FAP534: Sallie Mae emails, campaign 2008, Drexel, repayment, Matthew Ebel

Student Financial Aid News
+ In the last week or so, higher education appears to have arrived as a 2008 campaign issue. Democratic candidates are vying to be the boldest defender of student loan borrowers and one in particular — John Edwards — has issued proposals that are unusually detailed for this early in a campaign. And in a sign that Edwards’s move was noticed, Barack Obama followed Tuesday with a plan of his own.
+ On Friday, Edwards — the former North Carolina senator and vice presidential nominee — formally proposed that the guaranteed student loan program be abolished and that all students borrow through direct lending — in which colleges, not banks, pass loan funds to students. Edwards said that by eliminating subsidies to lenders, $6 billion a year would be saved — funds he would direct to new grant programs for students. On Tuesday, Obama, the Illinois senator, held a conference call with student journalists to formally offer his pledge to eliminate all lender subsidies and convert borrowing to direct lending.
+ But Henry Howard, CEO of U.S. Education Finance Group, issued a statement denouncing Obama within hours of his plan being released Tuesday. “As a lifelong Democrat, I am disappointed with Senator Obama’s proposal to take away Americans’ right to choose their own lender, abolish competition, and push everyone into a one-size-fits-all, inefficient, student loan monopoly. Such a proposal would result in increased borrower interest rates and mandate that the government serve as the only preferred lender.”
+ A spokeswoman for Howard elaborated that all of those criticisms applied to the Edwards plan, too.
+ “Fight on, Drexel!” “Stand Strong Drexel!” Those were representative of the comments that flowed from some financial aid officers and other college officials last month when New York Attorney General Andrew M. Cuomo threatened to sue Drexel University and the Pennsylvania private institution vowed in strong terms to go to court to defend the revenue sharing arrangement it had with a lender. Some campus officials felt that Cuomo and other critics were painting their industry with an overly broad brush and overreaching in implying that laws had been broken. Someone needed to stand up to him, they suggested, and Drexel took up the mantle.
+ But Tuesday, Cuomo’s office sent out the latest in its steady stream of news releases about colleges or lenders settling the attorney general’s accusations against them, and this time, Drexel (as well as Capella University) was featured.
+ Drexel officials did not return telephone calls seeking an explanation for their drastic about-face. In a brief written statement, which was not available online as of Tuesday evening, the university said that it had settled as a way of “avoiding the expense and distraction of protracted litigation.”

Scholarship Update
+ US Department of Justice Attorney Student Loan Repayment Program
+ Matching funds up to $6,000 towards federal loans of $10,000 or greater
+ 3 year service term required
+ Details at our free college scholarship search site

Mail Bag
+ Luke writes in: Hey Chris. Did you do a show on Sally Mae emailing people about hikes that are starting in July and wanting students to contact them so we could lock down our interest rates? I should listen to the show more often.
+ Ah, yes. The text of the Sallie Mae email is on the web site.
+ Something of a perceived sense of urgency… which isn’t urgent.
+ Facts: 91-day T-Bill rates are declining, currently at 4.70%
+ Final rates for student loan consolidation purposes set on May 28, 2007
+ Virtually every lender including us will be offering student loan consolidation at the lowest rate possible
+ Oh yeah, lowest statutory rate? Everyone has to offer it. That’s what statutory means.
+ Check out the full blog post here

Podsafe Music
+ Matthew Ebel, Trees – Live from U-Turn Cafe

Reminders

+ Private student loans
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+ Financial Aid Podcast Show Notes at FinancialAidNews.com.
+ The Financial Aid Podcast is a publication of the Student Loan Network.

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