Direct Loan Program Gets Boost From Health Care Bill

The extensive health care bill was rammed through Congress the other day by the Democrats. A relatively surprising end result of the bill will be that the U.S. federal government direct student loan program will also acquire a massive boost.

That program has long been fought by student loan corporations ever since it was initially launched during the Clinton administration. These banks and other loan providers have used a small army of lobbyists to influence Congress to cut the government out of making student loans direct to individuals and require these kinds of loans to go through the loan companies themselves.

It has been proven conclusively that charges to the government are much lower if college loans are made directly to college students. The discrepancy is substantial, and this really is part of the reason these two seemingly unrelated measures have been merged. That is, as a way to show that the health care bill will be paid for, a financial savings of around $60 billion U.S. is actually estimated for eliminating the student loan firms. Quite simply, the federal authorities have been merely giving billions of dollars to education loan firms over the years. Most of the top executives in these businesses have subsequently but not surprisingly come to be wealthy. What many of us are unaware of is that these corporations are actually preying upon numerous student borrowers in order to be able to get their hands on this revenue.

A person might ask, if the government could save taxpayers billions of dollars of wasted spending, exactly why wouldn’t they accomplish this on principle? Why does this bill need to be connected to the health care bill as a way to realize these cost savings? The answer is the fact that the lobbyists mentioned previously who have been engaged through the education loan companies have been exceptionally effective. It would seem that by offering a relatively small campaign contribution to our elected officers, in many instances Republicans, and also throwing in a handful of minor incentives such as trips to exotic places or perhaps a job for a relative, the Congress will bend to wishes of the student loan providers. They'll permit tens of billions of dollars to be steered from US taxpayers and basically handed to those corporations.

And just what is the major argument for continuing along this wasteful path? The response is that it will preserve jobs. Put simply, they take dollars from a few people just so they can give them to other people. If a few billion is skimmed from here or there, who cares? It is a little like the military airplane program which was discussed in the budget argument last year. An expensive airplane costing billions of dollars is being made for the military services, despite the fact that they have absolutely no mission for the plane and really do not need it. They've asked for the program to be stopped because it takes away resources which can be utilized efficiently elsewhere. Exactly what do our congressional leaders do? They continue building these worthless aircraft for the reason that it will save “jobs”. A position that isn't producing something of use and that exists simply because congress is extorting money from taxpayers isn't a real occupation. It is just a federal government giveaway program. It helps absolutely no one except the individual receiving the money and the member of congress whose district the plane factory exists in, since the people who are the recipients of these bogus wages keep voting for him or her.

So in any event the direct student loan program will grow considerably soon, and the student loan companies will no doubt retain the services of more lobbyists to once again attempt to get it reversed as they have successfully done in the past.  This will save some student loan borrowers from being in the clutches of the big student lenders.  However, there are millions of former borrowers who have gotten into financial difficulties and who'll continue to be in the clutches of the student loan companies with no way out of the large penalties and charges they impose. Just like the 41 year old physician who was in the media of late. She borrowed $250,000 to pay for medical school, and today owes $555,000 in student debt, despite having made repayments for some time. She has large monthly loan installments, but she is going to be about seventy years old when her obligation is repaid. The direct loan law has arrived a little too late for her.