How Commercial Banks and Private Firms Are Dictating Who Goes To College (Newsday, via AlterNet)

[marmar]

How Commercial Banks and Private Firms Are Dictating Who Goes To College

By Nomi Prins, Newsday. Posted June 21, 2007.



The government can do more to make borrowing for college tuition a benefit, not a burden.

New York State Attorney General Andrew Cuomo addressed the U.S. Senate Banking, Housing and Urban Affairs Committee recently on his continuing investigations into the conflicts of interest in the student loan industry.

He concentrated on private loans, not guaranteed by the federal government -- recommending a code of conduct to keep lenders from receiving university "finders-fee" kickbacks.

He also suggested the federal government get involved. Easier said than implemented.

First, the federal budget has consistently slashed education funding. In his last budget, President George W. Bush even called for cuts in subsidies to companies participating in federally guaranteed student loan programs to force diversion of loan business to private programs.

Second, there wasn't a word of caution uttered on Capitol Hill when the nation's largest education lending institution -- Sallie Mae, which manages $150 billion in student loans -- decided to sell itself to Wall Street: to Bank of America, JPMorgan Chase and two private equity companies, to be exact.

Not that education lending privatization is something new. Sallie Mae was created in 1972 as a government-sponsored agency. During the Clinton administration in 1997, it began turning private, completing the task under the Bush administration in 2004. It was no coincidence that between 1997 and 2004 the amount of total college funding received from private institutions quadrupled.

On April 11, Sallie Mae came to an agreement with Cuomo: It would limit conflicting relationships (limit, not cease) and pay a $2-million fine. Five days later, the company announced its $25-billion sale, not a bad price for that payoff. Its stock has leaped 30 percent since, and not because it will make loans more affordable to more students. ......(more)

The complete piece is at: http://www.alternet.org/story/54802/

[VanPelt4IndSenate]

1. When I get elected I will make Indiana look at this, we have too.

My wife is finishing her 3rd masters and is about 100 grand in debt to Sallie Mae and I have three young children. This crap has to be stopped for out kids to survive. No jobs and no education = more military volunteers.