The New York Times reports today that aggressive lobbying by top student lenders like Sallie Mae may derail Obama’s plans for reforming the student loan industry.
Obama’s plan is to cut out federal subsidies to private lenders and loan the money directly to students instead, a plan that a Congressional Budget Office analysis says could save approximately $80 billion dollars over the next ten years. That money would then go to “expanding direct Pell Grants to students, establishing $10,000 tax credits for families with loans, and forgiving debts eventually for students who go into public service, administration officials say.”
The Associated Press is reporting that Obama will name CEO of the Chicago Public Schools Arne Duncan as his choice for Secretary of Education on Tuesday morning:
Duncan has run the country’s third-biggest school district for the past seven years. He has focused on improving struggling schools, closing those that fail. Obama highlighted this work by choosing for the announcement a turnaround story for Duncan — Dodge Renaissance Academy, a school Duncan closed and then reopened.
Duncan is a 1987 graduate of Harvard, magna cum laude, who played professional basketball in Australia for four years before returning to the United States to direct the Ariel Education Initiative, which focused on increasing educational opportunities for inner-city youth. Apparently, Duncan is popular with both the pro-No Child Left Behind faction and the teachers’ unions.
Well, I’m a little disappointed. I was hoping, in spite of indications to the contrary, that Obama would appoint someone whose major focus was reforming higher education. I did find this quote from Duncan on the Huffington Post, in which he mentions student loans:
“Oh, there are lots of challenges and, obviously, huge opportunities,” Duncan said. “I think there’s a huge amount of work that has to go on on the early childhood side. There’s a huge amount you’ve got to do in the K to 12 sector. And higher ed, particularly the student loans, presents some huge, huge challenges.”
Not exactly a call to arms, and he could easily be talking about access to loans during the credit crunch rather than more radical reforms decreasing the necessity of huge debt loads for college students, but I will hold out hope until I’m proven wrong. More as this one develops.
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.