Obama vs Bankers
“They are gearing up for battle. So am I.”
President Barack Obama said he wouldn’t back down from a fight with the banking industry over his proposal to end the federal subsidies that go to private lenders in the student-loan market.
“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”
Obama said in brief remarks at the White House.
“They are gearing up for battle. So am I.”
The president said that the government needs to take a host of actions to ease the burden of soaring education costs on families, warning that out-of-control costs could widen the gap between the haves and the have-nots.
The administration’s February budget overview proposed ending the private Federal Family Education Loans program, which provides the majority of U.S. college loans. Critics say the program amounts to an unnecessary government subsidy, while the banking sector argues that eliminating it would force lenders out of the market, hindering competition and innovation.
Kevin Bruns, executive director of industry group America’s Student Loan Providers, said getting rid of the program will do more harm than good.
“The proposal does nothing to make college more affordable for the vast majority of students who require loans to pay for college”
Bruns said in a statement.
“It also puts the government in the awkward position of needing to make a profit on students to fund grant recipients.”
Obama said the only difference between direct government loans and loans under the FFEL program are that private lenders reap the benefit of a government guarantee when a student defaults on an FFEL loan.
“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,” Obama said. “Well, that’s a premium we cannot afford, not when we could be reinvesting that same money in our students, in our economy and in our country.”
According to the Congressional Budget Office, ending the subsidies would save $94 billion over the next decade.
“We have a student-loan system where we’re giving lenders billions of dollars in wasteful subsidies that could be used to make college more affordable for all Americans,” Obama said.
He outlined a series of other steps the White House has already taken or proposed to make it easier for people to get higher education or advanced training, including a tax credit to help with the cost of tuition, a reform of the Pell Grant system and a modernization of the Perkins Loan program.
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I don't know about everyone else, but this would help me out alot!
Kick ass Obama…
Agreed…
Glad this can help, stay subscribed for more great information.
Bankers are up to their old tricks, hoarding the taxpayers dollars and not lending, how are they a menace to society? Greed.
How right you are. Greed is how they are a menace to society.
How right you are. Greed is how they are a menace to society.
Interesting post. I have made a twitter post about this. Hope others find it as interesting as I did.