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  • College is about to Cost You Even More

    The New York Times and Washington Post are reporting that an agreement has been reached to include a federal takeover of student loans as part of the forthcoming reconciliation package. The New York Times reports:

    Democratic Congressional leaders struck a tentative agreement on Thursday that breathes new life into President Obama’s proposed overhaul of federal student loan programs. The deal would bundle the bill into an expedited budget package along with the Democratic health care legislation, which would allow for both measures to be passed by the Senate on a simple majority vote.The bill would end government payments to private, commercial student lenders, leaving the government to lend directly to students. It would also redirect billions of dollars to expand the Pell grant program for low-income students, and to pay for other education initiatives.

    The Washington Post notes:

    Both proposals, stuck in Congress for nearly a year, are gaining new momentum as Democrats contemplate facing voters in November without having delivered on any of Obama’s major policy objectives.
    Key Senate Democrats initially balked at combining the health-reform bill with a measure that overhauls the nation’s student-loan program, but on Thursday they had warmed to the idea.

    But, as Heritage wrote last year, this federal takeover, originating with the House SAFRA bill, would be a bad deal for students and taxpayers:

    [The proposal] would end the FFEL program in 2010, shifting all student aid lending into the federal government’s Direct Loan program and the Federal Direct Perkins Loan program. This proposed change is premised on the belief that ending subsidies to private-sector lenders will reduce government costs and that the federal government will administer student loans more efficiently than private lenders do.

    In July, CBO Director Douglas W. Elmendorf acknowledged that the original CBO projection did not adjust for the cost of market risk of increasing defaults that the federal government will assume with the shift to direct lending. In addition, there is a danger that taxpayers’ costs could balloon if the federal government proves less efficient in administering and collecting loans than current private-sector lenders, which have an incentive to administer and collect loans efficiently in order to maximize profits.

    There are also concerns that the elimination of FFEL and shift toward direct loans would lead to worse service for borrowers. Right now, college students have the opportunity to originate loans with the federal government through the Direct Loan program; however, most borrowers choose to take loans from the private-sector providers. If the federal government is given responsibility for making and administering all loans, there the quality of service in loan administration could be poor, presenting challenges for borrowers and colleges.

    Posted in Education [slideshow_deploy]

    10 Responses to College is about to Cost You Even More

    1. John Davis says:

      Wow, now that is what I am talking about dude.

      Jess
      http://www.isp-snooping.es.tc

    2. Barbara Frances Delo says:

      If America's best and brightest live are from the middle class – too often they cannot afford to go to the best schools are nation has to offer. Not only is is a heartbreak fro them but it weakens our nation.

    3. Barbara Frances Delo says:

      oops sorry about the typos…should have proofread…our nation…for…

    4. stirling, Pennsylvan says:

      "The deal would bundle the bill into an expedited budget package along with the Democratic health care legislation, which would allow for both measures to be passed by the Senate on a simple majority vote."

      Cramming everything together doesn't make it any better, and just shows that neither bill can stand on it's own merits. It's really sad to see the government take everything away from the private sector, which really cares about quality, and give it to the government workers who will treat you like a number and not a person.

    5. KELLI2L, USA says:

      The article above states:
      “The deal would bundle the bill into an expedited budget package along with the Democratic health care legislation, which would allow for both measures to be passed by the Senate on a simple majority vote.The bill would end government payments to private, commercial student lenders, leaving the government to lend directly to students. It would also redirect billions of dollars to expand the Pell grant program for low-income students, and to pay for other education initiatives”.

      (imo) = This doesn’t sound like a bad thing to me – what am I missing here?
      Cutting out the middle man always saves money and time, doesn’t it! ???

    6. KELLI2L, USA says:

      The article above states:
      “There are also concerns that the elimination of FFEL and shift toward direct loans would lead to worse service for borrowers. Right now, college students have the opportunity to originate loans with the federal government through the Direct Loan program; however, most borrowers choose to take loans from the private-sector providers. If the federal government is given responsibility for making and administering all loans, there the quality of service in loan administration COULD be poor, presenting challenges for borrowers and colleges”.

      (imo) = Operative word here is: COULD be poor, (last line)……

    7. Fallon says:

      Why is the government making another grab at another private-sector issue? Which runs better, FEDEX or the Post Office. Why would we take student loans from FEDEX and give them all to the Post Office?

    8. Pingback: CNN Recites Party-Line of the Fed’s Student-Loan Takeover, Neglects Consequences | Media In Politics

    9. Lillie says:

      It will be interesting to see how all of this works out. We have a granddaughter who will be entering college his fall and some of her funding will be provided via student loans. In my occupation as a credit counselor, I hear stories everyday from college graduates who are strapped with student loans and struggling in every area of their finances trying to make ends meet. That is not what we are envisioning for our granddaughter. So, again, if this works and improves the situation, I am all for it.

    10. Laura says:

      The effects of the government administering the student loans has already effect my family. Both my husband and I are full-time working adults and full time students. His SUBSIDIZED student loan amount dropped from about 3k a year to 600 dollars!!!!!!!!!! – and I did not even get any SUBSIDIZED money this year. What does that mean? Interest on these loans beings accumulating right away. I understand that the SUBSIDIZED loans are based on income. Guess what. Our income has not changed! Both of us were going to continue on to get a Master's degree. Now that is questionable. HOW IS THIS GOING TO HELP AMERICA MR. PRESIDENT? My husband and I work hard to earn a living and better our lives, but we cannot afford healthcare, education, or the cost of you running this country any longer. 2012 could NOT come soon enough. Hopefully, the next administration will be able to help reverse some of the damage this man has done to the fabric of our country.

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