Middle-class citizens are perpetually wading in the water trying to stay afloat in uncertain economic times. It goes without saying that this situation will hit middle-America the hardest; who utilize the education system as their buoy to a better life. Not long ago, I sat thru a documentary discussing the predatory lending practices of student loan institutions on & off college campuses across America [ "NOW on PBS" by David Brancaccioclick link to view transcript]. It pinpointed the tactics of the nation's largest student loan company, Sallie Mae. Sallie Mae, "said it will stop offering federal consolidation loans and cease paying loan-origination fees on Stafford loans. As a result, borrowers will have to pay the price. Former students who want to consolidate their loans can now only turn to the government and a small pool of lenders."
[Read more: Sallie Mae Halts Student-Loan Consolidation at SmartMoney.com]
My student loan interest rate has also ballooned and took off like Falcon Heene! However, Sallie Mae is also feeling heat. Reportedly, the company's shares (once known as SLM Corp.) fell this past Friday to 6.7 percent after receiving a poor rating from Ladenburg Thalman analyst Brad Ball on their financial standing. Meanwhile, their employees are fearful of losing their jobs since President Obama announced his plans to cut out the middle man -- private lenders such as themselves. Yesterday, in his first State of the Union address President Obama conveyed his intention to place education reform amongst his top priorities & asked the U.S. Senate to join the House in an effort to reform the student loan system. The plan proposes a $10K tax credit to families, including debt forgiveness to folks who've been paying on their student loan(s) for at least 20 years.
Basically, the idea is to eliminate the "middle management" of banks & other private lenders and the government itself will delegate funds for student loans directly. In my opinion, the audacity of these student loan institutions to set higher interest rates than credit card companies is appauling. Obviously, government intervention is necessary. Furthermore, I'm sure President Obama's intentions are well and if passed such implementations will work in the short term. However, many like myself are hopeful but skeptical. Sterotypically, government bureaucracy is known to misuse such policies. So, whether or not allowing government to "take over from here" will provide a long term remedy this looming ecomomic crisis is yet to be seen.
Tell your story...
What is your take on student loan debt & how are you handling it?
How has your experiences been with student loan companies such as Sallie Mae?
What is your take on the Obama administration's plan for education reform?
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