America For Purchase

College students across America have experience massive cost and tuition increases. In one state alone, Texas, the average cost of a college education has skyrocketed 136% from 2003 to 2008 under Gov. Rick Perry’s failed tuition deregulation scheme and it a story repeated all across this country.  As students and many families cope with out-of-control costs, they also face huge student loan debt after graduation.

A major reason for the ever-growing debt load America’s students are taking on is the broken student lending system, a big part of which involves the government paying student loan companies to originate and service loans. The companies are the inefficient middle men that drive up costs for students without adding any value.  According to a recent report from The Project on Student Debt, the average student in the class of 2008 graduated with $23,000 of debt, “ (some over $40,000) a figure 25 percent higher than what their older brothers and sisters owed when they graduated from college in 2004“.President Obama and Congressional Democrats are attempting to tackle this issue head on by introducing in September 2009, the Student Aid and Fiscal Responsibility Act (SAFRA), which expands and improves successful student aid programs like the Pell Grant and the Perkins Loan program, and eliminates billions of dollars in subsidies to wasteful private lenders.  By a 253-171 vote, the House of Representatives passed this landmark student lending legislation.  The Senate is now poised to pass this legislation for the President to sign into law.

Another aspect of SAFRA is that direct lending would become the only option for federal student loans on July 1, 2010, a shift that the nonpartisan Congressional Budget Office estimates would net the Treasury $62 billion through 2020. Most of the savings would be channeled into Pell grants for needy college students.

Of course, America’s college students are now familiar with the Republican ‘Party of No’ philosophy and this issue is just another opportunity for the GOP to stand up for banks and stand against America’s college students.  Additionally the Republican sponsored banks and student loan lenders have launched an aggressive lobbying campaign which is intended to obliterate the more just and cost-efficient federal student lending system proposed by Congressional Democrats.

Taking the exact same page as Republicans always use they call this proposed legislation a “job killer” and an “outrage.  Funny they have not created any jobs since they authored the ‘Great Recession’.

Sen. Lamar Alexander (R-Tenn.) said student borrowers would receive worse service if the government monopolizes the business. “That’ll make getting a student loan about as pleasant as standing in line to get your driver’s license,” he said.  Alexander also wrote a scaremongering objection to SAFRA, claiming that it would amount to a “Washington takeover” of the student loan system, turning the student lending process into a process “as enjoyable as going to the Department of Motor Vehicles”.  Not true!

What this Republicans deliberately fails to mention is the government already makes millions of loans every year. All SAFRA does is remove the banking industry middlemen, making the process less bureaucratic and getting money more directly to students.

Rep. Howard P. “Buck” McKeon (R-Calif.) said the proposal would eliminate 30,000 loan industry jobs. “It boggles my mind,” McKeon said.  If that really were true, what American would oppose the corrupt banking system to lose jobs?

Think Progress provides this explanation:

“Since 1965, the federal government has assisted students in paying for college through the Federal Family Education Loan (FFEL) program. While FFEL has helped many students afford college, it also extremely inefficient because the loans it provides are not made directly to students but rather through profit-seeking private student lenders. The presence of these lenders provides “a guaranteed rate of return for banks and other middlemen who provide capital for student loans,” with taxpayers being “required by law to reimburse the banks for 97 percent of the losses” when students are unable to repay their debts — essentially acting as a “lucrative form of corporate welfare.” By 2006, loans made to students directly by the government were earning taxpayers two cents on every dollar, whereas the FFEL program was netting fifteen cents for every dollar for private lenders. Thanks to the $413 billion in outstanding FFEL loans, student lender Sallie Mae was the second-most-profitable company in the world in 2005. SAFRA would eliminate FFEL, cutting out the wasteful bank middlemen, and use the $67 billion in savings over 10 years to “raise Pell grants, improve access and completion rates,” and simplify the college aid process. “The Obama administration has stepped in, in a very bold way, to fix aid programs and make them more effective,” said Christine Lindstrom, director of higher-education programs for the U.S. Public Interest Research Group. “[SAFRA] is game-changing.” As President Obama has said, the question when it comes to SAFRA is “whether we want to give tens of billions of dollars of tax dollars to special interests or whether we want to make college more affordable for 8.5 million more students.”

Republicans had NO problem passing on to America’s youth and college students the cost of two wars, their George W Bush Wall Street Bail out and a prescription drug plan for Seniors and passing these massive debts onto others, in fact, Republicans NEVER paid for a single spending bill during the 8 years of Bush’s Administration.

College students should ask themselves “What has the Republican Party done for us except place massive debt on future generations?”  And “why are Republicans standing with big banks and their huge profits instead of helping reduce the financial burden on college students and their families?”

According to the House Education and Labor Committee SAFRA will:

• Invest $40 billion to increase the maximum annual Pell Grant Scholarship to $5,550 in 2010 and to $6,900 by 2019
• Invests $3 billion to bolster college access and completion programs for students
• Strengthens the Perkins Loan program, a campus-based program that provides low-cost federal loans to students, by providing the program with more reliable forms of credit from the federal government and expanding the program to include significantly more college campuses
• Keeps interest rates low on need-based (or subsidized) federal student loans by making the interest rates on these loans variable beginning in 2012
• Makes it easier for families to apply for financial aid by simplifying the FAFSA form
• Invests $2.55 billion in Historically Black Colleges and Universities and Minority-Serving Institutions to provide students with the support they need to stay in school and graduate
• Converts all new federal students lending to the stable, effective and cost-efficient Direct Loan program beginning July 1, 2010
• Provides all federal student loan borrowers with upgraded, modern, state-of-the-art customer service
• Build a 21st century workforce by encouraging historic partnerships between community colleges, states, businesses, job training and adult education programs
• Expands access to education by supporting free, high-quality, online training, high school and college courses
• Ensures that community college students can learn in modern, updated, state-of-the-art facilities by renovating campuses in need of repair
• Saves taxpayers $87 billion over ten years by switching to the cheaper Direct Loan program, according to the Congressional Budget Office. In addition to investing in college aid, this legislation will also direct $8 billion in savings back to the U.S. Treasury to help pay down the deficit.

Now more than ever, Americans need affordable, quality education opportunities to help make our economy strong and competitive again. President Obama has identified an opportunity to make historic investments in our economic future by improving early education opportunities and making college dramatically more affordable-and all at no cost to taxpayers!

The Student Aid and Fiscal Responsibility Act help reach President Obama’s goal of producing the most college graduates by 2020 by making college accessible and transforming the way our student loan programs operate. It will expand quality early education opportunities that will put more children on the path to success. It will strengthen community colleges and training program to help build a highly-skilled, innovative, 21st century workforce ready for the rigors of a global economy. And it will boost the fiscal health of the country our children will inherit by paying down the deficit.

In addition to supporting SAFRA, college students should take to the polls in 2010 to ensure those Democrats seeking to assist and provide college students help, are returned to office and they should boot out Republicans who have stood against American college students, placed massive amount of debt on to their generation and stood up to protect Wall Street and big banks over the good of America’s finest youth of tomorrow.

Tags American colleges American Universities college democrats Democratic Party news politics Party of No SAFRA student aid student lending student loans tuition increases university democrats

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