U.S. Education (ED) Secretary Arne Duncan told eCampus News on June 12 he will work with private lending companies as the Obama Administration pushes for a direct federal student loan system, adding that he will not compromise in extending college money to low-income students or in bolstering the nation’s college-completion rate.
“I just think we should be in the business of investing in students and not in subsidizing banks,” said Duncan, who added that the federal government underwrites about 97 percent of student loans every year, with most of that money coming from private lenders.
Duncan’s remarks came during a wide-ranging interview at department headquarters in Washington, D.C.
Duncan has led the charge in the Obama Administration’s proposal to have student loans come directly from the federal government and save tax payers more than $90 billion by doing away with the lender-based program in coming years.
Extending loans to students who may not qualify under the current system would not just help teenagers finishing high school, Duncan said, but would also aid low-income grade-school children whose parents have been laid off in a down economy and now see higher education as an expensive luxury for middle-and-upper-class families.
“I worry about smart kids whose dreams start to die at a young age,” he said. “So I would love to be able to say to the country, ‘It doesn’t matter what’s going on at home. … If you work hard, we’re going to have money there.’ … So we can tell not just [high school] juniors and seniors, but 9, 10 11 year olds, ‘Work hard and you’re going to be ok,’ and be able to mean it.”
***See page 3 for audio of the eCampus News interview with Arne Duncan***
President Obama’s 2010 budget — for the fiscal year starting Oct. 1 — includes a major shift in the Pell grant program, which would increase by 13 percent, making more money available while expanding student eligibility. The maximum Pell grant under the new plan would be $5,500.
The federal government would continue to offer direct lending as college applicants struggle to find lending companies willing to loan tens of thousands of dollars every school year while the financial markets have been in flux. Obama’s 2010 budget proposal also alters the federal Perkins loan program to encourage more opportunity for low-income applicants. Universities and colleges that provide need-based aid for students would be rewarded with Perkins funds, which would increase from the current $1 billion annually to $6 billion in the newest budget plan.
Increasing the number of students who can afford college, Duncan said, would not just advance education, but would also train a 21st century workforce that could help the country out of its current recession.
“I think this is one of the most important things we can do,” he said.
Online colleges and universities are benefiting from the wave of federal dollars alongside their brick-and-mortar counterparts, thanks to a 2005 law that made web-based students eligible for Pell grants and other federal assistance, higher-education officials have told eCampus News.