Congress kicks out private education loan companies

[DavidS]

The Associated Press: House passes overhaul of college aid program

This is terrible. Really, really terrible. If I'm a private corporation and I want to loan kids money to go to college -- who cares? Why is the government doing this??

 

[Modbert]

Essentially this:

Putting the government in charge of all federal loans would save taxpayers an estimated $87 billion, according to the Congressional Budget Office. The CBO says the figure could be much lower, $47 billion, when administrative costs and market conditions are considered.

The money would boost Pell Grants for needy students, increasing the maximum grant by $1,400 to $6,900 over the next decade. It also would pay for a new college completion fund, community college reforms and more college aid for veterans.

"No student in this great country of ours should have to mortgage their future to pursue their dreams," said the bill's sponsor, California Democratic Rep. George Miller, chairman of the House Education and Labor Committee.
Yet the money also would be spent on things that don't help pay for college, such as construction at K-12 schools and new preschool programs.
And while the measure would increase Pell Grants, it would do nothing to curb college costs, which rise much faster than Pell Grants do.
As consumers, college students probably wouldn't notice much difference in their loans, which they would get through their schools. Broadly speaking, the bill doesn't do much to make loans cheaper or help pay them off.

Though hopefully this would be within the next few years. I currently have two loans with Sallie Mae for college, and all this essentially does is cut out the middle man who the Government would give money to, then they would give it to the college student for a fee.

The Pell Grant is very important to many college students including myself, so seeing that expanded faster would be nice. However, I would of liked to see more done about loans.

 

[Polk]

The Associated Press: House passes overhaul of college aid program

This is terrible. Really, really terrible. If I'm a private corporation and I want to loan kids money to go to college -- who cares? Why is the government doing this??

Banks can still offer personal education loans. The change removes them from giving out loans that are backed by the government. It's a good move to do so, since the current system is effectively the government paying them to issue loans. They don't assume any risk (since the loans cannot be discharged in bankruptcy and are backed by the government), but profit from the interest payments. All this bill does is cut out the middle man.

 

[geauxtohell]

I was glad it happened, and I just went through the loan process. Prior to that, I had to switch banks 3-4 times, because so many of them got out of the loan process when during the bailouts.