The Sea Change In Higher Education
Quietly and with little fanfare, the President has embarked on a lasting, substantive benefit to Americans seeking college loans. And because he'll seek budget reconciliation for it and the measure clearly cuts costs, he'll get it, and finally we'll have a common-sense initiative that saves money, helps kids and ends the myth that privatization always benefits the country.
President Obama's health-care goals may be garnering attention, but his higher-education proposals are no less ambitious.
If adopted, they could transform the financial aid landscape for millions of students while expanding federal authority to a degree that even Democrats concede is controversial.
At stake is a plan to expand the Pell Grant program, making it an entitlement akin to Medicare and Social Security. Key to the effort is a consolidation of student lending that would give the U.S. Department of Education a near monopoly over the practice -- a proposal that has mobilized the private loan industry, which lent $55.3 billion to 6.4 million students in the 2007-2008 school year.
Obama outlined his initiatives, which also include incentives for colleges to cut costs and to raise graduation rates, in the fiscal 2010 budget that Congress approved Wednesday, and Democratic leaders said they hope to make them law by October.
The private loan industry takes federal grant money, delivers it to kids, and takes their profit share off the top. There is absolutely no reason for them to exist. With the savings from ending the privatization of the student loan industry, we can make Pell Grant funding permanent and help millions of Americans go to college. Without affordability, our efforts to bolster education in this country, in particular higher education, will never succeed. Furthermore, unsustainable student loan debt burdens young people coming out of college, lowers their purchasing power and forces their decision-making, furthering the debt peonage society.
The leeches in the private loan industry think they've created something:
"The only reason they're doing this is the government can make a lot of money," said Kevin Bruns, executive director of the trade group America's Student Loan Providers. "Private-sector lending built this entire industry, and now the federal government has piggybacked off of it."
Uh, no. Unaffordable higher education costs built the industry. They forced students to get loans or forego college. And middlemen benefited for no reason for decades. The taxpayer need not fund this industry any longer.
Obama is ushering in a sweeping change here, and practically nobody is talking about it.