well, why not, I mean they screwed it up so why not have us pick up the tab?

This is what comes of our elected idiots who's expertise is nothing more than cadging votes blowing up another financial practice, and using their positions to lay it off and pretend all is well. It must be wonderful to be able come out of some district somewhere after winning an election and all of a sudden presto chango, become an expert in markets.
And Bush of course who has rarley met a spending bill he doesn't like will sign...oh joy.

Bailout of the Year
April 24, 2008; Page A12
Guess who's asking Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke for a bailout now? Hint: They are members of an exclusive club who bet wrong on the credit markets last fall. No, it's not a cabal of Wall Streeters, but Democrats in Congress.

We're referring to the "student loan crisis" now appearing in a media outlet near you. In September, Congress vowed to make education more affordable by passing the "College Cost Reduction and Access Act." The law reduced the interest rates borrowers pay on federally insured student loans. Backed by the Federal Family Education Loan Program, these loans account for more than 70% of education lending. Taxpayers will fork over $7 billion by 2012 to pay for the rate cuts.

But Congress didn't stop there. Convinced that the private lenders who make these loans were reaping too much profit, Congress also cut the yield on each loan. The return on the popular Stafford loan for undergrads was reduced by 70 basis points. For loan consolidations, Congress cut returns by 65 basis points. In a vibrant market, banks might have absorbed these hits and continued to lend. But the combination of legislative fiat and fewer investors willing to buy asset-backed securities amid the credit crunch has put the squeeze on lenders.

What's now clear is that Congress didn't merely wring the profits out of student lending. It's blown up the entire student loan market. Market leader Sallie Mae says it now loses money on every new federal education loan. Sallie continues to lend in hopes of a change in D.C., or increased investor demand for securitized loans.

Others can't wait. A third of the nation's top 100 lenders to students in 2007 have temporarily suspended new loan originations or exited the business altogether. Citibank subsidiary Student Loan Corporation cited "unprecedented federal legislation" in announcing its recent withdrawal from much of the market.

Usually, the law of unintended consequences takes so long to reveal itself that no one remembers the culprits. But the speed at which Congress's student lending changes have gone south is raising political danger for Democrats, if Republicans had the wit to point it out. (They don't; that's why they're Republicans.)

Democrats would thus like to clean up the mess they created before May, when a flood of college-bound seniors will seek loans. But the pols can hardly repeal their autumn blunder mere moments after taking credit for it. No doubt many of them are still sending out taxpayer-financed mail bragging of their "achievement."


The result is that the same man who authored last year's bill to cut lenders' returns has crafted a new bill to subsidize those same lenders. Last week the House passed Education and Labor Chairman George Miller's latest foray into collegiate finance. The bill gives the Department of Education new authority to purchase loans directly from lenders.

To summarize: Congress mandated a return on student loans that is too low to attract private capital in the current market. So Congress will now use your money to create artificial investor demand. Taxpayers will bear more risk so that Congress can fashion a new business model to replace the one it just destroyed. The Bush Administration, unwisely but typically, has endorsed this approach.

Oh, there's more. Mr. Miller's allies in the Senate understand that legislation moves more slowly on their side of the Capitol. There may be too little time before the angry phone calls from parents target the 202 area code. So the same Senators who gave us the autumn accident have begun a letter-writing campaign to request that bailout we mentioned earlier.

Daniel Akaka, Bob Casey, Tom Carper, Chris Dodd, Tim Johnson, Bob Menendez and Jon Tester are desperately seeking a bureaucrat with a large checkbook to rescue them from their self-made political disaster. Last Thursday they wrote Mr. Bernanke asking him to accept student loans as collateral under the Fed's new Term Securities Lending Facility. They sent a similar letter to Treasury Secretary Paulson asking him to order the Federal Financing Bank to buy student-loan-backed securities.

So having raised solemn alarms when the Fed began to accept dodgy mortgage-backed securities as collateral, the Senators are now demanding that the Fed accept dodgy student-loan paper too. The Senators helpfully note in their letter that a virtue of their proposals is that they can be implemented quickly. Indeed, November is just around the corner.

Needless to say, none of this legislative history is appearing in the multiple media sob stories about students who can't get loans. But like airline passengers stranded this month due to panicky inspections, the current student loan "crisis" didn't have to happen. It is entirely a product of Congress.

Bailout of the Year - WSJ.com

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We few, we happy few, we band of brothers;
For he to-day that sheds his blood with me
Shall be my brother; be he ne'er so vile....

Tl; Dr

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"Take me back to the way life's never been."

Question: how can the governement set the interest rate for loans that are provided not by them but by private institutions? How do they convince the private company to set those interest rates? Moreover, how can they determine the yield? Isn't the yield an end figure and not, like interest rates, an input figure?

We have a student loan program here, it's entirely governement-operated though.

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When you're taking in refugees from Iraq, Somalia and Sudan, are you then aiding ethnic cleansing?

they wrote a law saying that the student loans can only yield a specific rate of return by % to the lending institutions who lent the money, in effect capping what they could charge.
The institutions said so long, we can lend our money at a better rates and less risk somewhere else and opted out of making student loans.

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We few, we happy few, we band of brothers;
For he to-day that sheds his blood with me
Shall be my brother; be he ne'er so vile....

And a "student loan" in this case means any loan granted to a student? So there are no alternatives for students?

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When you're taking in refugees from Iraq, Somalia and Sudan, are you then aiding ethnic cleansing?

There are alternatives but they could require paying up to a 15% interest rate on a private loan or they could require going to a state school, living at home with mom and dad, and covering tuition with federal and state loans.

This isn't going to prevent anyone from getting an education, but it's going to make it more dificult and maybe limit some options.

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Is there any good reason that state schools arent free to those who choose to attend? Why in America are we cornering young adults fresh out of high school with thousands of dollars in debt just so they can get a higher education and decent job. It makes no sense to me.

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Abstinence Education at its finest:

As a person who does business with 5 colleges....let me just say - they ain't hurting a bit.
Of all the industries I work with, colleges waste an ENORMOUS amount of money...from grossly overstaffed offices to positions where MAYBE 10-15 hours of actual work per month is done.
Colleges could reduce tuition by 20-%-30% - and get rid of unnecessary positions and reduce staff to at least a number that makes sense.

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If a man had the wealth of a kingdom, without care and diligence it would be brought to nothing.

Because running a college isnt free? Someone has to pay, be it the student, or the taxpayer. Also, like everything else, the people defaulting on loans make up a minority. 90% of us pay our loans back on time. Its the 10% that get all the news coverage.

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http://www.fairtax.org

Elminate all taxes on income and replace with a national sales tax.

Right on. I cant even imagine the watse that goes on around sports teams at colleges. One problem with college is that it has become more of a party than an education. More students should be steered to vocational schools, which are quicker and cheaper, than 4 year colleges where they drink more than they study, and in any case have to waste 2 years taking classes they already did in high school, and will forget anyway. Do high school grads really need another 2 years of math in order to get a art history degree?

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http://www.fairtax.org

Elminate all taxes on income and replace with a national sales tax.

Most of my collegiate education has been in business or engineering so I never even though about how useless some degree requirements are (engineering and business degrees don't offer a lot of room for "fluff").

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Is our children learning? -George W. Bush

"I think—tide turning—see, as I remember—I was raised in the desert, but tides kind of—it's easy to see a tide turn—did I say those words?"—Washington, D.C., June 14, 2006

"[T]he illiteracy level of our children are appalling."—Washington, D.C., Jan. 23, 2004

Engineering and sciences studies are on the decline in the US, have been for some time. A BA in 'business' is still the arts, which in our service economy allows a better chance at climbing the ladder in fast food or bedpan emptying.

The real reason banks stopped funding student loans wasn't because of interest rates but due to the inability of packaging them into insured securities in that now devastated market. Banks often participate in swaps, purchases and syndicated lending where their margin is 25-basis points, something that's very feasible when one's reserves are non-existent and return on capital can be calculated to include interest revenue.

Athletic programs at competitive schools normally generate far more revenue than costs and large alumni bequests. The purpose of college is two-fold, an education in higher learning and the development of critical thinking by exposure to people with different socioeconomic backgrounds and professors who think both inside and outside the box. That's not going to happen at Oral Roberts U or Tug's Dieselmechanic/Hairdresser/PCTech mill. And I do agree, more often than not many people are socially and mentally ill-suited to the exposure of a traditional four-year college.

Are Math and Engineering studies really on the decline or have the number of students enrolling increased at a much slower rate than liberal arts majors... coincidently isn't the proportion of women enrolling at college's increasing ?

Corelation does not imply causation I know, but still I yawn @ the obviousness of it all.

Also I was under the impression College's were meant to train you to become worthy of the 4 year degree. Not to serve as an approvals process for those already gifted ?

Who declared this some sort of "core goal" of higher education? I don't remember that referendum coming up at any time... In fact, in an effort to make actual education the focus of the experience, many people go out of their way to avoid that nonsense.

Explain to me your concept in relation to, ahem, "traditionally black" colleges/universities and non-coed institutions, but somehow make the points such that they don't also apply to religion-associated higher education institutions...that is, if you can without torturing your logic too much...

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"Compassionate Conservatism"?!?! Stupid phrase. Conservatism is inherently compassionate. It is liberalism that is cruel for the sake of maintaining a constituency.