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 ...
I see this as I see everything Obama and the Socialist/Democrats are in favor of, or making progress towards, and that is their POWER over every aspect of our lives. This move of direct loans puts their Leftist Government, via strings attached in control.
It will be interesting to see what those attached strings are comprised of.
Every single thing Obama proposes is designed to make a citizen beholden to the Federal government for their needs....in this case, beholden to the Feds for their entry into higher education.
Then, once they are paying the bills, the Fed. govt. can decide what school you can go to, what studies you can pursue, etc.
One constant in life, one that will never change, is.....”he who pays the bills makes the rules.”
That's because loans to students are treated equally, regardless of the student's course of study and, by extension, the student's post-graduation earning potential.
Folks in engineering and the hard sciences who get jobs with compensation that actually makes the borrowing worth it...well, they tend to pay their loans off. I can't say the same for folks in other fields of study who can't get jobs after graduation.
It's all about quantity now, not quality, to the detriment of the U.S. economy.
Obama wants to nationalize 4 year college and put it under Dept of Ed, just like k-12. He said pretty much as such in his fake SOTU address.
Now they want to offer direct student loans.
Tomorrow to get said “loan” you will be required to volunteer with a branch of Obama’s Civilian Defense Force, green shirt and all, for a certain period of time.
It’s been 30 days, and the Nation we were just 1 year ago is crumbling before our eyes. This is just yet another example.
“Tomorrow to get said “loan” you will be required to volunteer with a branch of Obama’s Civilian Defense Force, green shirt and all, for a certain period of time.”
Creepy. Very Creepy.
bttt
This is corporate welfare for the libs special interest groups. They can continue to charge inflated rates paided for by government loans. No competition allowed.
Anyone with a student loan watches their demise with pleasure.
Yes, this is going to be a default free-for-all!
Great, another incentive for colleges and universities to continue astronomical, unreasonable tuition increases.
...once again, the government’s involvement inflates the costs of goods and services.
Fing Communist and it looks like he’s going to get away with it all. Time to head for greener pastures, they sure as hell aren’t here anymore.
It might also be a backdoor way to regulate private colleges. Years ago the feds argued that if a private college or university had even one student with a federally-guaranteed loan or grant, it was enough to shoehorn in all the regulations that bind public schools, including all anti-discrimination laws prohibiting any discrimination against either employees, faculty or students on all the usual suspect classifications. The private schools fought it off but this appears to be another attempt. When I worked a couple decades ago for a private university, we were in the midst of this battle and we were discussing how we might help students finance their education without resorting to government aid. That discussion may become relevant again.
To be fair, the reasoning for this was that there were many people taking out student loans who would then shirk off their obligations by declaring bankruptcy. I see nothing wrong with making student loans non dischargable, along with the other draconian measures put in place to ensure repayment.
The problem these days is people borrow too much, well over the cost of tuition and living expenses, and many students are no longer willing to work their way through school to foot part of the bill.
It won't make this situation better.
It will simply set up a mechanism to fully fund whatever class of people the left wants to give free college educations using taxpayer money.
Just another step toward rationing everything through a peculiarly American-socialist command economy.
1. Education is rationed through direct government lending;
2. Credit will be rationed generally through the nationalized banking system;
3. Housing will be rationed through restrictions on mortgages & their tax deductability;
4. Energy in the form of electricity will be rationed through cap & trade, carbon taxes, and a decrease in domestic supply;
5. Transportation will be rationed through same policies on gasoline;
6. Health care will be rationed through nationalized health care system;
All of these things are already so far advanced there is little effective opposition. Food is next; I haven’t seen how they are going to do that, but it will happen.
Gotta hand it to the socialists running our country. They’ve been working on their plan for a while and it is being executed like a blitzkrieg.
now they have made student loans essentially grants with deferments and forgiveness PROVIDED you work for the government or go back in to work for the educational system.
If Obama federalizes the college system as he said in the faux state of the union, will this mean the feds will want the property tax dollars? will students be assigned to a college the same way as high schools? so if you want a private college does this mean you have to pay for the public school and the private ala sending your high schooler to a private school.
I agree about the shirking. But at that time you did not have all these absurd degrees in fluff.
I agree with all your insights. Very well stated.
In the early 1990s I was told to my face that World War III against the USA had already begun. This was by a far-leftist in southern california (where Obama got his first start in college) who described himself as an "agitprop." At the time I had never heard the term.
Absolutely everything I've learned since then tells me that you are absolutely correct - they've been at this extremely seriously for decades. They have been very smart and very disciplined (a word Obama likes to use.)
They were prepared for their break and they're taking full advantage of it.
It is very difficult to be optimistic at this point.
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