Students are getting a big gift from Uncle Sam this summer. Starting in July, the Student Aid and Fiscal Responsibility Act (SAFRA) gets put into action.
Not everyone is thrilled with the legislation, which makes the United States government the direct lender for all student loans. Conservatives are especially upset. They are partly peeved because the bill was slipped in as part of the Democrat’s health care reform bill, but the main reason is that they see this as a giant government takeover.
People like Neal McCluskey of Forbes magazine say SAFRA will “destroy what little chance there was of student loans being constrained at all by economic realities.” In his article, McCluskey even said that too many people are pursuing degrees. His reasoning was “29 percent of Americans have bachelor’s degrees even though only a quarter of American jobs require them.”
The Daily 49er reacts to all this with a sense of empathy. We appreciate Republican objections as to how the act was passed. We can understand why conservatives would be irked to the passage of such a piece of legislation. Yet, despite all this, our response remains the same — get over it!
According to the Huffington Post, the government was already funding more than 80 percent of student loans. The other 20 percent or so was subsidized by the government through private lenders. So, the argument that the passage of SAFRA was a giant government takeover doesn’t make sense.
If Republicans were really concerned about the size of government, where were their objections to subsidized student loans before this legislation was passed? Could it be that their objections have more to do with the political atmosphere of the day rather than their supposed principals?
Being only human, we can’t read the motivations of peoples’ hearts.
Yet the timing of all this is enough to make us wonder whether the objections to this legislation have more to do with midterm elections rather than any conservative principals.
Besides, the current situation is nothing to brag about. What happens when you mix the efforts coming from the government’s goodwill on one hand and the greed of banks on the other? Corruption.
Going back to the Huffington Post, banks were allowed to charge interest on students loans since they were supposedly taking a risk in lending money to college students. And lending to students is a pretty risky business. With little to no savings or even a credit history, one can understand why few in their right mind would want to lend to students.
The government knew this and, consequently, agreed to take care of the losses the banks accumulated from students unable or unwilling to pay their debts.
Now, let’s take a moment to review this. Banks are allowed to charge interest on student loans due to the risks they are taking. Sounds fair, until you remember that the government takes away the risk by guaranteeing to pay for the bank’s losses should students fail on their loan payments.
See the stupidity of the current situation? So do we, and so did the Democrats in Congress and the President Barack Obama.
There are other things we like about SAFRA. For example, savings attributed to the legislation will make it possible for the government to infuse billions of dollars into America’s education system. According to the House’s Committee on Education and Labor, SAFRA will save the federal government $61 billion over the course of 10 years.
So what’s all the fuss about against this bill? We like it, the budget’s situation improves due to it and Democrats look good because of it.
Ah, you see, that last part may be especially troublesome for those opposing Democrats come November. Get over it.
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