Six Democratic Senators Poised to Kill Student Loan Reform
by: Chris Kromm | Facing South
Graduating from college is a great feeling. Not so great: being saddled with $23,200 in student loans, the average debt owed by graduates of the class of 2008, according to the Project on Student Debt.
Reforming the for-profit student loan system, which allows finance giants like Virginia-based Sallie Mae to make virtually risk-free returns thanks to government subsidies, was a top priority of President Obama. His idea, supported by most Democrats, was to take out the middle-man: Instead of subsidizing private lenders, the feds would completely take over origination of student loans.
The result: The Student Aid and Fiscal Responsibility Act, which the Office of Management and Budget estimated would save over $80 billion over 10 years (critics point out the number is inflated, because it didn’t include money lost from defaults; but that’s neither here nor there, because the government currently absorbs private losses anyway). Savings would be plowed back into Pell Grants — much easier on students on the long-term — and other higher education initiatives.