Students Saved by Loan Overhaul

What a landmark day in Congress. After years of the government subsidizing banks that give unfortunate interest rates and basically screw over young people we have finally won. Billions of dollars was spent to lobby members of Congress to stop this. Not surprisingly Republican members overwhelmingly refused to take the side of the people over the big banks with a unanimous vote of 56 to 43 in the Senate and 220 to 207 in the house.

According to the New York Times:

"Democrats have long denounced the program, saying it fattened the bottom line for banks at the expense of students and taxpayers.

“Why are we paying people to lend the government’s money and then the government guarantees the loan and the government takes back the loan?” said Representative George Miller, Democrat of California and chairman of the Education and Labor Committee.

Democrats celebrated the legislation, a centerpiece of President Obama’s education agenda, as a far-reaching overhaul of federal financial aid, providing a huge infusion of money to the Pell grant program and offering new help to lower-income graduates in getting out from under crushing student debt. Still, the final bill is less ambitious than the original proposal."

The youth community rejoiced, particularly those who work tirelessly to engage government about the overwhelming cost of higher education to young people who now graduate with over $22,000 in debt and into a job market with a nearly 20% youth unemployment rate.

Campus Progress Senior Advocacy Associate Pedro de la Torre III released a statement touting the advocacy they did with their outreach site StudentsOverBanks.org which released an ad that aired on CNN, MSNBC, and during Comedy Central’s "The Colbert Report."

“Today Congress took action to eliminate an inefficient and corrupt student loan system and finally put the interests of students over banks. Young people overwhelmingly support health care and student aid reform, and are heartened to see that the change they voted for has become a reality.”

“Today will go down in history as the day when the federal government chose to invest in college students over bank profits,” said United States Student Association (USSA) President Gregory Cendana. “By ending wasteful subsidies to private lenders and directing over sixty billion dollars of savings into financial aid programs, this legislation will ensure that millions of low-income and traditionally underrepresented students have access to higher education.”

Rich Williams, Higher Ed Associate at the US PIRGs was similarly enthusiastic:

"The federal Direct Loan program will increase student protection from aggressive private loan marketing. Lenders used inducements to convince financial aid offices to push private student loans on students and families. These private loan products are more akin to credit cards with variable interest rates as high as 18% and limited repayment options and benefits. Originating loans from the federal government will give the time students need to assess their financing options in a fair setting.

“This legislation helps renew the promise of student aid programs for the tens of millions of students who rely on grants and loans to achieve a college education. We applaud Congress for prioritizing the Pell grant program, and education, and we look forward to President Obama’s final signature.”

These groups should be commended for their advocacy and their hard work to bring a grassroots force to back up members of Congress who took a stand for our nation's youth. Congratulations to students across the country who will have things a little bit easier in the future.