An Idea for Student Loan Reform

$8 BILLION!
In the recent tax bill signed by President Obama, there were $8 billion in earmarks.

REFORM
My suggestion is for members of Congress to forgo the earmarks and use the money to buyout all existing loans and through the U.S. Department of Education restructure the loans to the original amount of the loan minus payments made to the principal and adding predetermined accrued simple interest since the time the loan was granted and set the loan at simple interest high enough to make the program self supporting and low enough to make higher payments on the principal.

This will result in a much better approval rate for Congress, be beneficial to constituents and improve the economy by having the loans repaid much earlier and making it possible for the purchase of luxury items.

A CALL TO ACTION
I ask all my blogging friends to send messages to their Senators and Representatives. Click here for a list of addresses for your Congressperson.

Student Loans

According to news sources, more money is owed on student loans than on outstanding credit card debt.

One student borrowed $255,000 to become a doctor and upon graduation owed an outrageous $555,000. Students are in debt for most of their working lives. This is a disgraceful situation that needs to be changed.

So what's an alternative?

The Department of Education should grant student loans at a simple rate of interest-- high enough to make the program self supporting and low enough for students to make substantial payments on the principal.

This and more in my recently published book, For A Better America:Observations:Insights and A Plan for Action by A Ninety Five Year Old American available at Barnes and Noble.com

Student Loan Reform

Student Loans

In late April 2007, news of a scandal was reported that financial aid officers in a number of prestigious and renowned institutions of higher learning were taking “kickbacks from lenders of Student Loans,” and the disgusting aspect of this horrible thievery was that the students were paying for it.

How much lower can people stoop for monetary gain?

If the financial aid officers involved have not been fired, they should have been.

Difficult to understand is the method by which students borrow money to subsidize college and postgraduate education. Following completion of their training, they are required to repay the loans at a compounded rate of interest. The result is the government is cheating itself because in addition to repaying the loan, the former student probably will be making mortgage and car payments that leave little or no means for consumer spending.

One former student bemoaned his situation to the point that his student loan of $45,000 had escalated to $104,000 with the end not in sight!

This impacts the gross national product and slows down the economy.

To improve this condition, there should be added a section in the U.S. Department of Education for granting student loans at the lowest possible rate of simple interest that would make the process self-supporting and at no cost to the government.

This is similar to small business loans granted to people who want to start their own business except that granting student loans is an investment in the future of students who will be our members of Congress, mayors, governors, city council persons, presidents, etc. There is little doubt that the repayment rate would improve immeasurably.

It is recommended that the National Education Association and all teachers unions unite and put pressure on the government to grant loans at a reasonable rate of simple interest. This will ultimately be beneficial to the government, the student, and society.

Change is in order.