Barack Obama Conference Call

Proposing a change
Sen. Barack Obama discusses his ideas of reforming student loans in an exclusive interview

by Scott Bolohan
Staff Writer

Sen. Barack Obama (D-Ill.) held a conference call with student newspapers to discuss his plan for reforming student loans on Tuesday.

Under his plan, Obama would eliminate loans from the Federal Family Education Loan program (FFEL). Under the FFEL program, Obama said the federal government makes subsidy payments to banks that ultimately costs taxpayers billions of dollars every year, and over $15 million a day in subsidy payments.

"Today I’m proposing the elimination of these subsidies all together, just as I did in 2004. By removing private lenders from the process, requiring that all federal loans are provided directly from the government, we’ll save billions we can use to make college more affordable," Obama said. "This year, my plan would have saved us roughly $6 billion that could have been used to provide us with more than one million new Pell grants and other forms of need-based aid that could have gone to students struggling to pay their college bills."

Recently, the FEEL loans have been a topic of controversy following the uncovering of funds and other unethical practices including bribes paid out by lenders to schools.

Obama’s announcement comes on the heels of former Sen. John Edwards (D. N.C.) announcing he was in favor of eliminating the FEEL loans on May 11. However, Edwards would use the money to start a program he calls the "College for Everyone" program, which would provide two million students with scholarships to cover one year at a public college if they agree to work part-time in college and to take classes in high school that would prepare them for college.

Obama cited the increase in tuition costs in colleges as another reason for the need to reform the student loan system.

"Tuitions and fees to private colleges and universities have gone up 11 percent in the last five years, nearly 6 percent the last year alone, and this is an even bigger problem at public institutions. Over the last five years, the costs at public institutions jumped an unbelievable 35 percent," Obama said. "As a result of these increases, there are at least 200,000 students who were qualified to go to college but couldn’t go because they were priced out of a college education."

According to DePaul’s Web site, $284 million is awarded to DePaul students in the form of financial aid, with 65 percent of all undergrad students receiving some sort of aid. In the last year, the tuition at DePaul will increase 6 percent for next year.

"It seems to me that it’s nice to have the option of choosing a private loan, but I think that putting the $6 billion toward Pell grants can be more beneficial to those who truly need federal aid to attend college," said Patrick Powers, a sophomore philosophy and religious studies student.

Obama said he personally experienced the struggles of paying for college, although things have become worse since his time in school.

"When I went to law school, all my student assistance came in the form of aid and my wife went to law school as well. Just to give you some sense of the magnitude of the debt, our combined loans were bigger than our mortgage for our apartment for eight to nine years," Obama said. "We were lucky, as folks practicing as lawyers, we could afford to service the loan. But had we decided we wanted to go into teaching for example, there’s no way we could have afforded to pay them off. I think that’s a problem for students looking at careers and professions that students have to end up confronting."

Obama also criticized the schools, themselves, for frivolous spending and passing the expenses to the students.

"I think a lot of universities will spend money on state-of-the-art facilities and trying to attract the celebrity professor instead of just focusing on the nuts and bolts of a good education," Obama said. "I think it’s important for students to ask where the university budget is going, and how is it being spent."

Obama cited many reasons for why young people should be interested in the presidential election. There will be challenges that young Americans will need to address, such as the cost of college, federal debt, globalization and sustaining long term progress in economic growth and jobs.

"I think the feeling of many young people is that we keep kicking the can down the road when it comes to these challenges, and unless we step up now and start making some significant decisions…," Obama said.