The student loan industry has been the “saving grace” of many grad students due mainly to the generally staggering costs of tuition. Law school tuition typically runs somewhere between $25,000 and $32,000. Keep in mind that these high tuition costs are generally tied to the prospective amount of income law students are “expected” to earn upon graduation, which in today’s world is a completely unrealistic tuition cost. Federal loans cover a maximum of around $18,000 per school year, leaving a sizable gap between covering tuition expenses. This does not factor in living expenses such as the cost of  renting an apartment, basic amenities such as food, health care coverage while in school, and other miscelaneous expenses that pile on generously during the year (also, without private loans, how would law students be able to afford their drinking habits?) Scholarships are given to a select few, and as a result the majority of students are forced to rely on private lenders to cover the gap. But does it come as any surprise that the primary players in the private student lending industry are CitiBank, Bank of America, and Sallie Mae, three companies who have fallen so far that they are now government owned for all intents and purposes. These companies have collapsed on their own policies, and have been bailed out time and again by taxpayer dollars. As stated in a few other posts here at TLL, Big Banking lives only to screw the people over.

The New York Times reports that a powerful lobby has been set up by the private student lending industry to stop President Obama’s plans for overhauling the way student loans are handled. The Times states:

“The private student lending industry and its allies in Congress are maneuvering to thwart a plan by President Obama to end a subsidized loan program and redirect billions of dollars in bank profits to scholarships for needy students.

The plan is the main money-saving component of Mr. Obama’s education agenda, which includes a sweeping overhaul of financial aid programs. The Congressional Budget Office says replacing subsidized loans made by private banks with direct government lending would save $94 billion over the next decade, money that Mr. Obama would use to expand Pell grants for the poorest students.“

Big Banking and the private student lenders were fine with accepting bailout cash when financial collapse stared them in the face, and their gratitude shows. By moving to block President Obama’s plans to reform the student loan policies, they are clearly showing an aversion to change in how they conduct business. Rather than give back to the populace in a time when the American people ought to be coming together and supporting one another, they want to continue with the status quo, which has been proven to not work. Instead, these lenders feel they can accomplish the goals set by President Obama without very much change to their policies. I highly doubt this considering the track records these companies have.

Republicans are touting Obama’s policies as yet another attempt to increase the size of government. This argument cannot be refuted. Obama clearly wants a larger government role in running the major institutions in our country, and the student loan sector is no different. The thing is, had these financial institutions not fucked up in the first place, there wouldn’t be much need to expand government to control them. The lenders and banks are like big children. They make mistakes and just generally keep fucking things up. Now, the adults have to come and step in and tell them how to do things, because left to their own devices, these companies just get into deeper trouble. Of course they don’t like it. Nobody likes being told what to do. But when you’ve shown that you don’t have the capability of handling things independently, it’s time for the grown ups to take over. Get over it already please. That’s just life.

Sallie Mae has spoken out about the proposed changes and said that while welcome to the injection of fresh ideas, stated that it will fight to keep the current system mostly intact. Saying that you are open to change but will fight to keep things the same is a complete contradiction. One might question why these lenders are so opposed to the prospect of change. The following might shed some light on the answer to that question:

“Just last week, Sallie Mae reported that despite losing $213 million in 2008, it paid its chief executive more than $4.6 million in cash and stock and its vice chairman more than $13.2 million in cash and stock, including the use of a company plane. The company, which did not receive money under the $700 billion financial system bailout and is not subject to pay restrictions, also disbursed cash bonuses of up to $600,000 to other executives.“

Take some time to soak that one in and digest it. The rich get richer and the poor get poorer. Kudos to you, student lenders! You make me sick.

-J Boogie [TLL]