Treasury wrong to bail out private student lenders
If the progression of industries begging the Department of the Treasury for bailouts has left you increasingly unsympathetic, consider these people the icing on the cake: the ones you’ll be indebted to for 20 years after you graduate. In a recent change to the Treasury’s bailout bill, the government has announced that part of the money will be used to guarantee consumer lending in order to stimulate spending in the economy. Among possible candidates were private student lenders, more than 60 of which have, in recent months, ceased offering loans. The possibility has ignited a heated debate among education circles as to whether the decision places the interests of students at heart. Some wonder whether the money could be better placed. And while the Secretary of Education has already indicated that she will bolster federal loans, some feel that private loans should receive no assistance, or that any bailout package given to private lenders should include more stringent guidelines to benefit students. Critics, such as the American Association of Collegiate Registrars and Admissions Officers, American Association of State Colleges and Universities and half a dozen similar groups recently sent a letter to the Secretary of Treasury urging his department to reconsider. Their concern is understandable – just last year, a massive scandal broke over conflict of interest between university financial aid departments and private lenders, especially notable since it’s many of the same groups implicated in last year’s scandal that are now cheering the Treasury’s decision.
