Posted on 02/26/2009 9:21:37 AM PST by cowtowney
Renewing a battle waged during the Clinton administration, President Barack Obama proposed to eliminate private lenders from the student-loan market and have the federal government make all such loans directly.
In his spending blueprint for fiscal 2010, Mr. Obama said the shift to the Department of Education's so-called direct-lending program would save more than $4 billion a year in subsidies paid to private lenders and eliminate uncertainty for students "because of turmoil in the financial markets."
Direct loans only accounted for about 20% of the $68.2 billion in new federal loans during for the 2007-2008 school year, but interest in them has surged recently as many private lenders have stopped making federally guaranteed loans amid the credit crunch.
Student loans themselves don't generate significant earnings for banks because of the high level of defaults, so the fees paid by the government are the main incentive for lenders to take part in the program.
One of the largest players in the student-loan market, SLM Corp., saw its shares fall 26% as word of the proposed change filtered out Thursday morning. SLM was down $2.17 to $6.22 a share in early trading on the New York Stock Exchange.
(Excerpt) Read more at online.wsj.com ...
How do you know Obama is lying?
His lips are moving.
Yeah...good luck if you’re a conservative college...your students won’t get the time of day from this crowd...
Sallie Mae’s stock is down 42% today
The government taking over a business operation is going to save money?
On what other planet did that happen?
Because the price of tuition isn’t high enough yet.
I hope Sallie Mae falls apart. It’s a corrupt, criminal organization. They routinely lie and tack on fees and charges. It took me 4 months to prevail in a dispute over $500 they were trying to fleece from me.
Taxpayer holds the bag.
Yep, been waiting for this massive gubment redistribution of income/wealth ponzie scheme. Next is credit card debt. All placed on the back of taxpayers for generations to come.
Elections have consequences. Back in the USS, back in the USS, back in the USSR.
How about an investigation into college price gouging brought on as a direct result of easy student loans? (sound of crickets chirping....tumble weed blows down the street)
And how will the government taking over this program going to make it any better?
At least now there is some responsiveness and efficiency at Sallie Mae. Put the govt directly in charge, the number of people administering the program triples, and kids will be 21 before they get the loan approved for their freshman year.
Of course, they can use that time profitably in the 0bama Youth Movement.
they fixed the default rate problem.
they made student loans non dischargable in bankruptcy.
This was essentially the same as inflating mortgage securities.
lenders are free to lend absurd amounts of money for worthless degrees because they know they are protected from discharge.
notice how junk degrees proliferated in the era of nondischargable student loans.
Obama and the Dems are doing to college education what they did to housing.
Subsidize it by giving below market loans + give the colleges govt. grants + then the colleges get free money from alumni =
???
Answer? Inflated college tuitions, massive building campaigns, debt, debt debt.
Then to this cauldron you add a bad economy and lower demographics of kids college age.
Finally, you add the fact that the higher college tuition can not be paid off with graduating salaries...equals?
bump for later.
I didn’t say it made it better. This is about wealth transfer, not making things work. I also hope it didn’t sound like I was in favor of it.
My suspicion is that this program is to provide education cash. Instead of making it a straight grant, they make it a loan, but if Sallie Mae never files a credit default report, it essentially ceases to be a loan and becomes a gift. I work for a college, and student loan sources were drying up.
Get a federal college loan, go default and never see another tax refund until it’s paid off.
That is what does indeed happen; people with defaulted student loans, and who don’t pay, have their tax refunds (if they don’t withhold correctly!) applied to the debt, as well as their social security payments. The gov’t does wage garnishment too.
I suspect the Dept of Ed does a better job collecting debt than the IRS does, as the Dept of Ed uses private collection agencies (not sure if the IRS does yet).
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