that duty of care. Future loan and loan payment programs need to do better than that, without excuses, and without fine print.