Later On

A blog written for those whose interests more or less match mine.

Fights over student loans (and the money they make)

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Interesting:

Back in February, during one of his weekly multi-media addresses, President Obama predicted fierce fights with agents of the status quo. "I know that banks and big student lenders won’t like the idea that we’re ending their huge taxpayer subsidies, but that’s how we’ll save taxpayers nearly $50 billion and make college more affordable," the president said, adding, "I know these steps won’t sit well with the special interests and lobbyists who are invested in the old way of doing business, and I know they’re gearing up for a fight as we speak. My message to them is this: So am I."

Well, Mr. President, here they come.

The private student lending industry and its allies in Congress are maneuvering to thwart a plan by President Obama to end a subsidized loan program and redirect billions of dollars in bank profits to scholarships for needy students.

The plan is the main money-saving component of Mr. Obama’s education agenda, which includes a sweeping overhaul of financial aid programs. The Congressional Budget Office says replacing subsidized loans made by private banks with direct government lending would save $94 billion over the next decade, money that Mr. Obama would use to expand Pell grants for the poorest students.

But the proposal has ignited one of the most fractious policy fights this year.

That’s a shame, because Obama is overwhelmingly right on this one, for all the reasons we talked about a few weeks ago. In a nutshell, this is a no-brainer — the student-loan industry is getting government subsidies to provide a service the government can perform for less. Obama can remove the middle-man, streamline the process, save taxpayers a lot money, and help more young people get college degrees.

The arguments from lobbyists, Republicans, and Democrats with the student-loan industry in their districts range from bad to worse. Many on the right argue that  …

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Written by Leisureguy

14 April 2009 at 9:39 am

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