Government takeover of student loan industry appears to be moving forward using pending budget bill

CNSNews ^ | January 20, 2010 | Matt Cover

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(CNSNews.com) – A bill currently before the Senate would empower the Obama administration to nationalize the student lending industry, eliminating the federally subsidized private loans millions of university students rely on to finance their educations.

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.

[jilliane]

The govt. ALREADY is the lender.

[Red Badger]

The gov backs the loan, protecting the lender, but when the gov is the lender, who protects us?................

[jilliane]

... the govt. already does originate the loan and the bank is a middleman loaning fed. dollars...applicants will be more equal how? it’s not need based lending - anyone can apply.

[jilliane]

My understanding is that the ffel program lends all federal dollars for this program and students/parents apply through one of two channels - their option: the banks or through the .gov;

The banks and the govt. have rate agreements, payback agreements etc....not like a car loan where the bank uses its capital.

I don’t see that the gov. role any different as far as the amount of money it is putting up - it pays the entire program - not “backing” it - govt even pays the interest on the loan while the students with need are still in school (subsidized stafford)

[Red Badger]

Imagine a whole new bureaucracy, unionized, of course, whose sole mission is to make sure the loans get into the hands of those that “need them”.........

[Texas resident]

They have been picking winners and losers, car companies, banks and on and on. I don’t put it past them to deny loans to folks who are not registered dimrats. Actually, I don’t put anything past this group.

[o_zarkman44]

“If this bill passes, the government will BE the LENDER....................”

Not only that. but the students will become indebted to the federal government with additional community service requirements. Community service might reduce the student’s individual debt. But who will decide what qualifies as community service and what organizations the student will work for? Government again. co-opting our youth.

[bgill]

Now we’ll get to fund the next 9/11 with student loans to all those students with expired visas our officials can’t be bothered to kick out of the country.

[mia]

My niece is staying with me while she goes to a private local college in their nursing program. She can not get a student loan and has been encouraged to get a personal loan from a local bank. So much for the student loan program. She has no money, is 21 yrs. old and already has a Associates Degree. What to do, what to do, what to do. . . .

[jilliane]

It’s currently operating pretty smoothly...funds electronically transfer between the school and the lender.

[Red Badger]

The government will put a stop to that.............

[nayjay]

You are right, anyone can apply, but everyone doesn’t get the loan or the amount they want. If this is now put entirely in the hands of the federal government, you will have a panel of politicals deciding who gets what and how much. They will decide if the student gets the loan or the parent, and those loans have different guidelines. The federal government will easily have the control of who goes to college and what schools will get the federal money. Now at least you have the banks in the middle who don’t care who gets the money, they are simply looking out for the bank’s best interest. When you apply for a student loan it is done through the college or university you are enrolled at, if this bill passes you can kiss your more conservative universities good-bye, the money will go to liberal schools as long as liberals are in control.

[jilliane]

I’ve wondered what would happen if the just deny credit-worthy people loans for ffel...that’s not the current concern because the ffel already lends to 17 million people. Why can’t she get a ffel loan? If a bank would give her a loan, I’d think she might easier qualify for a stafford. The ffel’s are unsecured loans.

[jilliane]

Applying through the school is an option but not the only way to do it. One can apply directly online with the dept. of ed and tell them which univ. gets the funds. The borrower makes the decision, not the govt. The govt. looks at the credit of the borrower based on the FAFSA. The school receives the dispursement directly if the loan is directed that way...thank goodness or you’ll have situations like octomom all over taking the money and not paying the school.

I’m not sure who makes the credit decision if a bank takes the application...I would not think that they enough skin in the game to make the credit decision since it’s not their money.

[jilliane]

I don’t know if there is an age requirement for the ffel, is there? I just thought they had to be a student meeting the number of academic hour requirements.

[mia]

Thanks for the information. I haven’t been working with her on her finances. I have the same questions you are stating and will review her options with her when she returns from classes this evening. She is a full-time student and should qualify.

[jilliane]

Start here...

http://www.fafsa.ed.gov/

[nayjay]

You can do the paperwork on-line, but you must be accepted by a institute of higher learning, before you can start the paperwork. This is all coordinated through the fiscal office at your university. Yes, money will go directly to the school in some cases, but not all. My problem with this bill is the government will have total control over every aspect of a person getting an educational loan. One criteria they could use is what school they are going to and that would be detrimental to conservative schools and there are still a few out there.

[mia]

Thank you.

[AndyJackson]

All Newton and Liebnitz had were quill pens and animal skins..............

And look where that went. The enlightenment, the industrial revolution, petro-man, and now carbon disaster. Those quill waiving morons doomed us from the start.