Obama Hoping to Take Student Loans Away from Banks
Monday July 13, 2009
In a conference call with reporters last week, President Obama discussed his plans to make all student loans federal. The banks, of course, are fighting that. If I understand the situation correctly, they've been essentially acting as agents for the government anyway, making student loans they subsequently sell back to the Treasury Department.
According to an article by David M. Herszenhorn for the New York Times, Obama's plan "would save the government roughly $87 billion over 10 years, according to the Congressional Budget Office — money that the White House says should be used to aid impoverished students."
The administration’s view, shared by a number of Democratic lawmakers, is that the private lenders should no longer be paid by taxpayers to operate a virtually risk-free business in which they essentially use taxpayer dollars to originate loans, with repayment guaranteed, and then resell those loans to the Treasury.
Republicans fear the plan simply builds a bigger government. I hope the discussion includes comments from students of all ages, the people paying off these loans. What do you think about the whole matter?
Comments
A (perhaps The) question is, IF the program continues unchanged, THEN what do the taxpayers get for the estimated $87 billion that could be saved over ten years by cutting out the banker middlemen? What IS the $87 billion ‘bang’ and who gets it? It seems that neither the students nor the schools can expect to receive any of that $87 billion under the current plan and procedures.
Perhaps this is a way to streamline the banking industry and take away something the govn’t was doing anyway. I, too, would like to see part of the $87 billion going back to the taxpayers. Perhaps in the form of educational incentives?
Hey Zickbee! Thanks for commenting. It’ll be interesting to see where all the dollars end up. Hopefully in the pockets of students who are the future of the country.