April 4, 2005: Headlines: Figures: COS - Somalia: Politics: Congress: Legislation: Student Loans: Village Voice: The Student Aid Reward Act (STAR Act), sponsored by Democrat George Miller and Republican Tom Petri in the House and Democrat Ted Kennedy in the Senate, proposes making some of the savings available to colleges who choose direct loans, with the stipulation that the schools pass it on in the form of Pell Grants to lower-income students

Peace Corps Online: Directory: Somalia: Special Report: Tom Petri: Tom Petri: Archived Stories: April 4, 2005: Headlines: Figures: COS - Somalia: Politics: Congress: Legislation: Student Loans: Village Voice: The Student Aid Reward Act (STAR Act), sponsored by Democrat George Miller and Republican Tom Petri in the House and Democrat Ted Kennedy in the Senate, proposes making some of the savings available to colleges who choose direct loans, with the stipulation that the schools pass it on in the form of Pell Grants to lower-income students

By Admin1 (admin) (pool-151-196-181-108.balt.east.verizon.net - 151.196.181.108) on Saturday, April 09, 2005 - 11:54 pm: Edit Post

The Student Aid Reward Act (STAR Act), sponsored by Democrat George Miller and Republican Tom Petri in the House and Democrat Ted Kennedy in the Senate, proposes making some of the savings available to colleges who choose direct loans, with the stipulation that the schools pass it on in the form of Pell Grants to lower-income students

The Student Aid Reward Act (STAR Act), sponsored by Democrat George Miller and Republican Tom Petri in the House and Democrat Ted Kennedy in the Senate, proposes making some of the savings available to colleges who choose direct loans, with the stipulation that the schools pass it on in the form of Pell Grants to lower-income students

The Student Aid Reward Act (STAR Act), sponsored by Democrat George Miller and Republican Tom Petri in the House and Democrat Ted Kennedy in the Senate, proposes making some of the savings available to colleges who choose direct loans, with the stipulation that the schools pass it on in the form of Pell Grants to lower-income students

Greed Aid
Big banks do billions in student loans—and that means less money for you
by Anya Kamenetz
April 4th, 2005 2:15 PM alert me by e-mail
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The Student Aid Reward Act (STAR Act) introduced in both houses of Congress March 15 provides an unusually clear test of our national priorities. Do lawmakers really want to increase aid to needy students? Or would they prefer to keep lining the pockets of the banking lobby?

At issue is the Direct Loan Program, one of two federal vehicles for student loans. As the name suggests, direct student loans are made straight out of the U.S. Treasury. Private companies bid for the contracts to handle the loans, without special fees or subsidies. By contrast, in the Federal Family Education Loan program (FFEL), banks and marketers like Sallie Mae receive subsidies from the government as incentives to make student loans, which are also guaranteed by the treasury against default.

President Bill Clinton, who introduced the direct loans in 1993, described their creation as taking "on powerful vested interests in behalf of the national interest . . . remov[ing] a government-guaranteed income from several interests who like the system as it is now." Clinton hoped to eliminate bank loans entirely, but the Consumer Bankers Association, MBNA, and other groups fought hard and won, and the programs have coexisted ever since.

Well, over 10 years later, the numbers are in. According to President Bush's latest education budget, loans made through FFEL in 2004 cost the federal government $12.09 on every $100. Direct loans cost just 84 cents. The STAR Act, sponsored by Democrat George Miller and Republican Tom Petri in the House and Democrat Ted Kennedy in the Senate, proposes making some of the savings available to colleges who choose direct loans, with the stipulation that the schools pass it on in the form of Pell Grants to lower-income students.

For many students from families making less than $40,000 a year, those higher grants could determine whether they get to college at all.

As it stands, banks are profiting from FFEL and then using those profits for marketing and incentives to keep schools in the fold. Only about 1,200 colleges now use direct loans, making up about 30 percent of total loan volume. According to the Congressional Budget Office, even a modest expansion in the Direct Loan Program could save up to $12 billion in the next 10 years. Many colleges would save enough to increase their Pell Grants by as much as a thousand bucks each.

FFEL is worth a lot to the nation's powerful financial-services lobby, and those bankers won't give it up without a fight. Since 1994, student loan volume has nearly quadrupled to $85 billion annually, and it's still growing. Student lenders are some of the most profitable companies in the country. They pad their bottom line by trading loan portfolios and marketing private or "alternative" loans at higher interest rates. For Sallie Mae, which dominates the student loan market, profits ballooned from $384 million in 2001 to $1.3 billion last year. And every dollar it lends is still underwritten by the federal government.

That doesn't seem quite right to Craig Munier. He is the director of the Office of Scholarships and Financial Aid at the University of Nebraska-Lincoln and a member of the National Direct Student Loan Coalition. "I've been in financial aid for 25 years," he says. "As student borrowing has increased in this country, there are never any economies of scale. The federal government was paying lenders the same rates on their capital at 1980 volumes and 2000 volumes. When I buy a box of paper clips I expect to pay one price; if I'm buying a truckload of paper clips I expect a different price. When I would ask, why can't we reduce incentives and increase grants to students, the lending companies would scream back, 'You can't dare touch our profits, cause we'll stop participating.' "

Predictably, the student loan lobby has come back with its own study from PricewaterhouseCoopers, saying the savings for direct loans are not all that high. "We think it's pretty close to a wash, but we don't have the exact figures," says Shelly Repp, general counsel for the National Council of Higher Education Loan Programs, an industry group. The study was sponsored in part by the Consumer Bankers Association, the same folks who brought you last month's screw-the-middle-class bankruptcy bill.

"The people that are fighting this and arguing that direct lending does not save money are without exception profiting from the status quo," says Munier. His group, on the other hand, is composed of financial-aid officers from over 100 schools who come to Washington on weekends, often at their own expense, to promote a program they believe in.

"I am not paid to do this. I do it out of my love and belief that this is a good program for students," Munier says. "It's a very simple issue for me. We have very little money because of the large deficits in our country. Are we gonna use the little money we have to subsidize the banking industry, or low-income students? I know how I would vote."





When this story was posted in April 2005, this was on the front page of PCOL:


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The Peace Corps Library Date: March 27 2005 No: 536 The Peace Corps Library
Peace Corps Online is proud to announce that the Peace Corps Library is now available online. With over 30,000 index entries in 500 categories, this is the largest collection of Peace Corps related stories in the world. From Acting to Zucchini, you can find hundreds of stories about what RPCVs with your same interests or from your Country of Service are doing today. If you have a web site, support the "Peace Corps Library" and link to it today.

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RPCVs and Friends remember Pope John Paul II Date: April 3 2005 No: 550 RPCVs and Friends remember Pope John Paul II
Tony Hall found the pope to be courageous and capable of forgiving the man who shot him in 1981, Mark Gearan said the pope was as dynamic in person as he appears on television, Maria Shriver said he was a beacon of virtue, strength and goodness, and an RPCV who met the pope while serving in the Solomon Islands said he possessed the holiness of a man filled with a deep love and concern for humanity. Leave your thoughts here.

Friends of the Peace Corps 170,000  strong Date: April 2 2005 No: 543 Friends of the Peace Corps 170,000 strong
170,000 is a very special number for the RPCV community - it's the number of Volunteers who have served in the Peace Corps since 1961. It's also a number that is very special to us because March is the first month since our founding in January, 2001 that our readership has exceeded 170,000. And while we know that not everyone who comes to this site is an RPCV, they are all "Friends of the Peace Corps." Thanks everybody for making PCOL your source of news for the Returned Volunteer community.

This Month's Feature Stories - only on PCOL Date: March 27 2005 No: 537 This Month's Feature Stories - only on PCOL
Dream Come True - Revisiting India after 34 years
The Coyne Column: Read Winning Vanity Fair PCV Essay
Tomas Belsky's paintings inspired by service in Brazil
RPCV reunites with friend after 40 years
RPCV reviews "Los Heraldos Negros" by Cesar Vallejo
Photo Essay: Taking it to the Streets


April 3, 2005: This Week's Top Stories Date: April 3 2005 No: 548 April 3, 2005: This Week's Top Stories
Ralph White suspended for opening locked gates 2 Apr
The Coyne Column: Events in Kyrgyzstan 2 Apr
Timothy J. O’Brien suggests Korea increase publicity 1 Apr
Danielle Wain deals with dry areas in Uganda 1 Apr
Chris Matthews says Schiavo's Dad having "Good Time" 1 Apr
Chris Dodd to reintroduce workers protection act 1 Apr
Steven Lawry named president of Antioch College 31 Mar
Matt Sesow shines light on grief and pain of war 31 Mar
Kinky Friedman Preps for Gubernatorial Run 30 Mar
Police travel to Tonga with RPCV 28 Mar
Randall L. Tobias speaks at PC Headquarters 28 Mar
NBC apologizes to Turkey for West Wing episode 28 Mar
Jim Doyle proposes domestic partner benefit 27 Mar
University to name library auditorium for Elaine Chao 26 Mar
Rockefeller says every young American should serve 26 Mar
Chris Shays calls Republicans "party of theocracy" 25 Mar
Norm Coleman to visit South America 25 Mar

April 3, 2005: RPCV Groups in the News Date: April 3 2005 No: 545 April 3, 2005: RPCV Groups in the News
Houston RPCVs sponsor "Around the World in a Day"on April 6 25 Mar
Vasquez to visit DePaul University on April 6 22 Mar
Henry McKoy speaks at Clemson University April 6 1 Apr
Minnesota RPCVs need Photos for Exhibition 24 Mar
Maryland RPCVs eat crab cakes in Annapolis 17 Mar
Connecticut RPCVs held fundraiser on March 5 3 Mar
RPCVs: Post your stories or press releases here for inclusion next week.

Crisis Corps arrives in Thailand Date: March 20 2005 No: 530 Crisis Corps arrives in Thailand
After the Tsunami in Southeast Asia last December, Peace Corps issued an appeal for Crisis Corps Volunteers and over 200 RPCVs responded. The first team of 8 Crisis Corps volunteers departed for Thailand on March 18 to join RPCVs who are already supporting relief efforts in Sri Lanka, Indonesia, Thailand, Malaysia, and India with other agencies and NGO's.

RPCVs in Congress ask colleagues to support PC Date: March 5 2005 No: 482 RPCVs in Congress ask colleagues to support PC
RPCVs Sam Farr, Chris Shays, Thomas Petri, James Walsh, and Mike Honda have asked their colleagues in Congress to add their names to a letter they have written to the House Foreign Operations Subcommittee, asking for full funding of $345 M for the Peace Corps in 2006. As a follow-on to Peace Corps week, please read the letter and call your Representative in Congress and ask him or her to add their name to the letter.

Add your info now to the RPCV Directory Date: March 13 2005 No: 489 Add your info now to the RPCV Directory
Call Harris Publishing at 800-414-4608 right away to add your name or make changes to your listing in the newest edition of the NPCA's Directory of Peace Corps Volunteers and Former Staff. Then read our story on how you can get access to the book after it is published. The deadline for inclusion is May 16 so call now.

March 1: National Day of Action Date: February 28 2005 No: 471 March 1: National Day of Action
Tuesday, March 1, is the NPCA's National Day of Action. Please call your Senators and ask them to support the President's proposed $27 Million budget increase for the Peace Corps for FY2006 and ask them to oppose the elimination of Perkins loans that benefit Peace Corps volunteers from low-income backgrounds. Follow this link for step-by-step information on how to make your calls. Then take our poll and leave feedback on how the calls went.


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Story Source: Village Voice

This story has been posted in the following forums: : Headlines; Figures; COS - Somalia; Politics; Congress; Legislation; Student Loans

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