PRO-CON: SHOULD THE FED­ERAL GOV­ERN­MENT LOAN MONEY DI­RECTLY TO COL­LEGE STU­DENTS?

The Kansas City Star (Sunday) - - OPINION -

Un­der cur­rent law, tax­pay­ers pro­vide as much as $9 bil­lion each year to sub­si­dize guar­an­teed stu­dent loans is­sued by banks.

The banks earn prof­its on the in­ter­est; if stu­dents de­fault, tax­pay­ers take the loss, not the banks.

Pres­i­dent Obama wants to elim­i­nate the sub­sidy for banks and use that money to help poor and mid­dle­class stu­dents and adults at­tend col­lege.

The pres­i­dent wants to lower max­i­mum monthly pay­ments for stu­dent loans from the cur­rent 15 per­cent of in­come to 10 per­cent.

Un­der our con­tract, the high-per­form­ing com­pa­nies will get more busi­ness over time while poor-per­form­ing com­pa­nies will get less. The mar­ket will play, and stu­dents and tax­pay­ers will win. Arne Dun­can, U.S. ed­u­ca­tion sec­re­tary, for The Wash­ing­ton Post

YES

Hav­ing just re­tired af­ter al­most 35 years as Duke Uni­ver­sity’s di­rec­tor of fi­nan­cial aid, I re­main in­ter­ested in the de­bate over col­lege loans.

The Obama ad­min­is­tra­tion has pro­posed to elim­i­nate all pri­vate stu­dent lenders. This would be a very se­ri­ous mis­take.

Elim­i­nat­ing pri­vate lend­ing will cost stu­dents money. As cur­rently con­fig­ured, stu­dent lend­ing is a com­pet­i­tive mar­ket, and pri­vate lenders com­pete on price and ser­vice. Over time this has saved bor­row­ers money by re­duc­ing their costs of bor­row­ing.

In a mar­ket in which the fed­eral gov­ern­ment is the only lender, elim­i­nat­ing com­pe­ti­tion will lead to a re­duc­tion in ser­vices to stu­dents. In a com­pet­i­tive loan mar­ket, stu­dents can choose a lender based on price and the lenders’ ar­ray of ser­vices.. James A. Belvin Jr., Raleigh (N.C.) News & Ob­server

NO

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