Sunday, April 26, 2009

Student loans: Cutting out the middle man

A proposal by President Obama from White House website:


Cut the middle man out of student lending by shifting federal support entirely to the Direct Loan program, and away from the program that cushions bank profits. The proposal follows on significant action already taken: together, the American Recovery and Reinvestment Act (ARRA) and the President’s Budget provide about $200 billion in Pell Grant scholarships and tax credits over the next decade, including giving millions of families up to $2,500 each to help pay for college. The Middle Class Task Force also held their most recent meeting going in depth into precisely this issue of college affordability.

He once again explained that he was not motivated by any ideology from the right or the left, but by simple common sense:

In the end, this is not about growing the size of government or relying on the free market -- because it's not a free market when we have a student loan system that's rigged to reward private lenders without any risk. It's about whether we want to give tens of billions of tax dollars to special interests or whether we want to make college more affordable for eight and a half million more students. I think most of us would agree on what the right answer is.

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