Obama to Nationalize Student Lending with Pending

Hmmm ....

EDIT: sorry I forgot the link ....

Obama to Nationalize Student Lending with Pending Budget Bill
Wednesday, January 20, 2010
By Matt Cover, Staff Writer


The Student Aid and Fiscal Responsibility Act – currently being considered by the Senate Health, Education, Labor, and Pensions (HELP) Committee – would eliminate the Federal Family Education Loan (FFEL) program. FFEL loans are federally subsidized and make up approximately 80 percent of the student lending industry.

According to the Department of Education, 14.3 million of the 17.5 million student loans were federally subsidized for the 2009-2010 fiscal year. Under Obama’s plan, the government would consume the entirety of this industry – a total of $103 billion in 2009-2010.

Under the current system, the federal government subsidizes private financial institutions in order to entice those institutions to provide low-interest loans to students.

Under the system proposed by Obama, the government would cut private lenders out of the picture entirely, setting the interest rates and collecting payments directly for all student lending.

Whether or not the government saw a profit or a loss from the new, federal loans would depend on the rate at which the government borrows money. For instance, the law currently sets the interest rate for direct loans at a maximum of 6.8 percent.

Under Obama’s proposal, if the government can borrow money at a rate lower than 6.8 percent, it would realize the difference as profit. If the government’s borrowing rate were to fall in the future, its profit on student loans would grow.

The Government is not in the in business and shouldn't be setting itself up as a bank like this ...........

[SamSpade]

Why is the current system bad? Right now, students can get loans without much to show for it, because the federal government can guarantee the bank will get their money.

So what is the reasoning behind this? From what I can tell, the only point I can find is that it makes money for the government - a kind of protracted tax over the life of the loan. Right now, loans through Sallie Mae are really cheap, but if this passes, that's gone. The government itself will be in the student loan business.

[aps45819]

Originally Posted by SamSpade

Why is the current system bad?

Because a socialist isn't in charge of deciding who gets a student loan. Expect a Loan Czar appointed by the president that only answers to the president

[SamSpade]

Originally Posted by aps45819

Because a socialist isn't in charge of deciding who gets a student loan. Expect a Loan Czar appointed by the president that only answers to the president

I can't see the rationale.

If it's accessibility - the likelihood that ANY person going to college can get one - it's unnecessary. Pretty much anyone can get a student loan that is backed by the government.

If it's the high rate of default - well, from what I can tell, the same laws apply no matter who gives the loan. The government running it won't change anything.

All I can see is, if the rates are incredibly low, the government loses money should the economy tank. Well, I thought part of that was the reason they were attractive in the first place. You want a low rate for a loan, go through the federal government. They've got this long record of swallowing costs to ensure education. Now it looks like they want to change things, so they can be sure to make money over the long haul.

I'm not crazy about it. Heck, I think I'd prefer the "free college" he alluded to a couple times in the campaign.

[Lenny]

Originally Posted by SamSpade

Pretty much anyone can get a student loan that is backed by the government.

The Socialists don't want just ANYBODY to get a student loan. Only those who claim an American slave in their ancestry and whose parents are registered Democrats will be in the running once this program gets going. (OK, maybe a little paranoia there, but it's not out of the realm of possibilities).

[ylexot]

Will they actually make money though? They will have to stand up a whole new bureaucracy to handle the loans. That's not going to be cheap.

[bcp (Premo)]

easiest way to insure that loans are made strictly on the basis of how dark your skin is, is to control all loans from the start.

must be too many white males slipping into college with loans from those racist banks.

[Lenny]

Wealth redistribution at the financial aids office.

[Aerogal]

My sons' are already at a disadvantage - they don't easily qualify for FFEL nor do they get any consideration for most scholarship or grant programs because they are caucasian males.
One wants to be a teacher - if he was female or black/hispanic/asian/FOREIGN BORN (citizenship not required) he would qualify for state & federal programs (and a lot of ethnic based scholarships/grants) that pay for college. I can't see how this would help him at all. The white American male can get NOTHING from the current govts' (fed & state).

If the govt NATIONALIZES this system for profit it becomes profit generating program to what end - or the profits get funneled to pet projects, labor bosses, party affiliated groups - what?
Just another take over by the feds. I think I'll move to Texas so I can be in a free country when they decide to secede from the United States of Obama.

[ImnoMensa]

Let's not get race into this. It isn't about race, it's about Power.

It's another way the government will have you under their thumb.

The Obama administration wants power over Americans from the womb to the tomb.

This is just another increment in getting that power. Just as the Health care bill would govern who lives and who dies ,who get rationed and who doesnt this one will decide who gets to go to college and who doesnt. It's the frog in the water again, just heating it up a bit at a time so he wont jump out.