It’s all about the bankers — again. As I’ve said in this blog numerous times, the Student Aid and Fiscal Responsibility Act is poised to dispense critical aid to low-income college students and the colleges they attend — if the lending industry doesn’t kill it first.
The savings that would result from a move to direct lending are substantial. Money would go directly to the neediest college students and to community colleges, a sector that is swamped and struggling in this recession. This investment in human capital is in so many ways a no-brainer — it’ll generate a large return, benefit folks in nearly every community in the country, and support the American dream.
Of course, the bankers will have none of it. In the current system they draw profits on the backs of students, lending them money and selling those loans to the government. They are so eager to hold onto those profits that they argue that the status quo is actually good for students. Disgusting, but not surprising. This is how the power elite maintains its position.
What’s terribly sad is that some Democrats from states with pathetically low college attainment rates are actually buying into this hooey, giving credence to the banks’ arguments that there are ways to save money while preserving their profits.
Senators Thomas R. Carper of Delaware, Blanche Lincoln of Arkansas, Ben Nelson of Nebraska, Bill Nelson of Florida, Mark Warner of Virginia and Jim Webb of Virginia ought to be ashamed of themselves. Just look at the state of their higher education systems:
– Delaware ranks last in the nation in community college completion rates — just 10.8% of those who start at a two-year college finish an associates degree in 3 years.
– Nebraska’s commitment to low-income students is pathetic — for every dollar in federal Pell Grant aid to students, the state spends only 19 cents.
– Arkansas has one of the largest black/white gaps in college completion in the country (16 percentage points)
– Florida doesn’t make college affordable — the state’s poor and working-class families must devote 24% of their income, even after aid, to pay for costs at public four-year colleges.
– Virginia is a place of great inequity — just 29% of black young adults are enrolled in college, compared to 42% of whites.
The children in these states deserve the sort of affordable education that SAFRA will provide. Their leaders should (quickly) stop stalling, develop backbones, and stand up to the banking industry.
2 Responses to Stand Up for Safra
che_lscc11 - March 15, 2010 at 10:51 am
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ramses - March 15, 2010 at 6:03 pm
Sara, I have some questions about the benefits the SAFRA legislation will actual generate. Many people talk about the savings we get from not paying a cut to the lenders. I know some lenders such as Sallie Mae, do depend on these subsidies. Though if it were such a profitable business, then why have so many lenders stopped student lending, and why did Congress need ECASLA to free up the money for banks to lend to students? I am not stating subsidies are a good thing. Additionally, we are not “saving” money as we will still spend the same amount, simply on a different program. I wonder how much we will have to spend towards Pell however since according to this article: http://www.insidehighered.com/news/2010/03/15/safra , Congress will most likely include the subsidy savings towards healthcare and the current year’s Pell budget shortfall. I think giving those without the wherewithal to pay for college, the ability to do so, but we cannot even provide the need to those who are already in the system by cutting a related program. I know this is not an issue you address, but I also question having the government as a lender to all. What protection do the debt holders have against the government should they default? I am not saying people should not have responsiblity for their loans, yet we have protections for people such as bankruptcy which was created for a reason. These protections do not exist in the same way for student loans. And I know this situation applies regardless of SAFRA passing because the government already provides guarantee. There is still a cost to the taxpayer regardless, as to how much, that is unknown. I know that is a big piece of information, but I am curious as to your thoughts.