Debtors rejoice, student loans go public
September 21, 2009
I used to worry about how much debt I’d be in when I left college — then I came to America. How anyone in this country manages to pay for higher education and still eat is a constant source of amazement to me. This is why I found myself feeling happy on your behalf when I read about the “Student Aid and Fiscal Responsibility Act” which the U.S. House of Representatives passed Thursday.
Large-scale government spending may not seem overly sensible during a recession, but by making the transition from government subsidies of private loans to direct federal lending, President Barack Obama actually intends to save $80 billion.This princely sum can then be used to fund the new system, as well as bolstering schemes like the Perkins Loan program which provides financial support for low-income students in post-secondary institutions.
A scheme that pays for itself while simultaneously generating $10 billion to be sent back to the treasury sounds pretty good to me. So why are men like Congressman John Kline (R-MN) so unhappy? Well, it seems to come back to that beloved phrase, “erosion of consumer choice.” I am trying hard to get my head around the assumption that government intervention is in some way intrinsically detrimental. I can understand to an extent — I’d like to make my own decisions about higher education without interference from politicians who I don’t like and probably didn’t elect. But I would also like a helping hand to be there when I can’t quite make it all the way on my own — preferably one that’s not raising my interest rate.
As things stand, two-thirds of American students rely on grants and loans to help them through college. The new legislation will guarantee students this support regardless of what the credit market looks like, which is quite reassuring considering the current state of credit. It also guarantees the largest investment ever made in federal student aid, something American students should be grabbing at with both hands.
That the bill bears an “eerily strong resemblance to the health care debate,” as Kline claims, is not a bad thing as far as I’m concerned. Just as Obama isn’t proposing to take over healthcare in America, he is not suggesting the government take over education. He is also not suggesting they utilize the opportunity to make money from impoverished students — he’s leaving that to the banks. He is suggesting the government serve the people they represent by giving a greater proportion of them access to a better future.
Some Republicans may have legitimate concerns over such “job-killing legislation,” and certainly the companies currently pocketing the interest on your loans are going to take a hit, but isn’t that the point?
After all, you are the ones putting in the hours at Earl Gregg Swem Library to earn a degree from the College of William and Mary, so you are the ones who deserve to profit from it. At the end of the day, it is the banking sector that will see job losses, and let’s face it — they deserve it.
E-mail Lucy James at [email protected]