Tuesday, November 22, 2005

Student Loans Strangle Business Growth

A punitive bill is making it's way through congress that will stick those with student loans with a fixed rate that is far above current market interest rates. Call your congressman or woman on my behalf and JUST SAY NO!

Dick Morris says: (read the whole thing here)
With a 25 percent share of the student loan market — more than six times that of its rivals — SLM has cashed in on federal guarantees against defaults on the one hand and blocked student refinancing on the other. As a result, according to columnist Terry Savage, writing for thestreet.com, SLM has made a profit of 1 percent over its loan volume of $100 billion — $1 billion in profit!

Student loans are near and dear to my heart. My husband and I, both chiropractors, paid our way through college. We left undergrad with no debt. We left graduate school with mounds of debt. It is simply unfeasable to get through academics that difficult while carrying a full or sometimes even a part time job.

Like many people we consolidated and "locked in". That is, we got stuck with an interest rate that cannot be refinanced. So, while interest rates have hit rock bottom, the monopoly called Sallie Mae still gets big fat interest on top of inflated loans (the schools benefit from government upping of loans--they correspondingly increase room, board and tuition). Tuition has more than doubled inflation increasing an average of 10% a year. There is no market correction because financing is so tightly governmentally regulated.

This is NOT a good thing.

Crappy schools make the same money as good schools through student loans. So, good schools, setting themselves apart raise their fees. Only the "poor" (that would have been me) students pay the government loan amounts.

You see how this is crazy?

Sallie Mae wants to keep her nice big cash cow--Dick Morris says that their yearly take is over ONE BILLION DOLLARS--by pushing through a law that would not allow students to refinance.

Of course, this is wrong. The whole student loan system needs to be deregulated so competition can enter. Guess what? Tuition would decline. Loan interest rates would decline. Defaults (to the tune of 25%, which are guaranteed by the Federal government--that's you and me, don't forget) would decline.

Stop this madness! Call your Congress Person--TODAY!
More blogs about the woodlands rita.