Spring Break
It's time to make higher education the priority
Kevin Hollinshead
Issue date: 4/27/09 Section: Opinion
Higher education costs continue to rise, and students are bearing more of the financial burden than ever before.
Many depend on financial aid, yet its availability is often a casualty of budgetary woes, and repayment terms have become more onerous.
At a time when global competition dictates an increased emphasis on education in the United States, it is time for the government to restructure the student financial aid industry.
President Obama is leading this charge with his proposal to increase college affordability while decreasing the cost to taxpayers.
Government coordination of student loans traces its roots to the National Defense Education Act of 1958, which saw the federal government distribute low-interest aid directly to schools for its students. This program was implemented after the launch of the Russian satellite Sputnik, driven by fears that Soviet schools had overtaken their American counterparts in math and science. Sound familiar?
This act was scrapped, however, in favor of the current system, the Federal Family Education Loan program, implemented in 1965. Rather than distribute aid via schools, this program grants subsidies to private lenders, including banks.
At a time when banks are receiving taxpayer-funded bailouts, it seems inappropriate that they are charging as much as 9 percent interest on student loans.
More importantly, there are no laws dictating when lenders can start requiring repayment. As a result, many lenders have started the greedy practice of requiring payments before the student actually graduates.
This is a bad practice from a practical standpoint. The current system necessitates that students start making payments before receiving their first paycheck, the main reason for attending college in the first place. This places an unreasonable burden on students.
The current system essentially positions banks and other lenders as middlemen, leading to wasted tax dollars in the form of administrative costs. This is where Obama's proposal comes in.
Many depend on financial aid, yet its availability is often a casualty of budgetary woes, and repayment terms have become more onerous.
At a time when global competition dictates an increased emphasis on education in the United States, it is time for the government to restructure the student financial aid industry.
President Obama is leading this charge with his proposal to increase college affordability while decreasing the cost to taxpayers.
Government coordination of student loans traces its roots to the National Defense Education Act of 1958, which saw the federal government distribute low-interest aid directly to schools for its students. This program was implemented after the launch of the Russian satellite Sputnik, driven by fears that Soviet schools had overtaken their American counterparts in math and science. Sound familiar?
This act was scrapped, however, in favor of the current system, the Federal Family Education Loan program, implemented in 1965. Rather than distribute aid via schools, this program grants subsidies to private lenders, including banks.
At a time when banks are receiving taxpayer-funded bailouts, it seems inappropriate that they are charging as much as 9 percent interest on student loans.
More importantly, there are no laws dictating when lenders can start requiring repayment. As a result, many lenders have started the greedy practice of requiring payments before the student actually graduates.
This is a bad practice from a practical standpoint. The current system necessitates that students start making payments before receiving their first paycheck, the main reason for attending college in the first place. This places an unreasonable burden on students.
The current system essentially positions banks and other lenders as middlemen, leading to wasted tax dollars in the form of administrative costs. This is where Obama's proposal comes in.
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