Ending one of the fiercest lobbying fights in Washington, Congress voted Thursday to force commercial banks out of the federal student loan market, cutting off billions of dollars in profits in a sweeping restructuring of financial-aid programs and redirecting most of the money to new education initiatives.This is just a good, common sense thing. All sorts of folks agree. Now, can they throw in a little student loan forgiveness? That's probably asking too much.
The revamping of student-loan programs was included in — if overshadowed by — the final health care package. The vote was 56 to 43 in the Senate and 220 to 207 in the House, with Republicans unanimously opposed in both chambers.
Friday, March 26, 2010
Two for the Price of One
Like Steve Benen at Washington Monthly, I think this is worth noting:
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7 comments:
Government student loans may sound like a good idea to most people. But being a student, who struggles to pay for tuition, I do not believe it is a good move. I personally do not want the government deciding if I should get money. Because I know what the answer will be....no. I am not considered a minority, and cannot get aid now, even though I have the grades. The government is definitely not going to work in my favor either.
Lyrical-
I hear your struggles, and I'm certainly not saying they're not real and pressing, but the point of this legislation is that it's always been the government's money, the government's guidelines and the government's guarantees. We have all just been paying private banks to act as a pass-through. My understanding of it the situation is that, in essence, nothing changes. Except banks get less money. Which I'm okay with.
Now, ask me if I think education should require a loan and we'll have a different discussion.
Not to veer too far off topic, but you shouldn't be paying a god damned cent to go to school anyway. It should be free.
Not too far off-topic at all, if you ask me. If these are all the first steps in the march to a socialist state...can't we march any faster?
Lyrical,
I think you might be a little confused about what's happened. I've been reading up on this, so to just try to explain it:
J. is right... There are two ways the federal government is involved with student loans. In the first case... the government loans the money directly and eats the lost money if you default on the loan or if hardship/bankruptcy etc. leads to loan forgiveness.
The SECOND form is that basically the federal government guarantees private loans as a means to try to keep interest rates on student loans down. If you default on a private loan (or through bankruptcy etc are let out of it) the federal government eats the loss.
This costs taxpayers roughly $60 billion dollars a year in subsidizing unnecessarily the private student loan industry.
This will basically have no effect on your ability to get a loan, although private lending rates might go up a little bit. But you could still get a loan (not a grant, but a loan) at a lower rate from the government.
Now here's the part that J. left out: What that money saved is going towards, and here's the good news. Some percentage of that money is going to help pay for the deficit-neutral (and deficit-reducing!) Affordable Health Care Act. But the rest of that money is going to expand federal student aid programs, thus making it more likely that you will be able to get a grant, rather than a loan, from the government.
aaand to correct myself, it turns out that the end of subsidies actually does mean the end of banks in the student loan business:
http://motherjones.com/kevin-drum/2010/03/all-and-college-loans-too
the rest of the point still stands tho, you'll be getting a similar loan, just getting it from the federal government.
Let's break it down: Whatever sins the government might commit in granting loans, the banksters will collect more dough for doing less.
As 99 said, the government's involved anyway; it's time to take out the middleman, as it was back when student loans were more plentiful and simpler to administer.
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