Student Loan - Loans and Debt Consolidation

TIME FOR REAL STUDENT LOAN REFORM THE UNIVERSITY OF ALABAMA CRIMSON WHITE

September 9, 2010 12:25 AM CST

Time for real student loan reform

In March, Congress enacted desperately needed reforms through the student loan provisions tucked in the healthcare reconciliation package.

Even though the minority wailed about the changes, this is a great deal for Americans living outside the Beltway.

But there is one aspect of student lending in an even more dire need of attention: private student lenders PSLs. A decade ago, the low prevalence of these loans meant action was not necessary, but today it is necessary for true student loan reform.

Due to negligence by both Democratic and Republican administrations, PSLs such as Sallie Mae became very powerful. They intensely lobbied public and private college financial aid offices to direct enrollees towards private lenders rather than encouraging federal options first. In exchange, the colleges received commissions and other various perks for those referrals.

It is no wonder, then, that PSLs student loan portfolios doubled in yearly volume from $7.2 billion in 2003 to $15 billion in 2008, and the number is expected to grow.

Furthermore, the statistics on borrowers is startling at best and alarming at worst. According to the Project on Student Debt, 64 percent of private borrowers did not fully pursue federal options, and 26 percent did not take out any form of federal aid. Given today s tuition environment, the problem will only get worse.

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