Monday, December 12, 2005

Apparently, the average college graduate's debt amounts to $17,600. The NYT ran an interesting proposal for making student loans work for students rather than lenders... which seems vital right now, as the Pell Grant program is woefully behind inflation. For most of us, the Pell Grant is really just a tiny drop in the bucket, not the empowering force necessary to help working class students feel that they can afford a college education.

"It's thus no surprise that lawmakers are apt to protect lenders and not students. On Oct. 26, Mr. Boehner's committee approved more than $14 billion in cuts over the next six years, which would be the largest reduction in the history of the federal student aid program. Mr. Boehner defended the cuts by saying they mostly came from corporate subsidies to Sallie Mae, Bank One, Citibank and the rest. But that gets to the heart of what is wrong with this program - and the way to fix it. The best way to reverse the shocking trends in debt and educational attainment would be to switch from loans back to grants. Given ballooning deficits, though, that's a nonstarter. Instead, why not cut off subsidies to banks and give that money to needy students?"


Buckeye Beauford said...

What cuts? Can you please point out where these "cuts" are? This considering money for student loans and Pell Grants will continue to INCREASE each year.

Becky said...

Ok, I'm actually doing you the favor of looking this up & responding instead of telling you to simply google the info yourself. Btw, do I even know you?

The Pell Grant issue is old. And the grants have often been lamented over for being inadequate considering that the grant "INCREASE" that you speak of has never kept up with the actual soaring costs of attending college.

So here's an article for you, although I have a feeling you'll not approve of the source. I was actually thinking of the NYT article cited below w/in the quote, but I believe one needs to pay for access to those archived stories. If you're that interested in the issue, I'm sure you can keep researching it yourself.

"US Congress uses Alice in Wonderland logic to sell cuts in college grants" By Charles Bogle, 29 Dec. 2004

"Prodded by the Bush administration, the US Congress has changed the formula for determining the disbursement of Pell Grants, the main source of financial aid for low- and mid-income college students. As a result, 1.4 million students will receive less financial aid for the 2005-2006 academic year, and at least 80,000 deserving students will receive no Pell Grant funds at all (“Students to Bear More of the Cost of College,” by Greg Winter, New York Times, 12/23/04)."

Becky said...

P.S. I never even used the word "cut" in my original post. I actually said that the Pell Grants are behind considering inflation & the still very real class divides in this country (if you're interested, the NYT ran some amazing features over the summer... especially on how Americans perceive class boundaries to be more permeable than they really are. There's a pretty viable argument for there actually being LESS class mobility now than in the '70s).

karuna said...

Actually, Beck, America has the biggest middle class population in probably the world. Instead of the government offering grants or even subsidizing banks, lenders should have to compete in a market format to lend to students. Also, American students may not realize this but the system of student loans that we have here is far superior to what they have in Europe. Unfortunately in Europe, students not only recieve a lower quality education, but there is no such thing as low interest student loans.

Becky said...

I didn't mean to imply we don't have a large middle class population -- the problem in my mind is more of the rigidity of class boundaries. And I think the article was implying that lenders aren't totally competing... there are safeguards in place for lenders because there was originally apprehension over lending to young people. Now that it's seen as fairly safe to lend to students, I think the journalist was suggesting that the money used to help lenders should go toward better grant support. I haven't really looked into Europe's system for comparison. I just know that many low-income students become discouraged and anxious over taking out loan amounts that top what their parents make in a year. (The article addressed the problem of students dropping out over fears of borrowing too much money.) It's a tricky situation, I think, to find a balance between helping students and OVER helping students... but at the same time, I don't think the government has kept up the Pell Grant program very well, considering the rising costs of attending college.

Myst Dragon said...

Becky, I may be testing your memory, but I wonder if article differentiated between government loan programs (with relatively low interest rates) and non-government loans? I don't know if that would have much of an effect on helping students, but I do know the cost of loans, i.e. the interest rates, are lower on government loans.

Still, the point that the Pell Grant is behind inflation is not lost on me.