Univ. bashes loan plan
The Obama administration’s recent education budget proposal intends to make college an affordable reality for American students. But Director of Student Financial Services Caesar Storlazzi criticized the plan in an interview Monday, saying parts of the proposal could create problems for students at Yale.
The proposal’s most controversial point calls for the elimination of private loans in July 2010, requiring college students instead to borrow directly from the federal government. Yale — unlike some of its peer schools, such as Harvard and Brown universities — currently offers...
Great, big government is going to block my loans. Yes we can rot in a socialist paradise!
Private loans ought to go. The government-sponsored private loan system has been inefficient and wasteful, and features higher interest rates than federal loans anyway. Yale students won't miss private lenders and their "better service," and taxpayers will get a needed break as well. Win-win.
The graphic attached to this article says that only 10 percent of Yale students currently have student loans? There's no way that's right...
More money for the "Educational Industrial Complex." The only prices that rise faster then gas prices are tuition costs. This administration spends like Druken congressmen. (drunken sailors are eventully stopped by the Shore Patrol)Sallie Mae will end up in the same boat with its siblings Fannie and Freddie the taxpayers will lose the friends of Barak, Barney and Chris will get richer the schools will bloat with easy money and in the end the taxpayers will get a minus return.
TR is correct.
Mortgages and Student Loans were previously low risk.
Mortgages (pre-securitization) were underwritten by local bankers with a knowledge of the housing/employment market.
Student loans for college degrees previously guaranteed a massive payoff for the recipients.
Both of these standards no longer hold.
Mortgages are just another volatile piece of debt.
Student loans are now burdens carried to your grave, weighing down your credit score, and most college degrees aren't worth the tuition. (Yale/Ivies excepted)
Sallie Mae will fail.
We will bail them out.
Tuition costs will continue to rise as a symptom of inflation.
Private loans were the best way to go.
The government has soiled too much already.
As a recent Yale graduate with student loans, I can say that there is nothing cutting edge about private loan servicing. With universities selecting "preferred providers," there is often little choice for students to begin with.
Case in point: The servicer of my Yale loans required me to mail them a handwritten form to set up automatic deductions from my bank account. This should easily be doable online, but the lender has not invested in this technology because they are protected from competition.
Because students are often already restricted to a small set of lenders, lenders have little incentive to offer great service (as opposed to say,savings banks). Student lenders have poor service and antiquated technology because they control mini-monopolies with individual colleges and state university systems.
Federal servicing of loans is a win-win for everyone.
Storlazzi and Burns, the dynamic duo, they are afraid that service may be compromised?They say competition is needed, since when is two forced options competition? The only thing that will be compromised is the perks each player receives!
my med school was involved in the direct loans program from the fed govt. their website is excellent, user friendly, and responsive. if anyone in fin aid is an aggressive sallie mae promoter i'd wonder about a conflict of interest.
I can't believe Yale is still participating in the private student loan racket. The "service" is a sham, and many journalists have exposed the private student loan industry as a racket that operates by taking subsidies from the government in the millions, then spending that money marketing their loans, which are no better than the government's own, to students and (especially) to administrators, who can steer students their way.
Also, this YDN story was very one-sided. Only in the last paragraph do you mention anybody in favor of Obama's proposal, and you don't even quote them? Please.
Its not about who makes the loans its the loan money that has caused/allowed tuitions to go through the roof. With the U.S Mint and a government that can't say no! There is no market balance to bring down the price.
Administering student loans from one source can detect and analyze data on abuses, especially patterns of institutional exploitation of vulnerable low-income students with few family resources.
It's astounding that some Yalies offer enthusiastic and unquestioning support for Obama's plan to create one of the largest government monopolies in history. This is an $80 billion gamble that without any competition the Direct Loan program will continue to offer satisfactory service and invest in innovation.
Few programs run by government contractors, which the DL is one, are centers of innovation and consumer convenience. Many experts believe the only reason the direct loan program is half-way decent is competition in the form of the federal guaranteed student loan program existed.
Finally, reports of the lender-based program's waste, inefficiency and corruption are greatly exagarated, usually by direct loan advocates attempting to demonize lenders and financial aid offices and cut off debate.
It works, of course. You don't need a Yale degree to figure that out.
This is a horrible idea.
Government education loans are the #1 reason for the EXPLOSION in college tuition over the past 2 decades.
It has had an incredibly inflationary effect. It's so textbook, like Econ 101- more cheaps dollars chasing after limited goods (college degrees).
Cut out the government, and you will see students more carefully weighing whether college is truly their best option, and you will see a readjustment in tuition costs.