Sunday, April 15, 2007

Student Loans Are Big Business

The government's role as direct lender for student loans is under assault by financial institutions seeking their piece of the pie. Once again what is best for the American taxpayer is second to what is wanted by big business. With most college students requiring student loans to finance their education the profit potential for these institutions is enormous.
In a fierce contest to control the student loan market, the nation’s banks and lenders have for years waged a successful campaign to limit a federal program that was intended to make borrowing less costly by having the government provide loans directly to students.
President Clinton felt having the United States government be the direct lender would result in lower costs to the government since they would be collecting the interest. According to a study by the Bush Administration this is true.
President Bush’s budget reports that in 2006 for every $100 lent by private lenders, the cost to the government of subsidies, defaults and other items was $13.81, while the same amount lent through the direct loan program cost the government $3.85. The battle for dominance in the loan market has escalated as tuitions have soared and students have borrowed more. This is the context for many of the payments to universities and financial aid officials that have come to light as a result of recent investigations into student loan practices.
Since the program is cheaper for the goverment why are the Republicans trying to kill it? When will the Middle Class wake up and realize that the Republican Party does not care about them?

Read the rest of the article here.

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