Ron Paul: End U.S. student loans

This from Politico:

Republican presidential contender Ron Paul said Sunday he wants to end federal student loans, calling it a failed program that has put students $1 trillion in debt when there are no jobs and when the quality of education has deteriorated.

Paul unveiled a plan last week to cut $1 trillion from the federal budget that would eliminate five Cabinet departments, including education. He’s also wants young workers to be able to opt out of Social Security.


The student loan program is not part of those cuts, but Paul said Sunday on NBC’s “Meet the Press” that he’d kill the loan program eventually if he were president. That could put him at odds with some of his young followers, many of whom are college students.

Paul blamed government intervention in the economy for rising tuition.

“Just think of all this willingness to want to help every student get a college education,” said Paul, who graduated from Gettysburg College in Pennsylvania before earning a medical degree at the Duke University School of Medicine. “I went to school when we had none of those. I could work my way through college and medical school because it wasn’t so expensive.”

Annual tuition for Gettysburg College is $42,610 for the 2011-2012 academic year. Annual tuition at Duke’s medical school runs $46,621, according to its web site.

Amid such rising costs, borrowing for college is at record levels. The Federal Reserve Bank of New York says students and parents took out a record $100 billion last year, and owe more on student loans - more than $1 trillion is outstanding - than credit cards...

Lobbying Imperils Overhaul of Student Loans

This from the New York Times:

Four months ago, it appeared all but certain that the White House and Democrats in Congress would succeed in overhauling the student loan business and ending government subsidies to private lenders.

President Obama called the idea a “no-brainer” last fall, predicting it would take billions of dollars from the profits of private lenders and give it directly to students, and many colleges were already moving to get loans directly from the federal government in anticipation of the next move by Congress.

But an aggressive lobbying campaign by the nation’s biggest student lenders has now put one of the White House’s signature plans in peril, with lenders using sit-downs with lawmakers, town-hall-style meetings and petition drives to plead their case and stay in business.

House and Senate aides say that the administration’s plan faces a far tougher fight than it did last fall, when the House passed its version. The fierce attacks from the lending industry, the Massachusetts election that cost the Democrats their filibuster-proof majority in the Senate and the fight over a health care bill have all damaged the chances for the student loan measure, said the aides, who spoke on the condition of anonymity because they were not authorized to discuss the matter publicly.

But they said the administration had recognized the threat and was beginning to push back in an effort to get the plan approved...

KSN&C backstory.

Plan to Change Student Lending Sets Up a Fight

This from the New York Times:

WASHINGTON — The private student lending industry and its allies in Congress are maneuvering to thwart a plan by President Obama to end a subsidized loan program and redirect billions of dollars in bank profits to scholarships for needy students.

The plan is the main money-saving component of Mr. Obama’s education agenda, which includes a sweeping overhaul of financial aid programs. The Congressional Budget Office says replacing subsidized loans made by private banks with direct government lending would save $94 billion over the next decade, money that Mr. Obama would use to expand Pell grants for the poorest students.

But the proposal has ignited one of the most fractious policy fights this year...

During the Bush administration, a massive student loan scandal exposed student lending companies that were improperly collecting hundreds of millions in federal subsidies. At the time, Education Secretaries Rod Paige and his successor, Margaret Spellings, argued repeatedly that under existing law they were powerless to stop the payments and that it was Congress that needed to act.

Obama apparently disagrees.

For lenders, the stakes are huge. Just last week, Sallie Mae reported that despite losing $213 million in 2008, it paid its chief executive more than $4.6 million in cash and stock and its vice chairman more than $13.2 million in cash and stock, including the use of a company plane. The company, which did not receive money under the $700 billion financial system bailout and is not subject to pay restrictions, also disbursed cash bonuses of up to $600,000 to other executives...

Seduced and Abandoned?

This from Jim Warren at H-L:

Teachers say failing loan forgiveness program

will cost them thousands

Forgiveness program has no more money

Hundreds of Kentucky elementary and high school teachers who were promised that their student loans would be forgiven if they went into critical subject areas such as special education say they're suddenly facing big monthly loan payments because the state forgiveness program is out of cash.

Many say they borrowed heavily for graduate school because they were assured that their loans would be paid off under the federally funded Best In Class program.

Now, they say they're being hit with loan payments ranging from $200 to $400 a month for individuals to more than $800 monthly for couples — amounts for which many haven't budgeted.

"The loan forgiveness played a large role in me deciding to go into this field," said Travis Gay, a special education teacher in the Anderson County Public Schools. "I paid for my entire master's degree out of the program, books and all, and so did my wife."

"We were told, 'It's something you can count on.' But then it was just gone."

Gay says that, without the forgiveness program, he and his wife jointly could face loan payments totaling between $800 and $900 a month until their $90,000 balance
is repaid with interest.According to Gay and other teachers, more than 4,000 Kentucky teachers could be affected...

Obama Invests in College Affordablity

This from Ed Week:

President Obama on Thursday proposed a huge expansion of the government's role in making college more affordable and putting it within reach of more students... The president was following through on a campaign promise to give every child the chance to go to college or pursue some form of higher education.

In his budget plan, Obama seeks to link growth of the Pell Grant program to inflation for the first time since the program began. It would grow by more than 75 percent over the next decade.

Obama seeks to save money and protect students from the current turmoil in financial markets by boosting direct lending by the government and discontinuing government-subsidized loans made by private lenders.

During the Bush administration, a massive student loan scandal exposed student lending companies that were improperly collecting hundreds of millions in federal subsidies. At the time, Education Secretaries Rod Paige and his successor, Margaret Spellings, argued repeatedly that under existing law they were powerless to stop the payments and that it was Congress that needed to act.

Obama apparently disagrees.

State student-loan program may stop taking applications

This from Nancy Rodriguez at the Courier-Journal:

May 1 deadline set; more funding sought

The agency that oversees Kentucky's college-loan program says it's unable to secure money for new loans right now -- meaning thousands of students may have to turn to private lenders to pay for their education.

The Kentucky Higher Education Student Loan Corp. blamed ongoing fallout from the global credit crisis as it announced yesterday that it will suspend making college loans to first-time borrowers on May 1, until it can secure additional financing.

The corporation, also known as The Student Loan People, said it will continue to make loans to previous borrowers, based on availability of funds. The corporation uses federal and private funding to provide loans.

"We're hoping things will move and we will be able to come back in 30 days and tell the universities we will be able to make loans we ordinarily would," said Jo Carole Ellis, vice president for government relations and student services at The Kentucky Higher Education Assistance Authority, which acts as guarantor for loans provided by The Student Loan People.

The announcement was particularly bad news at a time when public universities and colleges in Kentucky are preparing to raise tuition for next school year. The Kentucky Council on Postsecondary Education is scheduled to vote on those proposals May 9...

State won't forgive school loans

Citing federal cutbacks, the state is phasing out three college loan-forgiveness programs it's been using to attract and keep teachers, nurses and public-service attorneys in Kentucky.

Under the changes announced this week, students who take out loans after June 30 will no longer be eligible for the forgiveness benefits.

And it remains unclear what benefits will be available to students who took out loans before that deadline, according to officials at the Kentucky Higher Education Assistance Authority/Kentucky Higher Education Student Loan Corp...

This from the Courier-Journal.