Big Banks Scam Students Out of Opportunity
by The Opportunity Agenda, Tue Feb 16, 2010 at 04:20:39 PM EST
The American Dream is perhaps our most powerful and enduring story. Through booms and busts, we insist (oftentimes in the face of overwhelmingly contrary evidence) that anyone who is willing to work hard can succeed. To the extent that the American Dream is a reality, it is due in large part to our secondary education system and the patchwork of loans, scholarships, and grants available for students. As sky-rocketing rates of student debt show us, though, these tools for expanding access to secondary education need retuning. There is talk of reform in Washington but, in a story that has become all too familiar, large financial institutions are standing in the way, protecting their profits at the expense of young people’s hopes and dreams.
Recognizing that financial barriers to secondary education undermine mobility, our federal government offers a number of direct programs for students from lower-income backgrounds, such as Pell grants and Perkins loans. Additionally, the government offers subsidies to banks that offer student loans, as well as guarantees on those loans. It is the latter program, in which banks are essentially being paid by taxpayers to offer risk-free loans, that has come under recent scrutiny. A bill that passed the House last September, the Student Aid and Fiscal Responsibility Act, would gut the subsidy system, reinvesting the projected $87 billion in savings over ten years in more efficient programs, like Pell and Perkins, as well as other important educational initiatives, such as early childhood reform. As the bill works its way through the Senate, though, Sallie Mae and other major lenders are applying pressure to the many politicians whose campaigns they subsidize, hoping to either kill it or render it toothless. These lenders, it seems, have no more shame than the Wall Street banks that take massive bailouts and then pay out massive bonuses.
Preserving the American Dream means preserving access to secondary education for all students. If we do not work to eliminate the subsidy boondoggle, we risk undermining public support for the entire system of student grants and loans, making the opportunity to learn one more victim of the big banks’ greed.
Read more at The Opportunity Agenda website./