Direct Student Loan Program Expands Because of Health Care Bill

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effective is cutting the market share of the direct student loan program substantially.

It has been conclusively demonstrated that the costs to the government are considerably reduced if education loans are made straight to individuals. The difference is enormous, and this really is part of the reason that these two seemingly disparate procedures were bundled. That is, as a way to show that the health care legislation is paid for, a financial savings of more than $60 billion U.S. is estimated for cutting out the student loan corporations and making loans direct to students. In other words, the federal authorities have been giving billions of dollars to student loan firms over the years. Not surprisingly, many of the executives of these firms have become rich.  

One might ask, if the government could possibly save taxpayers billions of dollars in wasted spending, precisely why wouldn’t they accomplish this on basic principle?  Why does this legislation need to be attached with the health care bill in order to realize these savings?  The answer is that the lobbyists described before who were employed by the student loan providers were exceptionally successful.  It would seem that simply by giving campaign contribution money to our elected officers, in most cases Republicans, and also tossing in a number of little perks such as fact-finding trips to exotic locations or maybe employment for a relative, the Congress will give the student lenders anything they want. They'll even permit tens of billions of dollars to be obtained from American taxpayers and merely handed to these corporations.

And what is the big reason for continuing along this wasteful path? The answer is that jobs will be saved. Basically they will take cash from some people and simply give it to others. If a few billion is skimmed from here or there, who cares? It reminds one of the military airplane program that discussed during the budget debate last year.  Some useless plane is being built, and the military has no use for it.  They have even asked that the program be stopped so they don’t have to keep accepting these planes.  But what does Congress do?  Of course they keep on building the useless aircraft in the name of preserving “jobs”.   A job that isn't producing something of use and that exists merely because congress is extorting funds from taxpayers isn't a genuine job. It's a government giveaway package. It helps absolutely no one but the particular person obtaining the money and the member of congress whose district or perhaps state the plane manufacturing plant resides in.

In any event the direct student loan program will certainly expand greatly soon, and the student loan corporations will probably retain the services of more lobbyists to once again try to have it reversed as they have done in the past. In the interim a number of student loan borrowers will avoid being in the clutches of the student loan corporations and won’t end up being preyed on, so that is some good news. Nonetheless, there are millions of ex-borrowers who have gotten into financial difficulties and defaulted on their student loans and who'll thus continue to be in the clutches of the student loan corporations with no way out of the massive penalties and fees they impose.  An example is the 41 year old physician who was in the news recently. She borrowed $250,000 to finance medical school and now owes $555,000 in student debt, penalties and interest in spite of having made repayments for some time. She has substantial monthly loan payments, however she will be about seventy years old when her liability is finally paid off. The direct loan legislation has come a little bit too late for her.