Open Letter to Senator Charles Schumer

7 October 2008 1 views One Comment

From NCHELP:

In response to the continued tightening of the private student loan market, Senator Charles Schumer (D-NY) yesterday unveiled his four-pronged plan “to protect students and families who struggle to pay for college.”

“We need to build an impermeable wall around the student loan market to protect our kids from this financial crisis,” Schumer said. “With all types of credit tightening up, we need to ensure that families and students can get the loans they need to pay for college. If even one high school grad has to forgo college because they can’t get the loans they need to pay for it would be a great casualty of this economic crisis. We need all hands on deck to make sure that the student loan market is protected at all costs. My plan will both protect borrowers right now and over the long term should things get worse.”

Senator Schumer,

Might you consider instead asking your colleagues in the Senate and House to allocate some of the trillions of dollars spent on bailouts towards the Pell Grant Program instead of more loans? We don’t need an impermeable wall around the student loan world. We need to get money to people at the grassroots level, not Wall Street.

In case you were wondering, I work at a student loan company. Heck, I’m a senior executive at one. You’d think I’d be thrilled at the idea of making sure student loans are available at all costs, but the honest truth is, I’m not. Yes, absolutely, I still want my company, the Student Loan Network, to do well, to provide legitimately useful products and services to anyone interested in higher education, but I also firmly believe that college students and families need more than just more loans.

Let’s run the numbers:

$150 billion for Fannie Mae
$150 billion for Freddie Mac
$85 billion for AIG
$30 billion for Bear Stearns
$700 billion for a general bailout plan
$900 billion for an expanded Term Auction Facility
Up to $1.3 trillion for unsecured corporate debt

Total: $3.315 trillion

Total size of the annual student loan marketplace: $100 billion

For the amount of money used for bailouts already allocated, you could have paid off every single student loan in the country several times over. You could have released an entire generation from debt and provided a real economic jolt by helping those citizens who borrowed to invest in their futures keep more of their monthly income.

So here’s my plea, even though it would mean less business for us: don’t protect the student loan marketplace. Protect the students themselves by using just a small amount of the $3.315 trillion to increase grants, scholarships, and other non-loan opportunities.

Thanks.

Christopher S. Penn
Chief Media Officer, the Student Loan Network

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