Student Loans
College costs are growing rapidly and financial aid hasn’t kept up. Close to 70 percent of undergrads graduate with debt. In 2009, the average student borrower owed $27,600. The Student Aid and Fiscal Responsibility Act (SAFRA) of 2010 ensures that all federally funded student loans will be directed through the federal government’s Direct Loan Program (DLP,) saving $61 billion and using that money to fund increased Pell Grant funding. SAFRA abolished the Federal Education Loan Program (FFELP), which used subsidized loan companies to provide student loans.
Cry Wolf Quotes
Currently, students have the option to choose between private and public lenders, and I am a firm believer that such choice and competition among lenders is the best proven method for reducing costs and improving services. By omitting private lenders, we would create a monopoly within the federal government regarding student loans.
Here is what they haven't told us: The Education Department will borrow money at 2.8 percent from the Treasury, lend it to you at 6.8 percent and spend the difference on new programs. So you'll work longer to pay off your student loan to help pay for someone else's education -- and to help your U.S. representative's reelection.
The student-loan provisions buried in the health care legislation intentionally eliminate private-sector jobs at a time when our country can least afford to lose them.
The President's plan, although touted as a means of promoting higher education, is not. The plan does not reduce the cost of student loans for a single student. Students and parents need to know that under this proposal, the government's profits on student loans borrowed by middle income students will be used to finance other student aid.
Related Laws and Rules
Evidence
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5 Myths About Student Loan Reform
Campus Progress: Almost all of the student loan industry's warning about SAFRA were wrong.
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Are Student Loan Companies Playing Politics With People’s Jobs
The definitive refutation of “job killer” cry wolf claims regarding SAFRA.
Resources
Campus Progress is the youth wing of the Center for American Progress. They do work in both advocacy and journalism.
Higher Education Watch is the New America Foundation's blog about the politics and policy of higher education.
