How Banks Swindle Student Loan Monies

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[Speaking Truth To Power]

President Barack Obama declared “In the United States of America, no one should go broke because they choose to go to college” during his State of the Union Address.

Yet the bailed-out bankers, who’ve gorged themselves on the flesh of the American people, have another agenda.

Unfortunately, these unrepentantly greedy money changers and their lobbyists are now aligned to kill a bill that would revamp the student loan process and allow students to get more money directly from the government. The Student Aid and Fiscal Responsibility Act (H.R. 3221) would dwindle billions of dollars of taxpayer subsidies banks and lending institutions have enjoyed at the expense of students.

The bill, introduced by Rep. George Miller, Democrat of California, would raise the Pell Grants to $5,500 this year. It is estimated it would cut the federal deficit by $80 billion to $87 billion in 10 years. The White House points out that this money could go into funding community colleges and Pell Grants.

The bill passed the House of Representatives, on September, 17, 2009, by a vote of 253 to 171. But it must still pass the Senate where it will face stiffer opposition by right-wingers and lecherous bankers. Not surprisingly, lending institutions have deployed their resources to prostitute congressional leaders into killing the bill. The “big government” boogey man is already being used to scare people into believing this will be another disastrous “government takeover.”

Town-hall style meetings are again being used to create opposition to this plan that would make student loans more affordable.

“We anticipated this,” Education Secretary Arne Duncan said. “They’ve had a sweet deal. They’ve had this phenomenal deal that taxpayers have subsidized, and that’s a hard thing to give up.”

In February 2007, New York Attorney General Andrew Cuomo, initiated an investigation into, purportedly, deceitful lending practices by student loan sharks like Citibank—I’ve personal horror stories about them—and Sallie Mae. Cuomo ended his investigation against Sallie Mae, after Sallie Mae supposedly agreed to change their lending practices. 

On October 10, 2007 it was revealed Sallie Mae attempted to use the Freedom of Information Act (FOIA) to gain access to the personal information of students in the State University of New York system. A court confrontation regarding this action appears imminent. Moreover, in a Connecticut Federal Court, there is another pending class action lawsuit alleging Sallie Mae discriminated against Hispanic and African Americans by charging them higher fees and interest rates.

Secretary Duncan recently lashed out against Salle Mae, which is amongst those in the forefront of blocking the legislation that would directly benefit students. "Sallie Mae executives have paid themselves hundreds of millions of dollars in the last decade while teachers, nurses, and scientists -- the backbone of the new economy -- face crushing debt because of runaway college tuition costs," he said. Duncan warned this bill was "a once-in a generation, maybe once-in-a lifetime" chance to overhaul the current student loan crisis.

However, a deeper discussion is required here regarding this commodification of education. In America, much hollow rhetoric is given to children about the importance of a college education. But why should children listen when it’s patently obvious America’s elites refuse to allow adequate funding so underprivileged children can attain higher education?  

New York Governor David Patterson’s current budget proposal is a case in point. The United University Professions (UUP) has decried a pending proposal, by the governor, to slash the Tuition Assistance Program (TAP) by over $50 million in 2010-11, for SUNY students. UUP is a union representing over 34,000 professionals and academics from 29 state universities. 

According to UUP, this legislation would provide SUNY “with full authority to raise tuition without legislative approval, and impose differential tuition which is currently prohibited under current law.” UPP states this law would permit SUNY “to lease campus properties, enter into contracts and variations of publicprivate partnerships with limited oversight.” The governor’s 2010-11 budget cuts would total $118 million. Isn’t this a clear indication political elites don’t care much about the education of working-class poor people?

Keep in mind, according to UUP President Dr. Phil Smith, the total contribution to the SUNY budget by the state is a miserly two percent. Yet, Governor Paterson is proposing a 25 percent cut. Dr. Smith asserts the two year cuts against SUNY, and CUNY, amounts to roughly 40 percent of the cuts levied against all state agencies. If the current cuts go through, the two years cuts to SUNY would rise to $528 million. 

The message is now abundantly clear: education—like health care—is just another cash cow opportunity for bankers, Wall Street swindlers, and the amoral politicians they control to bleed us all even more, while turning us into perpetual economic serfs. Is everything for these people to be defined by profit margins?  If America is to remain a superpower, how long can she afford to under-fund the education of her children?

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