The savings that would result from a move to direct lending are substantial. Money would go directly to the neediest college students and to community colleges, a sector that is swamped and struggling in this recession. This investment in human capital is in so many ways a no-brainer-- it'll generate a large return, benefit folks in nearly every community in the country, and support the American dream.
Of course, the bankers will have none of it. In the current system they draw profits on the backs of students, lending them money and selling those loans to the government. They are so eager to hold onto those profits that they argue that the status quo is actually good for students. Disgusting, but not surprising. This is how the power elite maintains its position.
What's terribly sad is that some Democrats from states with pathetically low college attainment rates are actually buying into this hooey, giving credence to the banks' arguments that there are ways to save money while preserving their profits.
Senators Thomas R. Carper of Delaware, Blanche Lincoln of Arkansas, Ben Nelson of Nebraska, Bill Nelson of Florida, Mark Warner of Virginia and Jim Webb of Virginia ought to be ashamed of themselves. Just look at the state of their higher education systems:
- Delaware ranks last in the nation in community college completion rates--just 10.8% of those who start at a two-year college finish an associates degree in 3 years.
- Nebraska's commitment to low-income students is pathetic--for every dollar in federal Pell Grant aid to students, the state spends only 19 cents.
- Arkansas has one of the largest black/white gaps in college completion in the country (16 percentage points)
- Florida doesn't make college affordable--the state's poor and working-class families must devote 24% of their income, even after aid, to pay for costs at public four-year colleges.
- Virginia is a place of great inequity--just 29% of black young adults are enrolled in college, compared to 42% of whites.
The children in these states deserve the support for an affordable higher education that SAFRA will provide. Their leaders should (quickly) stop stalling, develop backbones, and stand up to the banking industry.