Obama Administration to Change Student Loan Program
Apr 27th, 2009 @ 3:36 PM by Alden Smith
Since 1965, the federal government has been subsidizing student loans made by private lenders. President Obama has formally presented a plan that will do away with this.
A great deal of the student loan industry is considered to be a racket that exploits college students. Students have it driven into their heads that student loan debt is just a part of life. Colleges have told students that this scenario is just the way that it is. Many parents have suffered dearly getting the kiddies through college.
Doing away with the private student loans subsidy program would save the federal government $94 billion over 10 years. This has always been a cash cow for the private lenders because the government backs their loans, and there isn’t much way they can lose.
Killing that cash cow, however, isn’t sitting too well with the private student loan profiteers. They have gone into attack mode, and the lobbyists for the lenders are being very PC with their approach. The lobbyists feel that it should all be about choice. In other words, students should have the choice to take out a private loan or seek direct government lending or grants. This is probably one of the most hilarious things I have ever heard.
We Americans are all big fans of choice, whether it is health care, who to choose as our president and where to send our children to school. Choice is a good thing. However, choice is only a good thing if it benefits us. As thinking men and women, we must realize that education should not be placed behind the deep pockets of private lenders. I am of the old school. I think it is important that we give our children a decent education, so they don’t have to struggle like we did coming up. I don’t, however, think that we should have to eat dog food for the rest of our lives just to ensure Junior an education.
Sallie Mae is the largest provider of government subsidized private student loans, and is doing everything it can to ensure that the company stays ahead of the game. They have hired two high-profile lobbyists to assist and have brought 2,000 jobs back to the United States that it had sent overseas in an effort to boost their credibility. In reading an article by Karen Datko on the MSN Money Blog today, I learned that in the past year Sally May awarded its chief executive 4.6 million dollars in cash and stocks and awarded its vice chairman more than $13.2 million in cash and stock, plus the use of a company plane. I find it hard to believe that a company that awards its executives in this manner has the quality of life of students in mind. It appears to me the only thing they are interested in is the bottom line.
One can get a real insight into what people think by reading the comments on any blog. Reading the comments of readers on the MSN blog tells me that people are sick to death of the profiteers in this country. I applaud the Obama administration for taking this first step.
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This plan will make the life of students easier after graduation. Because of the loans problem, most people prefer not to go to college because they don’t want to owe any money after graduation. But one thing that they don’t realize is that they will be able to find a better pay job to pay them back.
Yes it looks like taking loans to continue education is part of life, because all students who were born after 1965 see it as the reality of life. But anyway, it’s a positive things when they deal with it to continue their education.
Thanks Obama for making it easier for us.
It’s time to basically end the whole student loan process. The sad fact is that the “free” money (sic) kids get to pay the cost of school only encourages schools to raise their prices as they see fit.
In a normal market where you go cash and carry, college is open only to those who find a way to pay the tuition. If a school wants to stay in business they must control costs. Likewise, if not everyone can afford an education, then educated people have marketable value.
The student loan program has produced these outcomes:
1. Runaway college tuition costs. Schools can raise prices knowing the lenders will update the borrower’s maximum line of credit to keep pace. Supply and demand no longer affects college tuition.
2. Oversaturation of the labor market. College degrees meant something when only a fraction of the workforce had them. Now most anyone can get a college degree, and the labor market if full of college-educated people who can’t find work worthy of the skill training they paid for. This not only means it’s harder to get a job, but it’s harder to find a job that pays well.
3. Enslavement of a generation to life-long debt. The average college graduate will be lucky to pay off their student loans in 30 years. Many find themselves in a crunch because the debt repayment never factored in issues such as needing transportation (car payments), having family (supporting of dependents), or any other number of factors that must have priority over the repayment of student loans in a monthly budget. Couple that with a depressed economy and instead of education liberating the student, it makes them economic slaves.
4. Cost to the community. When you have college debt to repay, using your skills to benefit society is the lowest of priorities. You need money to pay your debts. Working for charities or doing volunteer work when you could be earning income to pay down your debts doesn’t tend to favor helping your community in the long run. Agencies that help the poor can’t compensate indebted graduates for their time and effort.
student loans such as sallie mae have ruined my life. I turned to them when I was not allowed a government loan because my GPA dropped too low. Well my GPA was low because they took grades from 10 years prior also I have to work full time and struggle with dislexia. In the past 6 months Sallie Mae has tacked on 7,000 in interest alone because I am in forbearance because I am out of work. How can I compete with that? No one will help me. They own my soul. they are worse than the devil. My dreams of ever owning a home or even a decent car are GONE because my payments to the devil are over 1/3 of what I make a month. I wish I never went back to college ever big big big mistake. stupid mistake.
For somebody it’s good - for somebody bad. Everybody has his or her opinion for this question. Time will show who is right and who is wrong.