The gist of it is that GOP hopefuls want to repeal the legislation that removed "a cushy deal that gave private banks a percentage of government-loan funds for "administering" loans (they weren't actually lending the money). They performed their administrative duties both inefficiently and unethically. What's more, the banks took a portion of their vig and spent it on lobbyists in order to keep the pot sweetened for themselves."
In addition:
"The Republican repeal plan wouldn't just put tens of billions of public dollars in bank coffers. It would also raise the maximum amount a graduate is forced to pay each year from 10 percent to 15 percent of income. And it would extend the length of time before their debt is forgiven from 20 to 25 years."
I don't have an email address or phone number for you to call on this one, but perhaps a more basic question to start a discussion:
Can you trust a candidate to do what's right for Main Street, when they are funded by Wall Street? Can you trust a Representative or Senator to listen to doctors when they are funded by lawyers? This is an old question but more relevant than ever considering the ability of corporations to donate like people. What do you think? Will we ever get away from the hypocrisy?
My take on actual fiscal conservatives is similar to our take on quarks: we're really quite sure they exist, but that doesn't mean we can see them. Like the uncertainty principle at the quantum level - you can see the after effects, but if you actually try and observe one in action, it all gets fouled up. We "know" fiscal conservatives exist - my dad, for example, or the Tea Party in the most general sense. But when we actually look to see one in practice, well . . . suddenly things become a lot more difficult.
ReplyDeleteWhat is the actual bill that we're talking about here? I also wanted some clarification- I thought that student loans were given by private banks and guarenteed through the federal government (who paid the interest until six months post graduation). If this is incorrect let me know how the process works.
ReplyDeleteYou can get student loans through a private bank, but a lot of us get stafford loans from the government. All of my loans (enough to buy a pretty nice house) are either subsidized or unsubsidized stafford loans. You get these by filling out a FAFSA or free application for federal student aid. The government used private banks to administer the loans, but it wouldn't actually be the bank lending its money. I will look up the actual bill and get back to you.
ReplyDeleteI keep reading about Stafford Loans that they're federally guaranteed loans- meaning the money come from the banks but the Government guarentees that is the student defaults they will pay the bank the remaining amount (similar to a VA Home Loan). The Government does pay the interest on the subsidized loans, but the banks are still funding it initially. Are we sure this legislation isn't there to give the banks incentive to keep providing student loans since they've become extremely cautious in their lending practices.
ReplyDeleteI have several stafford loans and have never dealt with a bank. This link says they are funded by the "U.S. Department of Education through the Federal Direct Student Loan Program (FDLP)." I also think that I read somewhere that the money for these loans sometimes comes from the same place welfare and WIC come from, but don't quote me on that. http://www.staffordloan.com/stafford-loan-info/
ReplyDeleteI haven't had a chance to look up which bill it was but I will as soon as I get more than a few minutes. :)
Here this might help too, from the same website: In the past, the direct student loan program had a sister named the Federal Family Education Loan Program (FFELP). This alternate lending organization was designed to allow private banks to originate federal loans, with the funds guaranteed by the government. FFELP was eventually closed and eliminated as a result of the Student Aid and Fiscal Responsibility Act of 2010.
ReplyDeleteThough, again I haven't dealt with a bank and i get my statements on a .gov website.
Ok, I looked here http://ifap.ed.gov/sfahandbooks/attachments/0304Vol8MasterFile.pdf and figured out that we're both right because there are two different programs. I'm definitely interested in the bill, because on one hand it may have something to do with the private lender FFEL program...but if it's about the Direct Loan then there could definitely be a kickback issue.
ReplyDeleteFound the legislation! What they're ending isn't a true subsidy- they'd originally set up the student loan program in 1965 to be funded by private banks and the government would pay the interest on the loan until the student was six months out of college, and would guarentee repayment on the loan if the student defaulted- so the money being loaned belonged to the banks. The Direct Student Loan programs began in 1992 where you get your money directly from the federal government. The issue though is that the funding is only there for five years and Congress underestimated the actual cost of Pell Grants in the new legislation. So yes, the new legislation removes the middle man and keeps banks from making money off interest payments, but now the money for student loans will be completely at the whim of Congress and the budget. On the old system, you could always get a bank to provide money because they had 4 years of guarenteed interest payments anda guarentee of repayment. In no way were they making money though off "administering federal money". http://ezinearticles.com/?Pending-Legislation-Will-Overhaul-Student-Loans&id=2999220
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