Skip to comments.Ending the College Loan Giveaway
Posted on 06/29/2005 12:05:49 AM PDT by neverdem
Forty-two members of the Republican rank and file in the House sent a powerful message to their leaders last week when they joined with Democrats and voted to close an outrageous loophole that allows lenders to skim billions of dollars from loans that should be going to needy college students.
At issue is a special category of student loans for which the government guarantees lenders a gargantuan return of 9.5 percent, even though the prevailing rate charged to students is lower than 3.5 percent. The loans, backed by tax-exempt bonds, were created in the 1980's, when interest rates were high, to keep lenders in the college loan business. Congress tried to phase out the high-interest loans in 1993, when rates declined and federal subsidies were no longer needed. But the lenders have contrived a series of bookkeeping tricks that have kept the system going, despite damning reports by the Government Accountability Office, the Congressional Budget Office and outside advocacy groups. More recently, the House Republican leadership has seemed determined to keep the gravy train running for the banking industry.
The amendment, sponsored by Representative Chris Van Hollen, Democrat of Maryland, is likely to be tied up in a rules dispute. But the Republicans who broke ranks to support the bill put leaders on notice, and set the stage for a very public battle over the issue that should begin after the July recess.
(Excerpt) Read more at nytimes.com ...
BTW, I omitted the last sentence. I think you can guess their conclusion.
Excellent point about the value of different degrees. We certainly get a better return on subsidizing those who are science and engineering majors. If someone wants to major in art history or women's studies, they should go to the back of the student loan line.
it's worth it. The return we get for subsidizing the education of doctors and engineers is well worth it. Those people will be able to pay a lot more in future taxes than they would as uneducated laborers.
I don't mind investing in America's future. I like the idea of funding science and engineering majors only, although there are probably a few other majors that are of value, as well. I would probably add business-related majors to the list.
I don't believe we need to fund everyone's education, either. But I think it's important that we help those who need it, and want it.
I agree, I dislike a great deal of federal spending, but I think college loans are a good idea. I know a ton of people who improved their family trees with that help.
I am on the fence on subsidizing education. First, we built a strong middle class on doing just that after WW2 and throughout the 1960's via the GI Bill and Pell Grants. Now as the tuition keeps rising and rising, less are able to attend (even with student loans). I am looking at trying to send my son to college in 6 year--probably a $20,000 per year cost by then.
The state schools have gotten so expensive, they cost about what the private did 15 years ago.
Granted, I am saving some money for his college education via 529's, but at the same time not quite able to max out my own retirement funds (who knows if SS will even be around in 30 years?), and I still have my own student loans of approx. $15,000 left to pay off. Don't get me started on housing costs. I make under 50 a year as a registered nurse. Dh is an union electrician but has been laid off for almost half the year--no major building going on yet in the Northeast and it's almost F'ing July. We're now considering relocating which has its own large set of difficult issues. (We live in upstate NY)
The X Generation is tired of paying the bill and getting squat in return. COL increases keep going up for SS and Medicare/prescription but screw the younger generation to get an education so they can pay for it all.
My parents never managed to save for their retirement although they retired anyway. My mother isn't 65 yet and has poor health (smoker) so I basically purchase her meds when she needs me to. My father retired at 62, is now 65 and complaining he has to find a job and has health problems (smoker) as well. Dh's parents are busy filling and decorating their McMansions and taking vacations so most likely won't be able to afford retirement for another 10 years (when they most likely will have no choice). So no help coming from there for the boy in contrast to the assistance to the prior generation.
Sorry to whine but the whole situation is vastly grating to me as I always considered myself independent and fended for myself and generally opposed government taking money from one to give to another. Something has got to give.
The main thing that subsidies have dome it to make education much more expensive.