[Cabs-talk] Fwd: [Nabs-presidents] House bill would kill subsidized student loans

[Darian Smith]

saw this and  thought it would be good  for us as students to see.

---------- Forwarded message ----------
From: Jim Reed <jim275_2 at yahoo.com>
Date: Thu, 17 Sep 2009 11:56:27 -0700 (PDT)
Subject: [Nabs-presidents] House bill would kill subsidized student loans
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House bill would kill subsidized student loans     LIBBY QUAID |
Posted: Thursday, September 17, 2009 9:25 am




The House is poised to vote to push private lenders out of the federal
college loan business and massively expand the government's own lending
program.


Following a day of debate, House lawmakers were expected to approve on
Thursday a student aid bill that has widespread support, including from
the White House. The measure will then go to the Senate, where its fate
is somewhat less certain.


Putting the government in charge of all federal loans would save
taxpayers an estimated $87 billion, according to the Congressional
Budget Office. The CBO says the figure could be much lower, $47
billion, when administrative costs and market conditions are
considered.


The money would boost Pell Grants for needy students, increasing the
maximum grant by $1,400 to $6,900 over the next decade. It also would
pay for a new college completion fund, community college reforms and
more college aid for veterans.


No student in this great country of ours should have to mortgage their
future to pursue their dreams," said the bill's sponsor, California
Democratic Rep. George Miller, chairman of the House Education and
Labor Committee.


Yet the money also would be spent on things that don't help pay for
college, such as construction at K-12 schools and new preschool
programs.


And while the measure would increase Pell Grants, it would do nothing
to curb college costs, which rise much faster than Pell Grants do.


As consumers, college students probably wouldn't notice much difference
in their loans, which they would get through their schools. Broadly
speaking, the bill doesn't do much to make loans cheaper or help pay
them off.


It does keep interest rates for need-based federal loans from jumping
from 3.4 percent currently to 6.8 percent as scheduled in 2012. Rates
for most other loans would remain at 6.8 percent.


Still, the bill's changes to federal college aid programs would be the
most sweeping since their creation in the 1960s and would fulfill a
campaign promise by President Barack Obama.


The measure would end the subsidized loan program under which private
lenders made $56 billion in government-backed loans to more than 6
million students last year, compared with $14 billion in direct loans
from the government.


The bill would also shorten the labyrinthine college aid form, which
Obama proposed to eliminate altogether when he ran for president.


Republican critics argue it is wrong to put the government in
near-total control of student lending.


Ask yourselves whether another government takeover is what we need
right now," said Minnesota Rep. John Kline, senior Republican on the
Education Committee.


Many also worry about job losses in their districts. Private lenders
employ more than 30,000 people whose jobs depend on the subsidized loan
program, and the industry says many would be laid off.


Employees of Sallie Mae, the biggest student lender, have been trying
to involve local leaders in the issue and recently held a series of
town hall meetings and petition drives in Pennsylvania, Florida,
Delaware, New York and Indiana.


The Reston, Va. -based lender has about 8,500 employees in the program
and probably would lay off about 30 percent of those workers. It still
will have contracts to service federal loans.


Democratic Rep. David Wu of Oregon said lenders still could make all
the loans they want. What will not happen anymore is making those
student loans with taxpayer subsidies," he said.


Under the measure, Pell Grants would rise slightly more than inflation
over the next decade, increasing on average by about 2.6 percent
yearly, according to the bill's sponsors.


However, the grants would still depend on annual spending bills and
could rise less than promised, as has happened in the past.


Obama originally proposed to take Pell Grants out of lawmakers' hands
entirely, making the program an entitlement like Social Security and
Medicare, which would have cost an estimated $117 billion _ more than
lawmakers have to spend.

The problem with political jokes is they get elected.






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