Comments on House Passes Student Aid Bill

• friendly government lender
• Posted by Marcus on September 18, 2009 at 10:00am EDT

• Would the bill mean that instead of calling my current lender, I'd have to call my friendly state bureaucrat? I really like dealing with the IRS and Division of Motor Vehicles on a regular basis, and I suspect I'd like dealing with the state or federal loan office about as much.

• Follow the money
• Posted by finaidfollies on September 18, 2009 at 10:15am EDT

• Why are lenders fighting this? The profit was wrung out of FFELP long ago. It's possible that their fight is just a straw man. What the biggest players (ie Sallie, Chase, Wells, BofA, Nelnet) want is a bite at the servicing contracts that the bill promises. They can 'give up' FFELP but put all their infrastructure to profitable work.

  Why are private colleges fighting this? Because they've priced themselves into the stratosphere. This country needs to educate millions more than it does currently, and the Obama administration is surely right that there's more bang for the buck with community colleges. The private 4-years might cry poverty, but they were the ones that drove the relentless upward price spiral, decade after decade. They forced a generation of students deeply into debt for the privilege of going to their schools, and now they're angry that the punch bowl's being taken away.

• An end to an era
• Posted by Pat , DFA on September 18, 2009 at 10:45am EDT

• The passage of this bill did not end FFELP. FFELP ended when the private lenders borrowed the capital for their loans from the Department of Education and then sold the loans back to the the Department, which converted the loans to direct loans. My support of the FFELP program was because PRIVATE capital funded the loan principal not FEDERAL capital. Seventy percent of the FFELP loans are being funded through the Department of Education. Unless the lenders can return to the former practice, (and that is highly doubtful), FFELP is dead. What we need to work on now is a smooth transition to direct lending that will not be administratively burdensome for either the student or the school; will ensure that students receive their loan funds in a timely manner; will provide effective loan counseling to reduce default rates and will deliver superior customer service.

• Direct Lending not so bad
• Posted by lcl on September 18, 2009 at 11:00am EDT

• Marcus makes a common observation, but as someone who used to have loans held by (private corp) and then consolidated with Direct Lending (aka the government), I've never had any serious complaints with Direct Lending.

  Their paperwork is occasionally difficult to intuit, but both the website and the call center have never been anything but easy to use and helpful.

  Of course, the elephant in the room is that these federally held loans by and large be handled by private subcontractors and not by the government in and of itself. So will the service be the same when the government has an immensely larger portfolio and 5-6 contractors instead of just 1? To some extent, that's a fair question, but the track record so far gives me optimism.

• Remove Democrats
• Posted by D Peders on September 18, 2009 at 3:30pm EDT

• I am an independent and moderate, and now I have to draw the line. Since Obama has become president, the extreme socialist liberals in the Democratic party are doing what they can to ensure the entire country goes bankrupt under the weight of the entitlements to the select few. I thought we were finally getting rid of the fanatics in power with the Republicans, but I now I see that all we did was exchange one evil group with another. I can only pray a revolution will occur and eliminate both the democratic and republican parties. Maybe we will get people who actually do things for a country rather than their own personal and political interests.

• Pat is right on
• Posted by Sam , consultant at own company on September 18, 2009 at 10:15pm EDT

• Pat's comments are really to the point. FFELP was dead when the capital markets froze. Most schools can make a orderly transition to DL as the most commons student systems support both FFEL and DL. Some large lenders will move from origination and servicing to servicing only--I believe both Sallie Mae & Nelnet have been awarded DL servicing contracts. Will students receive the best default management information in the 100% DL world? Time will tell.

• Posted by Ivy , adjunct prof on December 11, 2009 at 8:00pm EST

• That's enough! Interest rates for student loans need to be reduce considerably--like down to 6-8% of the total loan amount and not accrued over the "life" of the damn thing. Graduate students and post-graduate students--and all college students--need to make payments within their capabilities as income earners. If an ex-student earns only $25,000 a year, and has run out of access to any of the reduced payment or forbearance programs, then what can he or she do? Not much--which is to say--depending on his or her life circumstances--even nothing. What can the lender or loan servicing agent do? Nothing. Absolutely nothing. There is no debtors jail and if the lender or servicing agent where to garnish wages, then how is the borrower supposed to live? Many of us are so not main stream middle class that credit reports are inane and some of us don't even have savings or checking accounts. We live from hand to mouth, and those of us who can save a little and maintain checking accounts don't bother with credit cards because those things are as toxic as a snake's venom. The amounts, by the way, we might have in the bank amount very little. Most of mine will be gone by the time the next semester starts because I have to use that money to live off of for the next six weeks. In other words, between semesters, I don't get paid, and won't see another paycheck until late into the first month of classes. More needs to be in place on a continuum for people who most certainly can't afford $1,000 or more a month to pay down student loans--or whatever any work ex-student can't afford. Some can't afford $500 a month. Some are so financially freaked-out, they need reductions or wavers for their loans. Lower interest, make it an amount to add on to the principle of the loan from the get-go, and capitalize nothing, or make loans that are more like grants--paid back only for the principle. Whose our lender? Usually it is our elected US Federal and State government(s). I pay taxes, and more taxes, and more taxes. No wonder I can't afford health insurance with a preexisting condition (mild strokes over the last dozen or so years)--and even if I didn't have those strokes, I still couldn't afford to have health insurance because I have to pay taxes and more taxes and still have to pay for my medical care--out of pocket--MY pocket. Sure, I found help in my community, but who is going to pay for the neurosurgeon I am supposed to see every 3-4 months? That's about $400 each time. Where am I going to get $1,200 to $1,600 a year for that doctor who saw me once for 2 minutes and simply order an MRI for me and that needs to be done every 3-4 months, too--at $3,000 a shot! That's ca. $10,000 a year--that's half of my NET pay--or more than half! And I have been paying a little ALMOST EVERY MONTH of something to pay down my student loan, but it is like running on a treadmill because the loan never ceases to balloon and balloon and I'm just waiting for it to go BOOM in my face and to all it may concern in their faces, too. Okay, I'm worn out now. Bottom line: Work with the borrowers based on what we can pay at any time, and take into consideration our health, families, and realistically how much we really can be expected to pay--at any time and not for 3 years, or 5 years, but for however long it takes for a borrower to pay more--and if never--then never shall be the case! I will be dead before I can pay that damn loan off. Really! At the rate I am going, the loan will outlive me. That's depressing.

• Posted by friends u alumni , owner at small business on February 8, 2010 at 6:00pm EST

• i agree substantially with ivy. i graduated in 1995 from a private university where i incurred the majority of my student loan debt. what i didn't know was that the majority of these loans were going to be handled by usa group who subsequently became sallie mae. i had one loan with nebraska student loan and one with sallie mae. i had no problems with nebraska--even though they garnished my pay check--they weren't outrageous in the treatment of me. i paid the first sallie mae loan off entirely because it was really small and the interest rate was reasonable.

  that did not continue to be true.

  usa group had the majority of my student loans. whenever i tried to contact them all i got was a line to leave a message. i'd leave a message and no one would call me back. i did get letters so i started writing instead. still nothing. eventually my income became less than my outgo (i was a single mother of two who was working for the post office as a long term temporary employee).

  every time i tried to communicate my situation to usa group, i was ignored and my bill kept getting bigger. then sallie mae became usa group. i never figured out how that happened but it really doesn't matter. i did think sallie mae would be easier to work with. i was wrong. so i finally gave up until a collection agency and i agreed to a set payment per month for a year at which time the negative on my credit report would go away. i got it in writing too, but sallie mae still refuses to remove negative comments from my credit report.

  i was 45 when i accumulated this debt. i have instructed my family what they should do when i die if i am still paying sallie mae money. even structured as it is, i will be in my 90s and still paying sallie mae every month out of my social security income. i don't have the money to have adequately fund retirement and i don't expect to ever be able to do it. if i retire, i will maybe have a very small check from social security and nothing else.

  my problem would not be a problem if i was paying on the original loans at their original interest rate, but i'm not. i'm paying interest on the interest and whatever else usa group and sallie mae tacked on. i haven't a clue as to what that is. all i know is that every time i made contact with a human, fees and charges were incurred and my loan balance went up. i am currently 45000$ in debt. i am 60 years old. i was never able to find a job in my degree. i still work--although now as a permanent employee--for the post office and my children are now grown and on their own.

  i am doing all i can to see to it that they don't get in over their heads with student loans. however, i realize that they have several things i didn't have: they are younger. their careers are in the future and they should not have a financial burden like i did. they are not married. they don't have children and aren't responsible to someone else for children.

  i don't even want to talk about health care because i have one kidney, migraines, asthma, and am 12% disabled from a workmen's comp claim. all i need is for my heart and brain to lose function!

  while i do think private colleges should take responsibility for higher level education costs, but i'm not sure they are 100% of the problem. they want to stay alive, and they don't have the nicety of taxpayers dollars in the usual sense of the term.