Sen. Barack Obama, D-Ill., called for the elimination of government subsidies to student loan providers on Tuesday in a nationwide conference call with student reporters. The senator described financial aid as one of the biggest problems students face today.
Obama originally called for this measure to be taken in 2004 and noted that recently unearthed scandals, involving such big name lenders as Sallie Mae, underscore the importance of abolishing government subsidies. The government should not be providing “billions of taxpayer funded giveaways to private banks,” he said.
“I don’t think there’s any justification for this,” Obama said.
“This year alone, my proposal would have saved us $6 billion,” Obama said. “This doesn’t solve all the problems of increased college costs, but by taking this step we can start making college more affordable for all students.”
Obama proposed that subsidies to private lenders be cut in favor of mandating that all student loans be provided through the direct loan program.
He said that at least 200,000 students were unable to go to college this year because they could not afford the high cost of tuition.
“I wouldn’t have been able to attend law school without financial assistance,” Obama said, referencing his own experience with financial aid in the 1970s and 1980s.
“Just to give you some sense of the magnitude of our debt, our combined loans were bigger than our mortgage for our apartment for about eight to nine years,” Obama said.
The senator acknowledged the fact that prices have risen much higher since that time, noting a close to six percent increase in the last year alone, and outlined some of the reasons for these raising tuition costs, such as the diminished support of public institutions by states due to tight budget constraints.
“Fewer resources mean they’ve got to make a dollar stretch more,” Obama noted.
The management of university budgets was also on Obama’s list of reasons for high tuition costs.
“In some cases, I think universities will spend a lot of money on state-of-the-art facilities and trying to attract the celebrity professor instead of focusing on the nuts and bolts of trying to provide a good education,” Obama said. “I think it’s important for students as good consumers to be asking, where is the university budget going? How is money being spent?”
“Maybe a university doesn’t need to have the best athletic facilities if they’re offering students a good education at lower costs,” Obama said.
The senator also stressed the importance of reaching out to community college students with better financial aid assistance, particularly because of the large percentage of non-traditional students.
“Those are institutions that can provide a bridge to students or provide training for students,” he said.