Sallie Mae just recently made an announcement that in the fourth quarter which just ended Dec 31, 2009 it reached a core earnings basis of $249 million. Chief Executive Albert L. Lord also hoped that earnings in 2011 will be higher than 2010. I guess it is ‘bravo, Sallie Mae’ – while America’s future is struggling to gain higher education, somebody is swimming in profit for it.
In the meantime, Huffington Post Investigative Fund published a very interesting article which is the first of a series of articles regarding the student loan reform. Back in February 2009, Obama announced his plan to overhaul the student loan industry and bring in a student loan reform which seemed like a hopeful relief for students. The plan caused dozens of nonprofit lenders to fear that their business was doomed. But apparently, Huffington Post Investigative Fund has dug deep and found that the same nonprofit lenders are now on the verge of winning a protected position in the higher-education business.
Read the whole article and their investigation here.
The Senate Health, Education, Labor and Pensions (HELP) Committee is considering the Student Aid and Fiscal Responsibility Act which would eliminate the Federal Family Education Loan (FFEL) program. FFEL loans are federally subsidized and make up approximately 80 percent of the student lending industry.
In the 2009-2010 fiscal year, 14.3 million of the 17.5 million student loans were federally subsidized according to the Department of Education. Under Obama’s plan to overhaul the student loan industry, the government would consume the entirety of this industry. In 2009-2010, this is a total of $103 billion.
Read here about Obama’s plan to nationalize student lending.
In the end we may wonder, what exactly is the hidden agenda behind the student loan reform?
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2 Responses
It is not possible to “nationalize” an industry which already subsists almost solely on government handouts.
FFEL is a program which provides government guarantees for private student loans. These guarantees count against the deficit, provide a subsidy for banks, and harm students, since unlike any other consumer debt, the loans cannot be discharged in bankruptcy. There is nothing private about the industry now. Reform would simply force the banks to contract to provide services to the government, cutting their profits.
Posted on January 24th, 2010 at 11:36 am
It’s really unfortunate that there is such a dramatic increase for student’s tuition. As if the students weren’t already dealt with huge loans after they graduate, now they will also be met with fewer job opportunities coming out of college because of the recession.
Posted on January 27th, 2010 at 10:57 am
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