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Students Lobby to Pass National Tuition Act of 2005
Publish Date : 12/9/2004 9:45:00 AM   Source : Education and Studies Onlypunjab.com

All bonds distributed by private banks, called “guaranteed” student loans, have historically been charged taxes; however, under current law, student loan bonds are tax-exempt, amounting to $4 billion in government losses. The bond rate for funds distributed to private banks is also currently set at 9.5%, three times current market rates. Also, these lending agencies run no risk when making loans because the federal government subsidizes defaulted loans of individual debtors. The NTE proposes addressing all of these tax loopholes. At the same time, 36 public watchdog agencies, which are engaged in the costly task of ensuring that these private lending banks operate honestly, would be eliminated by the passage of the NTE.

The initiative also proposes to streamline the federal direct student loan program, which facilitates loan distribution without private lending agencies, by eliminating intragovernmental interest rate payments from the Treasury Department to the Department of Education in the process of disbursing direct student loans.

The funds saved by fully privatizing student lending and the interest generated from direct loan consolidation would amount to over $30 billion over the next 10 years for federal taxpayers.

Since the 1990’s, college tuition and fee increases have outpaced both median family income and inflation. At the same time, state and local government contributions to public colleges and universities have been decreasing. As part of a larger effort to draw attention to the drastic fall in the affordability of higher education, the National Tuition Endowment would provide millions of students greater access to postsecondary education.

The issues of the nation’s tuition crisis and the waste of tax dollars in the financing of student loans have been discussed by Democratic and Republican representatives and senators from Colorado, Wisconsin, Michigan, and North Carolina.

At present, student leaders at Columbia University in New York City are contacting over 3,300 public and private nonprofit colleges and universities across the United States to solidify grassroots student support for this issue. On behalf of these student governments, students will lobby Congress to pass the National Tuition Act of 2005 in the spring.