Obama and Student Loans

President Obama would like the government to stop backing private students loans. He would like the government to provide direct financial aid to college students.

Two market forces are at at work here, one is the market for student loans. If we take the private sector out of the process, student loans may cost more due to loss of competition. The second, if the government sells directly to students, there would be no middleman which could save money. Hopefully, the middleman savings outweighs the loss of private competition.

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48 Responses to “Obama and Student Loans”


  1. 1 Tim Honeycutt April 25, 2009 at 6:30 PM

    I think this could be a good idea. Under a democratic president, chances are better that students will get more help and have cheaper loans. I really hope that cutting the middle man helps students because i will be needing a student loan for the next school year. Although, i am not a fan of eliminating public business, even if it is banks. I am all for small governement, but some things are better with a big government.

  2. 2 Jordon Lovett April 26, 2009 at 3:54 PM

    I think private student loans should be as cheap as possible. First, students who need loans, aren’t exactly in the best economical position already and secondly, if Obama creates a loss of competition in the private loan market, the prices will rise. Obama should be focusing on trying to help people with their finances, especially students (most of his votes came from them) because they are in one of the toughest economical positions at the moment. With less available jobs and a need to attend a 4 year university, it gives students a more difficult time when trying to be successful and not start off live after school with a large load of debt

  3. 3 Annmarie Minite April 27, 2009 at 9:58 AM

    I think this could be a good idea. This is something that Obama is doing to actually help our generation. I am fortunate to not have to worry about student loans or financial aid, but I have many friends that do. Some who graduated last year are just now starting to pay them back and they are paying in the 300’s every month. Making financial aid more available would help with the amount of debt students are left with once they graduate.

  4. 4 mrrodenas April 27, 2009 at 7:12 PM

    Another great worth my praise!

    I am pleased that the Obama administration is seriously analyzing with a just, humanistic eye all areas and identifying where there is waste, much needed improvement, and solutions that will benefit the people, reasons to invest in Americans. I am all in favor of open market forces, but agreeing with Tim H., let’s not be naive, banks and lenders are doing business to make a buck, not to do us a favor. The government has the resources to eliminate the middle man and save big money, which will in turn be redirected to Education. Come on! There is nothing to fear, this is the good socialism, the kind that other countries have embraced in measures such as universal healthcare and 30 piad vacation days a year. Let us welcome smart solutions that benefit ALL, and by that I mean the “regular” people, like us, students. Why do you think banks and lenders are fiercely lobbying, it’s all a business, but the education of Americans should not be a business item, but a guarantee. Kudos Obama.

  5. 5 mrrodenas April 27, 2009 at 7:13 PM

    Ooopss, I meant “Another great idea worth my praise!”

  6. 6 Genine Lobo April 29, 2009 at 12:43 AM

    I also agree and think this is a good plan by President Obama. His aim for the largest amount of students in college is a great goal and will truly help many less fortunate people attend college. Obama has a great plan to change from the old dual system that the federal government currently uses for loans. Although change may be risky, change in this situation will help over 8.5 million students.

  7. 7 Marilyn Monroe April 29, 2009 at 8:42 AM

    I believe that this will be a great idea for the government to sell loans to students directly. By cutting out the middle man there is less of a hassle. Students who need loans for school are not in the best economic situation so loans should be as cheap as possible. Education is an important part in advancing our views. Without an education people will not be able to get jobs because now it is all about competition and who has the best education.

  8. 8 SMCeon April 29, 2009 at 10:02 AM

    This seems to leave the lower and middle class better off and the upper class worse off. The reason I say this is becasue there is a difference between a loan and financial aid. An student from an upper class family may not recieve any financial aid from the governement but can easily apply for a student loan? My question to president Obama is how he plans to finance education for all people, including the upper class?

  9. 9 Melissa Schmitt April 29, 2009 at 10:16 AM

    i believe that this could be a great idea for student because it will be easier to access loans to attend colleges especially since the price of private and public college’s is rising more and more every year. The problem is that those students that are not eligible for the financial aid the government will provide would make the cost of a student loan much higher. On a personal sense, i would prefer that the government continues to keep student loans in the private sector because it will potentially save me money in the future.

  10. 10 Andrea Nemeth April 29, 2009 at 1:54 PM

    well i think it would probably be a pretty good idea. i would open up the loans for everyone. so anyone would have the chance to get alone instead of a selected few. yeah they might cost a little more possibly but i think i would be willing to pay alittle more for one then possibly not get one at all.

  11. 11 Leonardo Sanchez April 29, 2009 at 1:58 PM

    i agree the student loans should be as low as possible due to the economy and how the interest rate were extremly high until

    recently. Thanks to a democratic president this should be problem solve right? No, With every right there is a wrong. Yes

    the middle man may be pushed aside but then where is the capitalism at? i mean it is afree country but business is

    business and no one should fight against our democratic society. I do as well may need a loan but at what cost? The cost may out

    weigh the problem. keep middle man but lower interest.

  12. 12 Debbie April 29, 2009 at 3:56 PM

    Wow, everyone has had some very insightful opinions. I for one, would like to continue to a four year college and finish a BA in Business. However, at this time it is not possible. There is no way, I can go to school and become indebted (up to the eyeballs) to get an education. I think that if there were a way to standardize the process, lower the cost, and pay-back terms, it may actually be a good idea. NOt an easy task with the financial situation this nation is in right now. I commend President Obama for giving us hope at time like this. We need to see a light at the end of the tunnel, and not necessarily the light of another train about to hit us.

  13. 13 Kelli C April 30, 2009 at 1:17 PM

    College education for the youth of our world is key for our future. But the high cost of college is one of the main reasons why less people are able to attend. If Obamas plan to eliminate the middleman works out, it would help so many more students attend a four year college. I think that the government giving money to banks is an unnecessary step in trying to equip students with financial aid. It makes it too expensive to pay back these loans and college students have a limited amount of money as it is.

  14. 14 Emily Bonzi May 4, 2009 at 2:16 PM

    This sounds like a wonderful idea to me. For the past two semesters I have had to take out private loans and found the entire process always very tedious. My parents have bad credit and I am still in need of a co-signer for my loans. I wonder if by directly loaning to students the need for a co-signer would be eliminated. A reduction in interest rates as well is another plus. I will graduate in debt, just like so many other students nation wide, and the reduction of that debt in anyway would be greatly appreciated.

  15. 15 nancy moussa May 4, 2009 at 3:27 PM

    I agree that this can be a good thing. College is becoming extremly expensive. Our generation needs help. We need these loans. Many students drop out of college due to the prices, which in the long run hurts everyone. We need people to have jobs to keep our world going.

  16. 16 Luis A. May 5, 2009 at 4:38 PM

    if President Obama said, “Obama has claimed that the change would save at least $48 billion over the next 10 years” i think that is a great plan. Cutting the middle men out would benefit so many students that deserve and need financial aid. this would be a great plan because in the long-run there would be less of a debt to pay and more people working with a better education.

  17. 17 Tom Jones May 5, 2009 at 6:56 PM

    Helping out the students by giving them direct financial aid for college is going to make him a favorite on many college campuses. This act of cutting out the middle man and directly selling finicial aid will benefit the government because they will make more interest on the aid and helps the student because he will pay less for it. Although there may be a set back with taking out the private sector, this is a great starting plan to help young adults go to college

  18. 18 Nirbhik Trehan May 6, 2009 at 3:33 PM

    this is indeed a wise decision from Obama’s portfolio. i think this decision would help us students a lot as currently many of us are under debt due to the loan we have taken for our college fee. this process takes a lot of time and also require a co-signer. this decision will eliminate the need of the co-signer and would make the process a lot easier and more efficient for us as well as our parents.the reduction in the interest rate would encourage more and more students to take loans and even help the student to reduce their debt when they come out of college.

  19. 19 NicoleMB May 7, 2009 at 11:37 AM

    I don’t know much about the whole issue but it seems like this could be beneficial to students and to the government. The idea of taking banks out of the equation I would think would save money to everyone involved. Banks are there to profit off of what they do. I suppose I’d like to think that the government’s objective isn’t necessarily to profit but to aid students.

  20. 20 Santi Orona May 7, 2009 at 7:38 PM

    I think it would be great for the government to give loans directly to students. Student loans should be as cheap as possible, as they are being used for education. I’m all for measures that will help not only myself, but other college students.

  21. 21 Tracy Thomas May 7, 2009 at 11:15 PM

    I wonder what are the conditions of the trade if you barrow from the government and rid of the middle man. The article doesn’t say exactly how it would benifit the student. I wonder if they would give us cheaper interest rates or if they would just give us money to go school now. I think they do somewhat of a decent job now. I think people would be surprised about just how much money they get if the qualify for financial aid. Those that do really need it recieved free tuition and if you have high grades there grants that gaurantee you money. As a student it’s my incentive to get decent grades. Cal grants be a lot of free money from the government and only require a 2.0 !

  22. 22 jordan May 8, 2009 at 1:22 PM

    I think anything that will make loans easier and more accessible is a step in the right direction. The easier it is for students, whose parents can’t afford tuition, to get a loan or financial aid, the more encouraged they will be to continue their education. So I agree with one of the comments above mine, anything that can help students I’m in favor of.

  23. 23 Arnulfo Solorio May 8, 2009 at 4:57 PM

    Hi all,
    I did not see any fine printing on this article. Is there any fine printing some other place or would it be in the loan papers? This is a great idea from our government in getting rid of the middle man. This would definately help all whom want to continue their education. What would the interest be? What would the requirements be? Can anybody get a loan from the government? I have not gotten any loan from the government and do not have experience with it so I could not say much about it. I will be waiting for some answers from somebody out there.

  24. 24 Molly Jordan May 10, 2009 at 2:45 PM

    The interest rates that the government gives are generally lower than any interest rates that a bank would be offering. Although, you bring up a good point Arnulfo that no body really knows what kind of interest rates we would all have if something like this is really put into effect. Either way I think it is great what Obama is doing with education and I hope that he is able to make college more affordable for all students across the board.

  25. 25 phanh May 11, 2009 at 10:25 AM

    there is so many thing they r trying to do to make it better for people but is it really going to help so i don’t know if i would say its a good idea or not cause i have to see some effect in it before i think its a good idea that he’s is trying to do for students

  26. 26 Audrey Hepburn May 11, 2009 at 4:17 PM

    I definitely think this would be something great to try. It sounds like it would work and really help college students especially since tuition prices are so high. My only concern is if this will affect anyone financially. I agree that this is something that could really help students who are not in the best economic situation.

  27. 27 Matthew Dimech Econ-101 May 12, 2009 at 2:32 PM

    This situation in a sense kind of puts a student between a rock and a hard spot. Taking out a private student loan is a long and rigerous process that is very time consuming and makes you want to give up. However, the article brings up a good point that with Obama wanting to take away private student loans, normal loans may go up because of lack of competition which is why i said we are stuck between a rock and a hard place.

  28. 28 Hyo Kim May 12, 2009 at 8:51 PM

    I also think this is a great idea, this could be beneficial to government and also to student. however, I wish president Obama makes this also easier to International students.

  29. 29 Rachel Sturm May 12, 2009 at 10:15 PM

    While I like that it would be the government backing the loans giving to students, it makes me wonder where the gov is planning on getting the funds for all of these loans? If they print more money, inflation will go up and it will cost more to attend college. Plus, wont some of this money come from taxes that we are already paying? We would be paying for the govn’ to lend us our own money to attend colleges that are already charging outragious tuition. Loans by the government would be safer of an investment, but I think I would sure make a mess out of the banking/loan system….even more so then it already is.

  30. 30 Lucy Hwang May 13, 2009 at 3:05 PM

    Personnally, current student loan system doesn’t help student because of astonishing high interest. Although I never use it, I heard many friends were regret to get a student loan. Tush, this is a very good news to hear. Especially for highschool students who are willing to go colleges. I saw many many friends who got accepted top schools, but went to cheaper-worse- colleges. What a wasting? The qualified kids can’t study. Their possibilities just died out because of money. Direct student loan will help those people a lot..

  31. 31 Gabriel Mayora (Macro-Theory SMC) May 13, 2009 at 8:31 PM

    Under Obama, chances are better that students will get more help and have cheaper loans. I really hope that cutting the middle man helps students since I know what it is like to have student loans. Direct payment from the government would be so beneficial for students and is a good investment. Yet i wonder how the government will accurately review our financial reviews since it is carefully analyzed to determine how much money one receives. It is an interesting subject to follow.

  32. 32 Jim Castilone May 14, 2009 at 2:31 PM

    I that this will really be a good thing. Going to Saint Mary’s, I know a lot of people who have to take out student loans. They are literally dreading when they get out of college because that’s when they have to start paying back loans. I think that cheaper loans will benefit many students who are trying to get great educations

  33. 33 Casey Kingdon May 14, 2009 at 7:51 PM

    I say we go for it, by we i mean Obama. It would be a good thing to eliminate this middle man, and make student loans cheaper. In this time where drastic change is needed, little things like this may be essential to bring our economy back to the long-run swing of things. I mean, the worst that could happen (i hope, and we can never really know) is that we just return to the original way of giving out student loans. What have we got to lose at this point!

  34. 34 tmt2 May 14, 2009 at 11:22 PM

    I am glad that Obama told the government to stop doing that. Why are they holding back money that will help students get educated? Hopefully the money will be handed to those who needed without additional charges but I doubt that.

  35. 35 Kevin Clark St marys May 15, 2009 at 11:38 PM

    I agree with the decision to stop backing the private sector of the student loan market. If the government is backing these private loan sharks then we might as well cut them out and hope like the article suggests that cutting them out saves us money rather then eliminating competition and driving up prices through a goverment run monopoly. All we can hope for is that the right decision is made and it works out, its easy to sit back and use hindsight and say he should of done this or should of done that, stop second guessing the president and support the nations commander and chief.

  36. 36 Michelle V May 16, 2009 at 7:33 PM

    I think this is a good thing because people should not be profiting off of education. Educated people give back to the economy everyday and there is no reason that student loans should be charging interest for these people to get an education. There is no reason why a person should still be paying off student loans so many years after college at times in their lives when they are looking to start a family and buy a home and everything.

  37. 37 Hannibal May 17, 2009 at 12:56 AM

    Maybe this is a strong point for me because I have student loans myself…but I do feel this is so important. How can students who are trying to achieve goals get anywhere if they can’t afford tuition? I remember trying to apply for a loan this last year and almost all banks had stopped doing private or student loans. I freaked out thinking what am I going to do for tuition this year, will I still be able to go to school?

    I appreciate Obama’s concern for students and education. It’s comforting knowing he doesn’t take this lightly.

    P.S. Let’s get out of Iraq already!

  38. 38 Cole Scharton May 17, 2009 at 11:29 AM

    While this would not stop private student loans, it would raise the interest rate to the point that I doubt students would be able to take such loans. Especially since currently student loans cannot be wiped out by bankruptcy, if the government stopped backing the loans, I am sure many of these loans would later be wiped out. This seems like a way to phase out independent companies who are invested in helping students through school, not necessarily the nicest thing to do. Actually it seems like a way to monopolize the student loan market. I understand the desire to control the market, but that sort of conflicts with the interest of the country. This could also possibly increase unemployment as many people work at these companies who offer student loans. I really don’t feel this would have a higher benefit than disadvantage.

  39. 39 Simon Kudus May 17, 2009 at 8:11 PM

    I think this would be a great idea. It would make it would end up less because the isn’t competition and there isn’t a middle man trying to get their cut. Also I think people would take paying back their loans more seriously if the government is involved. And at the end of it would probably help create more or at least better jobs. Anything that helps with employment is always good especially in these times.

  40. 40 Robert LaVoy May 17, 2009 at 11:10 PM

    Ya Hopefully the middleman savings outweighs the loss of private competition. I’m not sure if this is going to be a good idea. The private competition has to be pretty steep. This is just another example of how President Obama is turning our society socialistic.

  41. 41 Leticia Martinez May 18, 2009 at 7:49 PM

    They say it would “end at highly lucrative business” but to the benefit of the students. However, I’m not so sure I have the confidence in the government to keep loan costs down for students, after all, they’re trying to make money too. Sometimes the government tries to step in too much but is it really worth it? Private competition is the only check we have to combat a monopoly & this is essentially creating a monopoly.

  42. 42 Alyssa McKinney May 20, 2009 at 8:06 PM

    The LAST thing that needs to happen right now is to put students into greater debt. If you start off a new group of job market applicants with tens of thousands of dollars worth of debt, you’re just asking for trouble.

    This is a case where Britain has it right. Government issued student loans are collected once you get a job. After you get a job, you pay a small percentage, but only after you make a certain amount of money. If you haven’t managed to pay your debt back in 25 years, they get rid of it for you

  43. 43 Mva89 May 20, 2009 at 8:27 PM

    I believe this is a very wise decision. It will make it easier and cheaper for students to access student loans and will help many people being able to get them so they can afford an education. Having educated people is very important for our economy, especially right now. The competition for jobs is huge, if you dont have an education you dont really stand a big chance.

  44. 44 Craig K May 20, 2009 at 9:25 PM

    I agree that there should be more direct financial aid instead of private student loans. Loans are a risky way of supporting students because of the unstable economy and the fact theat they may not be able to find work out of college. If that is the case, which is most likely a popular one in this day and age, then the student has no way to repay the loan and we are in a worse off situation than we began in. Direct aid would allow the student the freedom and time to find a good job, which would slower unemployment, raise moral, and boost the economy.

  45. 45 Claudio Ramirez May 26, 2009 at 2:30 PM

    I believe in the short-run this could be a good idea with the interest-rate on students loans at an all-time high as we speak. I also think that the government over-values private college and yeah they might cost twice as much to attend but the essence of recieving a good college education falls on the shoulders of the student and his willingness to learn.

  46. 46 quique May 26, 2009 at 10:28 PM

    hopefully by cutting the middle man out it is indeed a better situation for the students. it is also a good way for the govt. to make a little bit of money. and it would be better if it made the student loan process easier to recieve a loan.

  47. 47 stacey smarker August 5, 2009 at 11:48 AM

    Yes it is true that if you cut out the middle man it is always going to save you a buck. It may make it easyer for the students to get their loans, but then what about the people who abuse the loans. What will that standards be in order to get that loan for students. I do thing that is will help getting people back in to school rather than waiting to see if they qualify.

  48. 48 Nick Pasquale December 6, 2009 at 8:19 PM

    I think that this would help out students a lot. Because students can graduate from college and have trouble paying back the student loans that they received so they get in debt and it effects them for a long time. With Obama as president the students are bound to get more financial help.


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