When Democratic presidential candidate and senator Barack Obama and his wife graduated from law school, their combined student loan debt was greater than the mortgage on their home.
It stayed that way for more than eight years.
“We were lucky because, as folks who were practicing lawyers, we could afford to service the loans,” he said in a national teleconference with student reporters. “If we had decided we had wanted to go into teaching, for example, there’s no way we could have paid them off.”
Obama confronted the problem by announcing a proposal today to eliminate private student lenders from the loan process.
“By removing private lenders from the process and requiring that all federal student loans be provided by the federal government, we’ll save billions that we can use to make college more affordable,” he said.
Obama said his plan would have saved taxpayers nationwide roughly $6 billion this year alone.
Student loans — part of an $85 billion industry, according to the Associated Press — come either directly from the federal government or through private loan companies. News reports nationwide have revealed numerous unethical and potentially illegal arrangements between private lenders and universities.
“We shouldn’t provide billions of taxpayer-funded giveaways to private banks when young people all across the country are trying to figure out how they can finance an affordable, accessible college education,” Obama said.
Ohio Attorney General Marc Dann has requested documentation of all deals between lenders and alumni groups at state colleges and universities. Miami University recently disclosed its alumni association’s agreement with private lender Nelnet, which OU’s Alumni Association also has an agreement with.
“We work with Nelnet because we think they’re the best at what they do — student loan consolidation,” according to the OU Alumni Association Web site.Priced out
At least 200,000 students were qualified to go to college but didn’t because of financial limitations, Obama said, citing tuition increases over the past five years of 11 percent at private universities and 35 percent at public institutions.
Tuition at OU has increased a total of about 37 percent for an Ohio-resident undergraduate student, according to OU Institutional Research data.
“This doesn’t solve all the problems of increased college costs, but by taking this one step not only can we stop unethical behavior and eliminate waste, we can start making college more affordable for every American,” he said.Generation gap
Obama said he noticed the college-aged generation taking a deeper interest in political issues and attributed it to issues such as college loans, climate change, federal debt and globalization.
“The feeling among a lot of young people is that we keep kicking the can down the road when it comes to righting these challenges,” he said. “Unless we step up now and start making some significant decisions, you guys are going to be left holding the bank.
“There are a lot of things that everyone agrees we should do. But it’s not happening because there is too much politics as usual in Washington.”