Poor bankers.
Just as they’re catching flak for everything from the global financial crisis to high credit card interest rates, along comes the president and adds another grievance.
Barack Obama, it seems, thinks using banks to dole out federal college loan funds is a waste of taxpayer money.
So on Friday he discussed his scheme to boost the flow of federal dollars to those looking to get a higher education.
To pay for it, he said, “we’re going to eliminate waste, reduce inefficiency and cut what we don’t need to pay for what we do.”
Look out banks.
Obama said there are two kinds of federal education loans — direct loans and Federal Family Education Loans.
Under direct loans, tax dollars go directly to help students pay for tuition, “not to pad the profits of private lenders,” he said.
But under the FFEL program, “taxpayers are paying banks a premium to act as middlemen — a premium that costs the American people billions of dollars each year,” he added.
The loans are federally backed, so the banks don’t even have to take on significant risk.
Cutting out the middleman, Obama said, could save the government tens of billions of dollars that it could use to help more students.
But making that change won’t be easy, he said.
“The banks and the lenders who have reaped a windfall from these subsidies have mobilized an army of lobbyists to try to keep things the way they are.”
“They are gearing up for battle. So am I,” Obama said. “For those who care about America’s future, this is a battle we can’t afford to lose.
For more Reuters political news, click here.
Photo credit: Reuters/Larry Downing (President Obama discusses federal education programs in front of a portrait of George Washington)
Trackback
30 comments so far
Previous | 2 | 1 | Next
Remember Animal Farm. Napoleon is going to take your puppies and they will come back to bite you. A student loan bring with it servitude.
- Posted by Foxwoodobama quoted churchill recently,perhaps he should have added this as well, churchill,”anyone in their twenties who is not a liberal,has no heart,but anyone in their forties who is not a conservative has no brain”i am so pleased that the democratic party have a large majority,and have people like dodd,franks,and pelosi at the helm.this is going to be a most enlightening time for the young people who are joining the voting process,with the same expectations as there was at the beginning of the jimmy carter presidency.they will then be more willing to except the truth that the democratic congress put pressure on the lending institutions to discard sensible safeguards and lend to people who normally would not have qualified,
- Posted by brian leeTC, you like Rasmussen polls? How about THIS one–
Rasmussen Reports national telephone survey-
Just 21% of GOP voters believe Republicans in Congress have done a good job representing their own party’s values.
Sixty-nine percent (69%) say congressional Republicans have lost touch with GOP voters throughout the nation. These findings are virtually unchanged from a survey just after Election Day.
Among all voters, 73% say Republicans in Congress have lost touch with the GOP base.
Seventy-two percent (72%) of Republicans say it is more important for the GOP to stand for what it believes in than for the party to work with President Obama. Twenty-two percent (22%) want their party to work with the President more.
In other words, the Republican base, by a large margin, is unhappy with their party’s political leadership for not being right-wing ENOUGH. Which is what their real leadership, the Limbaugh National Committee, has been saying.
Unfortunately for you, TC, the electorate at large has a distinctly different outlook. They strongly want Republicans to cooperate with President Obama, and strongly believe they are not making a good-faith effort to do so, either. Republicans want to fight, but this not a fight you are winning.
- Posted by getplaningtc the liberal ideology always flounders because it has an inherent flaw,and that is human nature.if there is no sacrifice there is no appreciation.this will probably sound very negative ,and will be dismissed out of hand by eric h and get planning,but as someone who was a ex liberal government representative,i left the fold because i was so sick of the ungratefulness of people that i saw repeatedly hold they hand out.entitlement is like a decease and this is the rock on which obama is going to perish,he has raised expectations so high that people are going to get something for nothing and when the promises don,t materialize they will turn on him.
- Posted by brian leegetplaning. Perhaps you missed the point that Obama in three months has spent more than any other president in history…combined.
You can’t spend you way out of this “crisis” without it coming back to haunt us. Saving 4 billion dollars a year after spending 3 trillion in 3 months? Suppose you tell us how saving 4 billion dollars a year (it is a lie since Obama plan is the grand giveaway) will really be savings at all? It won’t, so don’t even bother trying to answer, even economists can’t answer that question. So I can’t expect a far left progressive liberal to do it either.
Also, in case you haven’t noticed, Obama has said if students take government funds, they will do service for the government. That is a fact and it is becoming obvious you really only care about demonizing republicans because you really have no answers for the bad policies the far left of the democrat party are trying to force down our throats.
Most of the citizens of the United States want less government and lower taxes. Look at the Rassmussen polls in case you don’t believe the truth.
Anyway, the government taking over student loans is a very bad idea and will lead to higher taxes. Fact!!
- Posted by TCOh, yes, TC, there are lots of well thought out comments on this thread.
“All so he can “force” our people who take government funds to work for him” isn’t one of them.
This is one of those typical situations in which Democrats want to spend less money and make a federal system more efficient, and conservatives are opposing them. The Obama administration wants to save $4 billion a year by ending subsidies to lenders. The White House and Department of Education have come to the conclusion that there’s no point in laundering loans through lenders, who make a guaranteed profit, for no reason.
I find it hard to understand how saving $4 billion a year will result in higher taxes, perhaps you can explain that to us? I was also wondering how you come to the conclusion that underwriting college loans at favorable terms to qualified applicants is giving people “something for nothing?”
- Posted by getplaninggetplaning. Go ahead and bad mouth the republicans again. There are a lot of well thought out comments on why this plan is bad and I didn’t see anyone falling to the “those republicans…”.
The bottom line is this, it won’t be cheaper to have the government pay for college. Anytime we use government funds (and many say the government running anything is bad for our future)it will result in higher taxes. That’s what is going to happen and it is happening right now. Low taxes? No, not true.
I know I am not using any government or private money to send my daughter to college. So it isn’t costing the government on red cent. But then again, I planned for it and am now reaping the rewards because I lived within my means to ensure she would have a chance to attend college. I agree with anyone how says hard work is the foundation of this country and you pay your own way by working hard.
Giving people something for nothing, is going to cost us dearly in the end in higher taxes. Besides, where is the money going to come from? Obama in just 3 months has spent more than any other president in history (yes, putting them all together). This man is a trainwreck and our kids are going to pay the price for his big government giveaways (which aren’t really giveaways. We are going to have to pay the piper and it will be a doozy).
- Posted by TCThe fact is, the Obama administration’s proposed reforms of the student-loan system are a no-brainer — they streamline the process, save money, and help more people go to college. Republicans, however, remain staunchly opposed, on purely ideological grounds.
- Posted by getplaningClinton compromised with Republicans in the ’90s and created a level playing field. Colleges were allowed to choose between direct government loans and guaranteed private-sector loans. Private plans lost, BIG TIME, for quite a while. Eventually, however, the tide turned, and colleges shifted away from the public plan. Was it because the private sector was superior? No, it was because the private sector was bribing college-loan administrators. Lenders plied college-loan officers with meals, cruises, and other gifts. Some loan officers were given lucrative stock offers. Columbia’s director of undergraduate financial aid purchased stock in Student Loan Xpress — which became one of that school’s preferred lenders — for $1 per share and sold it two years later for $10 per share. Some lenders offered millions to the universities themselves to drop out of the direct-lending program.
The the vast private profits made available by guaranteed loans is what drives Republicans’ opposition to Obama’s reforms to the student loan system. Nothing more.
its a good decession from Americas best president.the education in America is too costlier, as it hurts many talented students, by this new decesion will help lot of students and it also helps to the government.
——————————————————–
Pradin
\office politics uk
- Posted by PradinThis doesn’t surprise me. I am sure it will be quite well received these days. Why not allow the all wonderful federal government more control over our lives? The education system in America stinx anyways. It’s a “jobs” project that’s over priced, over-funded, and many times produces students who are quite under par in terms of their knowledge and experience in their respected fields. Like everything the federal government gets ahold of they screw up. And the more they screw it up the more it costs us all. Sounds like a great idea!
- Posted by jason