What’s going on:
Last fall, Democrats in Congress were all but certain they would succeed in passing an overhaul of the student loan business. The idea, which President Obama called a “”no-brainer,”” would allow students to borrow directly from the government through their colleges, and would replace the current system, which pays private companies to provide the loans. Supporters of the proposal say the change would end government subsidies to private lenders by eliminating the middleman and save the government $80 billion in the next decade. The House of Representatives have already passed a version of the bill which eliminates the portion of the federal lending industry that pays private companies to provide risk-free loans that are guaranteed by the government.
As reported on the front page of Friday’s New York Times, the bill that seemed a certainty four months ago is now facing governmental roadblocks in the path to passing. After the election of Republican Scott Brown to the Senate, Democrats no longer have a filibuster-proof majority, which could stop this Obama- and Democrat-supported motion from passing. Major lending companies are also mounting movements against this reform, painting the motion as hostile federal takeover that will eliminate thousands of jobs. Other Congressional concerns, like the healthcare bill, could leave this former “”no-brainer”” with a metaphorical lobotomy.
What it means:
Congress should do everything it can to make it easier to pay for higher education, regardless of what the big, scary private-lender lobbyists say. Eliminating the government subsidy to these loan companies and directing that money into programs for college students, such as Pell grants and scholarship programs is one effective way to save government money and for Obama to help the young population that helped get him elected.
Those who oppose the reform are concerned about federal takeover of a private industry, but this argument itself is misleading. The government guarantees the loans in the current system, while the private lenders only administrate them — for a hefty sum. As reported in a Feb. 7 editorial in the New York Times, “”The subsidized program, for example, was supposed to keep loans flowing during recessions. But the loans dried up in the last credit crunch, forcing the government to rescue the program.”” Colleges and universities would handle loans how Federal Pell Grants are handled now.
The only advantage to the current system, it seems, is that it’s making the private lenders rich on taxpayer money. Companies are spending billions of dollars to distort this movement into a hostile takeover and are soliciting the support of Senators in order to stop this motion from passing. As quoted in the New York Times piece, education secretary Arne Duncan said, “”They’ve had a sweet deal. They’ve had this phenomenal deal that taxpayers have subsidized, and that’s a hard thing to give up.”” The job of a Senator is to put the interests of the majority over the interests of the minority, or, in this case, to put the interests of the 10 million students with loans ahead of the small private companies that have been benefiting from a system that should have been reformed long ago.
Lobbyists claim students benefit from the service the private lenders provide. What would students really benefit from? A Congress that puts our interests above those of private interest groups and a student loan system that makes college as affordable and accessible to the greatest number of Americans possible.
— Arizona Daily Wildcat
