Student Loan Aid Is Test for Treasury: Groups Urge No Bailout Benefit To Private Lenders

[DeepModem Mom]

Source: WP, Page One

Student advocacy groups are urging the Treasury Department to prevent a new $200 billion consumer-lending program from benefiting private student lenders, which they say are largely unregulated and prey on students with risky, high-interest loans.

The program, announced this week and developed by the Treasury and Federal Reserve, is not aimed specifically at the student loan market. Its much broader goal is to encourage lending to consumers -- including car loans, credit card debt and student loans -- as well as help the financial system by increasing liquidity in the credit markets.
But groups including Consumers Union, the nonprofit group that publishes Consumer Reports magazine, and the American Association of Collegiate Registrars and Admissions Officers say the money will also help prop up private student-loan providers, which often offer high and variable interest rates but not the consumer protections guaranteed under the federal government's loan programs.

Private student loans, which were a primary focus of a nationwide conflict-of-interest scandal last year, are the fastest-growing segment of the $85 billion-a-year student loan market....

Read more: http://www.washingtonpost.com/wp-dyn/content/article/2008/11/27/AR2008112702570.html?nav=most_emailed

[IndyOp]

1. If we can't send students to school for free then the least we can do is to fund

their loans at a low interest rate, with a simple to understand, flexible plan. Many of the current private loans are absurd.

[lovuian]

14. Agree

they want this kids educated and skill give them low interest loans

[IndyOp]

2. A positive note - the Exec Director of Project on Student Debt is working on Obama's transition team

The estimated 8 percent of undergraduates who take out private loans often are swayed by misleading and deceptive advertising, then saddled with interest rates two or three times as high as federal loans, according to the Nov. 19 letter to Paulson, also signed by the U.S. Public Interest Research Groups, U.S. Student Association, National Consumer Law Center and the Project on Student Debt, whose executive director is working with President-elect Barack Obama's transition team on education issues. The Treasury has not responded to the letter.

:D

[fascisthunter]

4. I Sure as Hell Could Use a Bit of Help...

the variable interest rates are killing me. How'd that happen? I went into default because I couldn't find a job that could pay back the monthly payment on two private student loans. Well, damn.... I had to renegotiate and guess what happened when I did?

They took my fixed loan and made it into a variable interest loan. I really wish I had good financial advice at the time, because I didn't. How nice of them to have helped me by sticking me in a larger hole.....

[Psephos]

13. Wow. That seriously blows.

It's a bit like what the credit card companies do when someone is late and struggling to pay their bill...they jack the interest up to 29% and start adding late fees and penalties. Because that's sure to turn the situation around. :eyes:

I hope more sensible treatment of student loans is in your and everyone's future.

[AnneD]

17. My daughter is in college now.....

and I am always talking to her about this. I have cautioned her fully on this and she has said she will run this by me before she signs on the dotted line.

These private student loans will do to education and the next generation what they have done to the housing industry-mark my words. They need to be strictly regulated as they are making our children into wage slaves.

[fascisthunter]

3. How Nice of Them... Never help the little guy... bailout the billionaire thief

who knew exactly what they were doing..... it's always the little guy's fault.

[NoAmericanTaliban]

5. Another example how privatization hurts the consumer

The gov't used to give out these loans for a whole lot less overhead and interest. They need to go back to that system. K & R

[Duppers]

6. 60 min. did a expose on these rip-offs

some years ago.

[creeksneakers2]

7. They'll need to provide an alternative

Federal student loans have maximum caps that are too low to cover medical school and even law school. Those shortages are usually covered by students with private student loans. I don't want anybody to be bailed out at all. But if there are no more private loans, the government ought to raise the student loan caps for medical students at least.

[OhioChick]

12. You're right.

They'll have to raise maximum caps for grad students or they'll never be able to graduate.

[Psephos]

15. There's another way...

Tuition increases have outstripped inflation by double or triple every year for fifteen years. Student loans provide the money for universities to increase administrative staffs, increase benefits, fund capital programs, everything except improve the classroom experience. Courses are taught to undergrads by low-wage graduate assistants, or in lecture halls holding hundreds of people.

The costs are out of control, and student loans that leave grads saddled with a mortgage payment but no house have fueled those costs.

It's time to rein in tuition severely, and return universities to their primary role: providing great classroom experiences and developing critical skills. Time to stop wrecking young people's lives with crushing amounts of debt.

http://studentloanjustice.org/

[OhioChick]

16. I completely agree 100%.

I'm surprised this article has gotten such little attention.

[pattmarty]

8. This whole banking/lending system needs to be junked...............

......and started over from scratch. I was and still am against the initial "bailout" package and still am. There was NO oversight at all and with this administration whatever the law reads they just say "fuck it" and do whatever they want anyway. THE SYSTEM NEEDS A COMPLETE FUCKING OVERHAUL.

[Selatius]

9. The push has been to move students into the private sector by capping public loan amounts.

I don't know about other states, but the maximum a student in my state can receive in terms of federally backed student loans is 25,000. If it's the same standard across the country, God help you if you live in a state where public tuition runs 10,000 or higher for each year.

[Barbara2423]

10. This is personal for me- Sallie Mae is the Mob

I co-signed a student loan for my daughter who defaulted on the loan. By the time I found out she had defaulted on the loan (a couple months) they had added thousands of dollars on the loan. I explained the situation and asked if they could forgive the interest on the loan, because I would start paying the loan - I was told "NO". The people servicing the loans are from another country who can barely speak english and the entire situation has been difficult. Why are they not processing these loans in America, I know many unemployed Americans who would appreciate that job. Can you imagine how pissed off I am when the US Government gave Wall Street Billions of dollars that I have to pay for. One report was each American will have to pay $2,000.00 to bail out Wall Street. That is the amount I wanted them to forgive in interest. You can probably tell I am mad as HELL.

[northernlights]

11. I'm in med lab tech school

in a community college-type program through out state university. It's pre-med sciences the 1st year, and then clinical science the second year.

I got $8500 in stafford loans this past year -- they finally raised it to 10,500 when I asked them about private loans.

I go part time. After tuition and books, that gives me $4,000/year to live on. If I went full time there would be no living expense at all.