WASHINGTON (CNN) – President Barack Obama says he wants to eliminate what he calls the "middlemen" in the federal student loan program, but he says those middlemen are banks and lenders and he predicts that he's going to have a fight on his hands.
"You have probably seen how this proposal was greeted by the special interests. The banks and lenders who have reaped a windfall from these subsidizes have mobilized an army of lobbyists to keep things the way they are. They are gearing up for battle," Obama said Friday, adding, "So am I."
Obama discussed reforming the federal student loan program at a White House appearance. His proposals include ending the Federal Family Education Loans program, which involve banks and lenders, and shifting those funds to loans directly to students.
Obama said eliminating that program would end a system where lenders are given billions of dollars "in wasteful subsidies that could be used to make college more affordable for all Americans."
"Under the FFEL program, lenders get a big government subsidy with every loan they make, and these loans are then guaranteed with taxpayer money, which means that if a student defaults a lender can get back almost all of its money from our government," he said.
"There's only one real difference between direct loans and private FFEL loans. It's that, under the FFEL program, taxpayers are paying banks a premium to act as middlemen, a premium that costs the American people billions of dollars each year. "
Eliminating the FFEL program would be "a step that even a conservative estimate predicts will save tens of billions of tax dollars over the next 10 years," Obama said.
Those savings, he said, would help pay for expanding the Pell grant program, which Obama said nearly 30 percent of students rely on to put themselves through college.
In his remarks, Obama referred to "sweeping steps" in helping finance college costs, reforming some programs, expanding and modernizing others and making a $2.5 billion investment in initiatives to boost enrollment and graduation rates.
Obama emphasized the importance of a college education. He said half of the fastest-growing jobs in the United States require at least a bachelor's degree.
"If you don't have a college degree, you're more than twice as likely to be unemployed as someone who does," Obama said.
"It's never been more important to have a quality higher education," he said, noting "the cost of that kind of education has never been higher. Over the past few decades, the cost of tuition at private colleges has more than doubled while costs at public institutions have nearly tripled. Compounding the problem, tuition has grown then times faster than a typical family's income, putting new pressure on families that are already strained and pricing far too much students out of college all together."
He said the trend of "quality higher education" slipping out "of reach for ordinary Americans threatens the dream of opportunity that America promised to all of its citizens and threatens to widen the gap between have and have-nots and threatens to undermine competitiveness because we cannot lead in the 21st century unless we have the best educated most competitive workforce in the world."
There is no question that President Obama needs to do something about student loans. Thank you, Mr. President!
No matter what Obama does, the whining Republicans, without using their brains, will always fight the Democrats. The Republicans have PROVEN they could care less about middle America! 2010 needs to see a drastic REDUCTION in any Republicans getting voted in. They do nothing but whine, say no (even if it's good for the nation), complain no matter what. They should all move to Texas with Bush.
Oh come on. Cant you pay for it yourself. Give me give me give me. Why not make them go into the military first and earn the darn money.
What a concept! Student loans that are aimed at helping students, instead of lining the pockets of middlemen.
Yes, thank you Mr. President.
I rarely agree with President Obama on things...
But I agree with him on this one
How much do you wanna bet that the same conservative nut jobs that were screaming that we should be giving bailout money to the people instead of bailing out the banks are going to be the same ones screaming that Obama's trying to take down the banking industry.. I'll be tuning into conservative talk radio today just to see :)
Great, but where are the jobs, with Cap and Trade coming....India,China...............
Typical liberal president, spending money our children's future. I don't know about you, but I don't want my kids educated, I want them to grow up to be cynical, closed-minded individuals just like myself. And did you hear, the government is taking our taxes. I just can't stand living in a country where we owe taxes, what gives him the right? We should organize another tea party, since the last one was so successful.
Obama, you were just in Iowa and promising jobs, but what have you done, NOTHING. I am very well educated and I really dont want to move, but you and the governor of this state are DOING NOTHING of increasing the employment possibilities for people with or without educations. Obama and the Governor of Iowa are ALL TALK and SMOKE SCREENS.
Student loans are high, but it takes jobs to repay them.
The purpose of student loans is not to make lenders fabulously wealthy. The purpose of student loans is to keep kids in college.
Thank you. this is why I voted for you. I have to get my daughter to college
President Obama is truly the president of the American people and not just the fat cats.
Obama! Obama! Obama!
Go Mr. President. Thank you for supporting the people.
President Obama is finally tackling the problems that other administrations have ignored for decades.
President Obama is willing to actually work on behalf of the American people to try make things better for them, and I applaud him, and really appreciate him for that!
How about we cut out the middlemen with health care, too? Government run healthcare is "great" over there in Europe, with so many long lines and miles of red tape some Europeans get sick on purpose! Why not cut out the middlemen in employment, too? Businesspeople are just dogs in suits, right?
Heck, let's cut out the middlemen in reproduction, too–children need a trustworthy Uncle Sam to birth them, not these unqualified "parents"... Why not enter the brave new world Czar Obama is preparing us for.
This is great. Our President is standing by his campaign promises.
forgive student loans. give the people who will make a difference in society a bailout!
I cant believe there is only one comment on a story that could effect us and our children's well-being. This is the problem in america no one has respect for academics. We are a nation of imbeciles, we have to respect education more!! This is more important news than what Palin and Levi are doing. Grow up america, and concentrate on what issue is really important.
To make college more affordable he needs to stop his professor friends from raising tuition more than double inflation rate every year. Maybe he needs to keep the educators out of college cost decisions like he needs to eliminate the lawyers from our medical cost. The kids in school now will have a hard time paying their loans back when he raises taxes when the Bush tax cuts expire and they have to pay for cap and trade on energy raising their cost at last estimate of $3000.00 a year per household.
Thank you, Mr. President!
Finaly somebody who see where the problem is! Keep-up good work Mr. President, maybe you will be remembered bigger then Lincoln!!!!
Good! Cause I want to go back to school. And be able to pay for it. Thank you Mr. President.
Great speech today. He is on the right track!
God bless you!
Get 'em Mr. President. Just send me an email where to send the money!