This is good news.
Banks on verge of losing student lending business
By JIM KUHNHENN, Associated Press Writer Jim Kuhnhenn, Associated Press Writer 1 hr 2 mins ago
WASHINGTON - Banks and other private lenders are about to lose a $70 billion-a-year student loan business, part of a massive overhaul of college assistance programs that has received an unexpected boost from President Barack Obama's health care success.
Industry lobbyists have watched helplessly as Democrats and the Obama administration appear on the verge of shifting student lending from private banks to the federal government.
Under the measure, private banks would no longer get fees from the government for acting as middlemen in loans to low- and middle-income students. With those savings, the government would increase Pell Grants to needy students and make it easier for workers burdened by student loans to pay them back.
The bill would mean the loss of billions of dollars in business to student lending giant Sallie Mae as well as large financial institutions such as Citigroup, JPMorgan Chase and Bank of America.
Private lenders have conducted an all-out lobbying effort against the bill, arguing it would cost thousands of jobs and unnecessarily put the program in the hands of the government.
"The industry plays a role in maintaining competition and choice," said Scott Talbott, the chief lobbyist for the Financial Services Roundtable, an industry group. "If the government is the only lender, there is no choice." (LESS CHOICE, BUT MORE EQUITY MAYBE? AND LESS PROFIT FOR THOSE POOR LITTLE IMPOVERISHED INSTITUTIONS LIKE CITIGROUP AND BANK OF AMERICA.)
Under the college lending program, financial institutions provide college loans at low interest rates, and the government guarantees the loans in the event of default and subsidizes private lenders when necessary to keep rates low.
"This is a case of corporate welfare, a giveaway to bankers and to Sallie Mae," said Sen. Tom Harkin, D-Iowa.
Republicans portray the direct lending plan as part of a pattern of government takeovers. Citing the health care bill and the government's bailout of the financial and automobile industries, Sen. Judd Gregg, R-N.H., said the student loan bill "is the fourth major step forward in the push to drive this country down a road towards a European-style government." (OH STUFF IT YOU ASS-HAT. I'M SO SICK OF THIS "EUROPEAN / SOCIALIST GARBAGE REPUBLICANS ARE SPINNING.)
The bill would see $61 billion in savings over 10 years from the switch to direct government lending. It would pay for Pell Grants and provide more than $4 billion to community colleges and historically black colleges. It also would direct about $19 billion to reducing the deficit and offsetting expenses in the health care legislation. (OOH, BEWARE THE "EUROPEAN VALUES" OF INCREASED FUNDING FOR LOW INCOME AND MINORITY STUDENTS AND REDUCED DEFICITS).
In addition, beginning in 2014, college graduates would be allowed to devote no more than 10 percent of their monthly income to repay their student loans. The current cap is 15 percent.
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Just think, in one week a victory for healthcare reform and student loan industry reform. *fistbump*
By JIM KUHNHENN, Associated Press Writer Jim Kuhnhenn, Associated Press Writer 1 hr 2 mins ago
WASHINGTON - Banks and other private lenders are about to lose a $70 billion-a-year student loan business, part of a massive overhaul of college assistance programs that has received an unexpected boost from President Barack Obama's health care success.
Industry lobbyists have watched helplessly as Democrats and the Obama administration appear on the verge of shifting student lending from private banks to the federal government.
Under the measure, private banks would no longer get fees from the government for acting as middlemen in loans to low- and middle-income students. With those savings, the government would increase Pell Grants to needy students and make it easier for workers burdened by student loans to pay them back.
The bill would mean the loss of billions of dollars in business to student lending giant Sallie Mae as well as large financial institutions such as Citigroup, JPMorgan Chase and Bank of America.
Private lenders have conducted an all-out lobbying effort against the bill, arguing it would cost thousands of jobs and unnecessarily put the program in the hands of the government.
"The industry plays a role in maintaining competition and choice," said Scott Talbott, the chief lobbyist for the Financial Services Roundtable, an industry group. "If the government is the only lender, there is no choice." (LESS CHOICE, BUT MORE EQUITY MAYBE? AND LESS PROFIT FOR THOSE POOR LITTLE IMPOVERISHED INSTITUTIONS LIKE CITIGROUP AND BANK OF AMERICA.)
Under the college lending program, financial institutions provide college loans at low interest rates, and the government guarantees the loans in the event of default and subsidizes private lenders when necessary to keep rates low.
"This is a case of corporate welfare, a giveaway to bankers and to Sallie Mae," said Sen. Tom Harkin, D-Iowa.
Republicans portray the direct lending plan as part of a pattern of government takeovers. Citing the health care bill and the government's bailout of the financial and automobile industries, Sen. Judd Gregg, R-N.H., said the student loan bill "is the fourth major step forward in the push to drive this country down a road towards a European-style government." (OH STUFF IT YOU ASS-HAT. I'M SO SICK OF THIS "EUROPEAN / SOCIALIST GARBAGE REPUBLICANS ARE SPINNING.)
The bill would see $61 billion in savings over 10 years from the switch to direct government lending. It would pay for Pell Grants and provide more than $4 billion to community colleges and historically black colleges. It also would direct about $19 billion to reducing the deficit and offsetting expenses in the health care legislation. (OOH, BEWARE THE "EUROPEAN VALUES" OF INCREASED FUNDING FOR LOW INCOME AND MINORITY STUDENTS AND REDUCED DEFICITS).
In addition, beginning in 2014, college graduates would be allowed to devote no more than 10 percent of their monthly income to repay their student loans. The current cap is 15 percent.
~
Just think, in one week a victory for healthcare reform and student loan industry reform. *fistbump*