Help students, not lenders
The private student loan industry has launched a fierce lobbying effort to protect its version of corporate socialism — federal subsidies that allow the industry to profit by originating and servicing publicly funded education loans virtually risk free. Unfortunately, the industry's cynical campaign appears to be working.
The Obama administration's plan to end the subsidies and have the Department of Education loan money directly to students cleared the House but is stalled in the Senate. The plan has been speciously branded a "government takeover," an alarmist label that has lawmakers cowering. That's too bad, because the plan is a sound one.
Cutting out the middlemen would save about $80 billion over 10 years; the money would be used to expand Pell Grants and other assistance for low-income students. And the need is greater than ever.
At the University of Hawai'i, both enrollment and demand for financial assistance are growing. More than 13,000 students received $45 million in Pell Grants as of Jan. 19. That's up from $28 million for all of last year. UH-Mānoa had received 20,608 applications for federal assistance as of Feb. 2; two years ago, the number for the entire year was 15,835.
More and more, a college education is a prerequisite to a successful career. And with tuitions rising, it's harder for poor and middle-class students to gain a place on college campuses.
Public funds to help them should not be skimmed off by private companies like Sallie Mae, which spent $3.5 million in lobbying last year. If Sallie Mae and other companies want to compete in the student loan market, let them do so — with their own money, and at their own risk.