Featured * :: quality education

A Growing Problem for All Families: Student Loan Debt

OurFuture.org Staff — Thu, 23 Aug 2012 12:04:30 -0400

Don’t Let Them Kill Student Loan Reform

Armand Biroonak — Thu, 11 Mar 2010 15:36:41 -0500

Something so simple, so easy: end tens of billions of dollars in bank subsidies to the private lending industry and return much of the savings back into the hand of students, with the Department of Education providing loans to students directly. A no-brainer right? Well reform may be a no-go, if six Senate Democrats have their way.

Senators Ben Nelson (D-Neb.), Bill Nelson (D-Fla.), Blanche Lincoln (D-Ark.), Tom Carper (D-Del.), Mark Warner (D-Va.), and Jim Webb (D-Va.) all have expressed concerns about student loan reform (known as the Student Aid and Fiscal Responsibility Act) and urge for alternative proposals in order to protect lenders and jobs in their states. Fair enough, job losses –especially now –are never a good thing. However, even with reform, private lenders (that employ only around 30,000) will still play a big role in servicing loans –so job losses will be minimal or even increase with greater loan volume looking down the road. Click here for more common myths about student loan reform.

And how about the concern for students too? Students cannot afford to wait any longer, they need help now. Under reform legislation, the Pell Grant maximum would increase, thus allowing thousands more students to become eligible for aid. And making college affordable could not come at a better time. The average student debt has ballooned to over $23,000. Take a look at the increase in tuition over only the past two years at state universities for those Senate Democrats that stand in the way:

Univ. of Nebraska: over 11%
Univ. of Florida: 30%
Univ. of Arkansas: 7%
Univ. of Delaware: 16%
Univ. of Virginia: 14%

So who are some members of Congress really siding with? Students? Or Banks? Help make your voice heard here and tell the Senate to finish what the House already did, and pass student loan reform NOW!

Miller Harkin Act to Save Direct Lending

Robert Borosage — Fri, 12 Mar 2010 05:42:12 -0500

______________________

With word that Six Senators were expressing opposition to putting direct lending in the budget bill reconciliation -- which only requires sixty votes to pass the Senate -- Rep George Miller, Chair of the House Education and Labor Committee, and Tom Harkin, Chair of the Senate Education Committe, got to work. Miller pointed out that adding direct lending in the bill made reconciliation more, not less likely to pass in the House -- where every vote is needed to get the health care fix done.

The House pledged to adjust its measure to insure that direct lending would save money, even after increasing funding for Pell grants and guaranteeing that Pell grants would be adjusted annually for inflation.

If this holds, it is a terrific victory for students.

New York Times Story here http://www.nytimes.com/2010/03/12/us/politics/12loans.html?hp

Miller's press release on the program below.
__________________
EDUCATION & LABOR COMMITTEE
Congressman George Miller, Chairman
________________________________________
Thursday, March 11, 2010
Press Office, 202-226-0853

Chairman Miller: Student Loan Reform Boosts Support for Health Reform Bill
Members of Black and Hispanic Caucuses Also Show Strong Support

WASHINGTON, D.C. – Including student loan reforms in a reconciliation package will help pass health insurance reform in Congress because it is a once-in-a generation opportunity to make historic investments in college students and families, instead of banks – and at no cost to taxpayers, said U.S. Rep. George Miller (D-CA), the chairman of the House education committee, at a press conference on Capitol Hill today.

Miller was joined by U.S. Senator Tom Harkin (D-IA), the chair of the Senate education committee, House Majority Whip James E. Clyburn (D-SC) and Democratic Caucus Vice Chairman Xavier Becerra (D-CA), who underscored the importance of the bill for the Congressional Black Caucus and the Congressional Hispanic Caucus, because it invests billions of dollars to help low-income and minority students pay for college and graduate.

“Senators have a clear choice here: they can either continue to send tens of billions of dollars in wasteful subsidies to banks – or they can start to invest that money directly in students,” said Miller, who is the author of the student aid bill in the House. “This choice speaks to what our priorities will be for the next generation. We have a remarkable opportunity to change Washington and do the right thing, the fair thing, and the fiscally responsible thing for hard-working families. This is very important to the members of the House Democratic Caucus.”

The 2009 budget resolution provided reconciliation instructions for Congress to use for both health insurance reform and student loan reform. To comply with the reconciliation instructions, the student loan reforms have to be budget neutral and reduce the deficit by $1 billion over five years. Budget rules require that both bills would move together as one reconciliation measure – they cannot be moved separately.

The House passed the legislation, the Student Aid and Fiscal Responsibility Act, in September with bipartisan support. The bill, which was first proposed by President Obama, would eliminate wasteful taxpayer subsidies to banks in the federal student loan programs and invest the savings in students, families and taxpayers. The reliable and cost-efficient federal Direct Loan program, which many schools already use, would provide students with the same loans as banks – but at a cheaper price for taxpayers.

At the press conference today, Miller cleared up several key points of confusion:

• First, any student loan bill that would be included under reconciliation would have to be deficit neutral and return $1 billion in savings to pay down the deficit. Contrary to media reports that the bill could increase the deficit, any investments included under the bill would be entirely paid for.
• Second, the legislation will preserve jobs. For months banks have claimed that switching to Direct Loans would eliminate jobs. They are wrong. The student aid bill would maintain a servicing role for lenders, which will preserve jobs and, unlike in the current system, keep banks from shipping these jobs overseas. Last year, Sallie Mae, one of four private companies that currently services Direct Loans, had to bring 2,000 outsourced jobs back to the U.S. in order to be eligible for the servicing contract.
• Third, it has always been known that student loan reform would move as part of a reconciliation measure. Last year’s House Budget Resolution for Fiscal Year 2010 included instructions for the House Education and Labor Committee to enact student loan reforms that produce $1 billion in savings to help reduce the deficit over the next five years. In order to meet these reconciliation requirements, any student loan reform will have to help reduce the deficit.
• Fourth, these subsidies to lenders have been identified as wasteful by both Democratic and Republican presidents. In addition to President Bill Clinton and President Barack Obama, who both identified these subsidies as wasteful, President George W. Bush’s 2005, 2006 and 2008 budget proposals called for reducing these federal subsidies to private banks.
• Finally, this is the only opportunity to enact these reforms. As the lawmakers said today, student loan reform must move under these reconciliation instructions – or it won’t happen.

The Last Obscenity: Will the Bank Lobby Succeed in Screwing Poor Kids?

Robert Borosage — Thu, 11 Mar 2010 10:30:31 -0500

It is, as President Obama stated, a "no-brainer." Cut the $90 billion in subsides that go to banks to make risk-free student loans that are GUARANTEED BY THE GOVERNMENT, go to direct lending, and use the money saved to increase Pell grants and tuition tax credits for working families so more poor kids can afford college. $90 billion over 10 years isn't bubkas.

The banks, of course, mobilized to save their subsidy. Republicans, led by Sarah Palin, denounced the "government takeover." But shoveling out an extra $90 billion to private banks to make risk free loans that the government guarantees isn't exactly the free market. This is the most egregious form of crony predatory capitalism that Adam Smith would condemn.

So the bill passed the House easily. And it was put in reconciliation instructions in the Senate—so it only needs 50 votes. Piece of cake.

So the banks enlisted big-time Democratic lobbyists and spent millions. They mobilized employees to pressure senators, arguing that they would lose their jobs. (Actually most of the jobs would still be there as the loans would continue. It is just the subsidies to bank profits that would eliminated.)

Now six senators—WHO SHOULD HEAR FROM YOU—have announced their opposition to voting on the student loan package in the reconciliation bill:

Blanche Lincoln of Arkansas (no surprise there)
Ben Nelson of Nebraska
Bill Nelson of Florida
Thomas Carper of Delaware
Mark Warner of Virginia (so much for New Dems)
Jim Webb of Virginia

What do six senators matter when we only need 50 votes? Because health care needs every vote it can get to pass the "fix" in reconciliation. If a couple of these folks say they won't vote for reconciliation if student loans are in the bill, the leadership, desperate to get health care done, will drop student loans.

This will be the final obscenity: The bank lobby so strong and the Democrats so weak that even a "no-brainer" taking unearned subsidies from banks and giving them to poor kids can't pass.

Despair for the Republic. This, folks, is simply ugly.

Pay Teachers More

OurFuture.org Staff — Mon, 14 Mar 2011 15:16:26 -0400