Obama’s Good Move on Student Loans | Black Agenda Report

Obama’s Good Move on Student Loans

Glen Ford, BAR executive editor

15 Jul 2009

🖨️ Print Article

A Black Agenda Radio commentary by Glen Ford

Click the flash player below to listen to or the mic to download an mp3 copy of this BA Radio commentary.

President Obama has done students in need of loans a good turn, and surprised BAR by oving to snatch $15 billion a year out of the jaws of the banks. “For decades the bankers have been getting risk-free federal money at taxpayer and student expense, by handling student loans already guaranteed by the federal government, collecting fees and then selling the loans to the U.S. Treasury.”

Obama’s Good Move on Student Loans

A Black Agenda Radio commentary by Glen Ford

“It is a shameless, $15 billion a year gift to the banking industry for risking literally nothing while siphoning off money that should have gone to students’ education.”

It’s not often that we have good things to say about President Obama. It is even more rare that the good news about his administration has to do with banks. So it is welcome to hear that the White House is making good on its commitment to eliminate the multi-billion-dollar banking boondoggle in dispensing college loans.

For decades the bankers have been getting risk-free federal money at taxpayer and student expense, by handling student loans already guaranteed by the federal government, collecting fees and then selling the loans to the U.S. Treasury. It is a shameless, $15 billion a year gift to the banking industry for risking literally nothing while siphoning off money that should have gone to students’ education.

The Obama White House first promised to cut the bank middlemen out back in February. But we have all learned to take Obama’s political promises with several spoonfuls of salt, since he often fails to follow through with pressures on Democrats in Congress. This time appears to be different. The chairman of the House Education Committee, California Representative George Miller, is introducing legislation to enable the government to loan money directly to students, thus theoretically freeing up $87 billion over the next ten years for direct distribution to students. President Obama says he wants the savings directed to Pell grants for low-income students.

“The student loan business has become a racket because of corruption of politicians by businessmen.”

The banks are crying like somebody stole from them, although they’ll still be eligible for contracts to do some of the paperwork associated with student loans. But that’s not free money, which is the kind the bankster class has gotten used to receiving under both Republican and Democratic administrations. Some of the nation’s biggest banks have already opted out of funding loans to students at community colleges. Citibank and JP Morgan Chase picked up their marbles and left the community college student loan game after the federal government stopped reimbursing banks for paying students’ processing fees. These mega-banks say the processing – at about $20 per student – cuts too deeply into their profits.

The Washington-based New America Foundation recentlyissued a report that recommends elimination of 35 so-called student loan guarantee agencies. These outfits rake in about one and a half billion dollars a year performing contradictory functions. They are paid a fee to help borrowers avoid defaulting on their loans, but they get an even bigger fee by collecting on the loan if the borrower defaults.

Clearly this is a racket, just as the bank middlemen arrangement is a racket. But a more accurate term is: corruption. The student loan business has become a racket because of corruption of politicians by businessmen. A thoroughly corrupt society is one in which the theft occurs in the bright light of day, as part of the normal workings of the system. By that standard, the United States is a deeply corrupt nation, where $15 billion dollars in education money is siphoned into bankers’ pockets year after year for doing very little at no risk. Such monumental corruption would make any Nigerian general very proud.

For Black Agenda Radio, I’m Glen Ford. On the web, go to www.BlackAgendaReport.com.

BAR executive editor Glen Ford can be contacted at Glen.Ford@BlackAgendaReport.com.

Do you need and appreciate Black Agenda Report articles? Please click on the DONATE icon, and help us out, if you can.

More Stories

Essam Elkorghli
Centering Imperialism in Libya: Implications for the African Continent
31 May 2023
Libya exemplifies the terrorism inflicted upon African nations by US/NATO imperialism. Twelve years after the Libyan state was destroyed it is still under sanctions which devastate that country.…
Tanupriya Singh
Unity Is an Imperative: Reclaiming African Liberation Day, 60 Years On
31 May 2023
African liberation will not be realized without Pan-African unity and socialism, as Kwame Nkrumah made clear at the founding of the Organization of African Unity, the precursor to the African Union.
Pavan Kulkarni
Violations Mar Sudan’s Soon-to-Expire Ceasefire, Paramilitary RSF Occupies Communist Party’s Office
31 May 2023
The ceasefire agreement between rival military factions in Sudan was extended on May 29 as it was on the verge of collapsing. Civilians are suffering, and the Sudanese Communist Party is under attack.
Babyson Pierre
U.S. Government Approves Abinader's Racist Violence
31 May 2023
The Dominican Republic continues its policies of deporting Dominicans of Haitian descent, and discriminating against Black Dominicans, and it does so with the permission of the United States. The…
Black Alliance for Peace Solidarity Network Afghanistan Committee
Afghanistan News Update #18
31 May 2023
This Black Alliance for Peace Afghanistan update provides analysis of media coverage of the US role in Afghanistan and also links to many news sources.