We need more college graduates, says Obama

April 27, 7:36 AMCollege Admissions ExaminerLauren Starkey

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Joined at the White House by University of Maryland student Stephanie Stevenson in the White House Diplomatic Reception Room, President Barack Obama called for an end to federal subsidies of bank-backed student loans. These subsidies cost taxpayers $15 million a day, according to the Associated Press. 

Obama’s plan would eliminate the role of the lender in the loan process and offer financial aid directly from the federal government. Not surprisingly, lobbyists for lenders have never been busier, working congress to defeat the proposal.

According to the President, “this is not about growing the size of government or relying on the free market - because it’s not a free market when we have a student loan system that’s rigged to reward private lenders without any risk. It’s about whether we want to give tens of billions of tax dollars to special interests or whether we want to make college more affordable for eight and a half million more students."

The proposal would mark a return to the loan financing system of the 1970s. The Daily News reports that the shift to private financiers, which has provided billions of dollars to the banking industry, occurred during the Bush era.  About 76% of all student loans since 2006 were provided by private lenders, according to industry statistics.