As I’ve mentioned elsewhere, Presidents tend to pick experts in primary and/or secondary ed. for their Secretary of Education. However, the ever-rising cost of tuition combined with the current economic downturn is rapidly escalating into a crisis in college accessibility and affordability. Furthermore, as Steven Teles of the Reality-Based Community blog points out:
…[M]uch of what the Department of Education actually does concerns higher education. The federal government’s programs in higher education are incredibly complex, overlapping, contradictory, badly run, and politically embedded. Fixing them will require a Secretary with an intimate knowledge of their workings.
So far, the federal government has seemed more concerned with shoring up access to loans than reducing students’ need for them. Obama’s Secretary of Education should be someone willing to use his or her position as a bully pulpit to stop colleges from raising tuition and to press Congress to find better ways to fund education than simply giving students more loans that they can’t really afford. Read more…
The Department of Education is going to buy up more student loans from private lenders in an effort to bolster the private student loan market, the New York Times reports. The move comes as investors shy away from the student loan market in the wake of the economic crisis, and large lenders like Sallie Mae stand to benefit the most:
Sallie Mae and big banks like Citigroup and JPMorgan Chase, which make thousands of government-subsidized student loans each year, stand to benefit the most from the government’s program. But so will dozens of nonprofit student lenders that are caught in the same bind. The government’s action will not resolve all worries about student lending. Student loan borrowers this year are finding it more difficult to obtain private loans, which are not guaranteed by the government and which typically carry higher interest rates and less favorable repayment terms.
Thus, in yet another industry, the government is bailing out the people at the top of the hierarchy and overlooking those at the bottom. Part of me understands this – the fact of the matter is, the way our current system is set up, most students need to borrow, and if the lenders can’t lend, that leaves a lot of people unable to get a college education at all. On the other hand, I feel that their must be some alternative to letting tuition costs creep ever higher and forcing everyone to rely so much on loans that such bailouts become necessary in times of economic distress.
The Chronicle of Higher Education has an excellent article about Barack Obama’s potential choices for the next Secretary of Education. His choice will be important for student loan activists because the Sec. of Education advises the President on education policy and is in charge of overseeing federal education funding. Read more…
Higher Ed Watch has a great blog post today clearly outlining their hopes for college funding and student loan reform in an Obama administration.
Here’s the short version of their list:
1. Better oversite at the Dept. of Education and better (or heck, any) enforcement when lenders break laws protecting students.
2. Reassess the need for two competing federal student loan programs and clean up the way they are run.
3. Reform the bankruptcy law to provide protection for private student loan borrowers.
4. Crack down on unscrupulous, for-profit trade schools.
5. Simplify and stream-line the federal aid system.
The President & CEO of the National Association of Student Financial Aid Administrators (NASFAA), Dr. Philip R. Day, Jr., has written a terrific letter to Obama, congratulating him on his election, discussing the federal student aid system, and outlining plans for NASFAA to work with the new administration. From the letter:
At specific points during the campaign it seemed you were talking directly to us in the higher education trenches. When you said, “America is the sum of our dreams, and what binds us together, what makes us one American family, is that we stand up and fight for each other’s dreams, that we reaffirm that fundamental belief – I am my brother’s keeper, I am my sister’s keeper – through our politics, our policies, and in our daily lives,” it was clear that you understand the critical importance of supporting college access for all students, and not simply those of greater means. Read more…
As I’m sure you all know by now, Obama has been elected the new president of the United States. So what will an Obama presidency mean for student loan reform? It’s too soon to tell, but a review of some of his past statements might be instructive.
In a May 2007 interview with the Yale Daily News, Obama “vowed to overhaul the aid system in order to curb corruption by eliminating the middleman between the federal government and students seeking loans.” In that interview, Obama argued that the current student loan system benefits private lenders at the expense of students.
Also in May 2007, the Boston Globe reported that Obama said that he would like to see student loans centralized under the federal government and end the practice of federally guarenteed bank loans. “It is long past time to put an end to the rampant abuse by lenders of our student loan programs,” he said.
By June 2008, Obama was making more specific policy proposals. As reported in NextStudent’s Student Law Blog, he supported a $4000 college tuition tax credit in exchange for 100 hours of community service, expected to cost about $10 billion annually.
While in Congress, Obama also sponsored a bill that would have increased the amount of funds available in Pell Grants by 26 percent, from $4050 per year to $5100 per year with additional increases built in for inflation.
Most recently, in an interview that aired on MTV this past Monday, Obama reasserted his $4000 tax credit plan and talked about loan forgiveness for certain professions like teaching and nursing. He did, however, seem to hedge his words a little on people who already owe substantial loans that they are having trouble paying.
It will be interesting to see how many of Obama’s plans he is able to implement and whether, as he eases into the role of President, he will take a more or less aggressive stance on student loans and the cost of education. We have a new President, but only time will tell if we get real change. Here’s to hope.