With the prospect of President Obama’s student loan bill passing through the budget reconciliation bill fast approaching, Senator Lamar Alexander (R-TN) took to the Washington Post op-ed page to tell some lies about the bill. Alexander, who used to be the Secretary of Education and knows better, said:
Starting in July, all 19 million students who want government-backed loans will line up at offices designated by the U.S. Education Department…the government should disclose that getting your student loan will become about as enjoyable as going to the Department of Motor Vehicles.
That sounds pretty terrible, spending hour upon hour sitting in uncomfortable plastic chairs beneath soul-deadening fluorescent lights, waiting for your number to pop up on a screen so you can shuffle up to a window and listen to a surly civil service worker tell you that you won’t be able to take out a student loan because you still haven’t paid a speeding ticket issued on the Tappan Zee Bridge in November 1993. Why, President Obama, why? Can’t humble college students be spared in your diabolical collectivization plan?
In reality, getting a student loan through the Federal Direct Loan Program isn’t going be any different than it is for the millions of students who are already getting loans through the Federal Direct Loan Program, which involves filling out the same forms you use to get loans under the “give-banks-billions-of-free-taxpayer-dollars” program that Alexander is defending.
Alexander also alleges that the administration has been less than forthcoming about what’s really going on here:
Here is what they haven’t told us: The Education Department will borrow money at 2.8 percent from the Treasury, lend it to you at 6.8 percent and spend the difference on new programs. So you’ll work longer to pay off your student loan to help pay for someone else’s education — and to help your U.S. representative’s reelection.
It’s not a secret that the government will be lending money for more than that money costs. All lending programs work this way. The difference is that currently the money left over after paying people to administer the program is used to line the pockets of bank shareholders and executives whereas under Obama’s plan it will be used for Pell grants that benefit low-income students. Alexander’s contention that “you’ll work longer to pay off your student loan to help pay for someone else’s education” ignores the fact that many borrowers also receive Pell grants. Or attend the colleges that will receive grants to improve graduation rates, or have small children who will benefit from new investments in early childhood education. Alexander concedes that most people think such programs are a good idea. Otherwise, they wouldn’t help U.S. representatives get re-elected! He suggests that instead of subsidizing Pell grants, the federal government should use its unique ability to borrow cheaply to lend at extremely low rates, thus undercutting the private market for loans from companies that can’t raise money by issuing Treasury bonds. This, of course, would immediately be denounced as “socialism.”
Op-eds like this are best understood not as actual attempts to influence legislation but rather as strategic contributions to a larger narrative alleging that President Obama is engaged in grand conspiracy to drag unsuspecting Americans down the road to serfdom. It’s not true, but standards of truth are very lax when U.S. Senators write for the op-ed page of the Washington Post.
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5/11/2012 | U.S. News & World Report highlights ideas from "Moving On Up: How Tuition Tax Breaks Increasingly Favor the Upper-Middle Class." 
5/11/2012 | In Diverse, Steve Burd comments on the Obama administration's plans to address student debt. 
5/11/2012 | Kevin Carey talks to Salon about the government's role in rising student debt.
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Well what about state/city/university/bank bond buying and selling?
see how a school like umdnj uses to bailout medicaid debt and healthcare costs:
education building only bond used to pay medicaid debt, fraud charge by medicaid and other UH non educational debt, as well as tuition/fees revenue to pay interest rate of 7.47% and state education funds as locked up collateral in a bank and I doubt interest paid on it
http://www.umdnj.edu…_09_BOT_res.pdf
see above link
essentially University hospital is broke and always in debt to state and others so they use a bond/loan thats for educational buildings only from NJEFA, to wipe non education debt. the state also gets money they are owed.
school says its budget cuts reason for 18% tuition hike last year and all others, no mention of this. State gave same budget next year but we will still get a hike, always do
The state forgives half their medicaid debt, $46 mill, $9 of which is a charge for fraud. UMDNJ pays the rest from 2013-2028. They get some debt service fund.
And the to pay the woping 7.47% on the $260 million dollar bond, for non-educational use, as well as other bonds with they use any revenue, inlcuding tuition/fees, and use our state tution aid at least as collateral and some bank holds all this maybe without paying federally required interest on it. Thats like $12.7 mill a year in interest for just that one bond
The lien on the state money is kept in an actual lockbox in a bank, 70% of umdnj bond portfolio have this crazy lien, and state money thats restricted like charity care is held as well till bond interest is paid.
This is the only reason that 2009 was first year UH didnt lose 20-30 million that year in at least a decade, I bet the CEO makes their bonus. Same Year they sold bonds, 3 months before annual report, see board meeting 4/28/10 online 2 days beforebonds sold with great news of fiscal turnaround
its not the students job to bailout UH and the state through tuition/fees/state subsidy
There was an 18% hike in tuition last year, another this year despite no state budget difference, they make $100 mill from tuition alone then fees, $170 mill from state for education, grants, contracts, housing fees, and $30 billion a year of state money goes to UMDNJ as a whole
They also buy state/ city government/corporate, the banks that buy their bonds I assume, bonds that return a much worse interest than 7.47%. This allows their consolidated report to yield predictable even bottom lines as well as a public disclosure. With only fixed interest rates being used, they choose the bond amount and period, they never have surprises that would raise an eyebrow about their “investments”
Part of this $260 million paid old education bonds, 1999 and 1995, and I bet my eye the rate was better than 7.47%. Further increasing burden to students.
They can take another $215 mill per the attached. I have other resources if any gaps missing, see 4/28/10 umdnj board meeting for report of miraculous turn of fiscal events by CEO, bonds went on sale 2 days later. She gets millions for such a fiscal turn around that is just a new loan that students foot the bill for
why else they so scared of losing RWJ and school of public health?
sources
http://www.njefa.com…ty/recent/2009/
http://www.bondsonli…A=view&RID=2977
http://www.theuniver…tes_4_28_10.pdf
http://keepcaliforni…/comment-page-1
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I never new the fed was making that 4% on loans and they control the variable rate, seems like a no lose situation and no incentive to curb college tuition hikes
Linda, I agree. Why hasn’t Senator Alexander taken a stand himself?
Taking a loan for business purposes is very motivating. This is because the money ends up on an investment planning. The mistake most people do is take loans in order to spend, not knowing where the source repayment will come from.
Loans can be very helpful andd I dont see anything wrong with lending money, sometimes you dont have a chice
Not that I am a Wesley Snipes fan but this man serves three years for tax evasion while Geitner, Congress, Senate and federal employees seem to be granted immunity for the same. Why hasn’t an elected official such as yourself taken a stand on this, Senator Alexander?
Loans are very helpful. It is very easy to take a bank loan since it can be quickly secured. The good thing about bank loans is that qualified borrowers can easily complete a loan transaction.
Connect the dots: EdAmerica/Edfinancial, based in TN, is a major opponent of SAFRA and Direct Lending.
Edamerica supports TennPAC, which supports Alexander.
Alexander is repeating Edamerica/Edfinancial talking points. What a surprise.
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I think one should go for a loan when he is in a tight corner and he does not have any other source of money because that is the only source of money where you can be guaranteed you will get it, that is if you have a solid reason that you need it badly and the project will contribute in paying the loan back.
I took out Direct Loans for my undergrad and FFELP loans through Citibank for my grad degree. Seriously, Direct Loans are FAR easier to pay and keep track of. Citibank has sold all of my loans to different servicers, and I’ve had a lot of trouble getting the forms of all the interest I paid while in school to report on my taxes. I work for a student loan guarantor, and I can’t imagine how hard it is for those who don’t know how the system works.
As soon as my grad loans are out their Grace period, I’ll be consolidating into Direct Loans. At least I can trust the government to manage their program properly.
Connect the dots: EdAmerica/Edfinancial, based in TN, is a major opponent of SAFRA and Direct Lending.
Edamerica supports TennPAC, which supports Alexander.
Alexander is repeating Edamerica/Edfinancial talking points. What a surprise.
I agree that the shocking thing is that the Washington Post prints lies.
I think it would be a very good thing if people e-mail Brauchli demanding a correction of the false claims of fact. He won’t reply, and, if he did, he would say that corrections are used only for false claims of fact on all pages except the 2 opinion pages. An expression of faux naive shocked outrage that The Post thinks that if one is allowed to have one’s own opinions one is therefore allowed to have one own facts would be a good reply to the unlikely reply.
Also, regular demands that Fred Hiatt be fired are needed. Clearly he is an anti journalist regularly publishing falsehoods. There can be no place for any such person in any enterprise which claims to be a newspaper.
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