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Remember What Happened Last Time Obama & Dems Intervened In Student Loans? | Missouri Political News Service

Remember What Happened Last Time Obama & Dems Intervened In Student Loans?‏

November 1st, 2011 by mopns · No Comments

AP: “To the dismay of consumer groups and the discomfort of Democrats, President Barack Obama wants Congress to make it easier for private debt collectors to call the cellphones of consumers delinquent on student loans.”

The Wall Street Journal reported last week that, “President Barack Obama will announce a plan that would allow Americans to consolidate and reduce interest rates on their student loans, the latest in a string of narrowly tailored moves designed to jolt the economy. . . . The switch would help borrowers because the U.S. would essentially be refinancing the private loan at the lower government rate. . . . Wednesday will be the third day in a row Mr. Obama has announced an executive action aimed at bypassing Congress, including a housing refinancing plan and a proposal to train and hire veterans.” But CNBC greets the announcement with a skeptical headline, “White House Student Loan Measures Will Barely Dent Soaring Costs.”

It’s instructive, though, to recall what happened the last time Democrats intervened in the student loan industry. In 2010, Democrats attached a government takeover of student loans to their unpopular health care reform bill, (partly so they could use the reconciliation procedure in the Senate, which requires only a majority vote to pass something, instead of 60 votes) and President Obama signed it into law. Back in March of this year, The Chronicle of Higher Education wrote, “A year after President Obama signed a law eliminating bank-based student lending, the lenders and guarantors that formed the backbone of the old system have laid off thousands of workers, eliminated programs, and sought out new roles in the student-loan industry.” Barely a month after the health care spending bill was signed, the AP reported that 2,500 Sallie Mae employees across the country had lost their jobs. And thanks to the student loan takeover, layoffs were reported in Florida, Massachusetts, Texas, South Dakota, Pennsylvania, Indiana, and Tennessee.

Amazingly even some Democrat senators warned of these potential consequences just weeks before the bill passed. In a letter to Senate Majority Leader Harry Reid (D-NV), Sens. Jim Webb (D-VA), Mark Warner (D-VA), Tom Carper (D-DE), Ben Nelson (D-NE), and Bill Nelson (D-FL) wrote, “We write to make you aware of our concern with provisions of contemplated student lending reform that could put jobs at risk.”

Yet Democrats passed the bill anyway, with the predictable result described by The Chronicle of Higher Education: “The shift meant that the companies were significantly scaling back their student-lending programs, offering smaller loans to far fewer students. Sallie Mae, the largest lender under the FFEL program, is laying off 2,500 employees this year, a reduction of 30 percent of its work force. . . . At least two major national banks, Key Bank and Citibank, have stopped lending money for education altogether, with Key Bank’s education division remaining in place only to service existing loans. Citibank sold its portfolio to Discover Bank last year.”


Rasmussen Reports: 66% Oppose Forgiveness of Student Loans



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