Very interesting video

Chicago Tea Party..

http://www.foundingbloggers.com/wordpress/2009/04/founding-bloggers-exclusive-our-footage-of-the-cnn-chicago-tea-party-throwdown/

FFELP comments

I had a recent comment on my post about Obama and his socialist plan to take over not only the auto industry but the student loan industry. Instead of just sharing the comment and it likely going unread, I am going to publish it in a new post along with my comments. I appreciate the alternative point of view but disagree whole heartedly as someone who use to work in the industry and who is married to someone who still does.


Kudos to the President, the first president who actually had student loans.

The student loan industry is ripe with greed, arrogance, and corruption. The Sallie Mae CEO has taken nearly a half billion dollars personally as a middleman. He now owns three mansioned estates (annapolis, MD / Harwood, MD / Naples, FL), one with a private 18 hole golf course - although an old photo and the golf course is still under construction, you can see where taxpayer subsidy dollars go via Google Maps at coordinates 38°51'38.52"N, 76°40'4.47"W

I know of no industry that is not ripe with greed,
arrogance or corruption. When people are involved, these negative aspects
pop up. It’s not an excuse but it isn’t a reason for the government to
control the industry either.

Sallie Mae owns two private jets - they used to own three. The jets are tail numbered N50FD and N188AK.

And the President of my company, no doubt, owns a boat and a lovely house
but it doesn’t mean he shouldn’t.

That is where the taxpayer subsidies are going, private golf courses and private jets.

When a FFELP loan defaults, the taxpayer pays nearly twice the amount of the loan. Sallie Mae is allowed to attach fees, penalties, and crank the interest rate up to above credit card rates. After a period, they capitalize those fees, penalties, and interests and put the loan to the taxpayer for payoff. So, a 20k loan becomes more than 40k cost to the taxpayer. In the direct program, the 40k might still be the receivable, but it does not effect cash flow as we see with the middlemen involved. Why are we funding this madness?

When a loan defaults, the loan is turned over to the DOE. The DOE will add
additional fees and increase the rates in order to pay to collect the
debt. When you promise to pay a loan back and fail to do so, the lender
has the right to charge a fee. Unlike a mortgage, Sallie Mae and the like
cannot take away your education like a lender can take your home. Everyone
is a taxpayer- the CEO of Sallie Mae as well as you and me. So the
taxpayer who defaulted on their student loan will have to pay more than
borrowed; that is the nature of a loan a defaulted loan is even more
expensive. Student loans are the only loans that allow you to apply a
forbearance or deferment to your account. Try deferring your mortgage
payments because you have an economic hardship let alone your credit card
payments.

Let's not forget the corruption that the subsidies fund. The following student aid administrators got into more than a little hot water for taking kickbacks and other inducements from the student loan industry - most lost their jobs:
Ellen Frishberg - Johns Hopkins
Catherine Thomas - USC
David Charlow - Columbia
Lawrence Burt - University of Texas
Walter Cathie - Widener University
Tim Lehmann - Capella University
Daniel Pinch - Emerson College

Yes, there is corruption in some schools but you don’t cut down the apple tree because it produces one bad apple.

In the investigations of 2007, many Universities were fined for revenue sharing schemes. Specifically, University of Pennsylvania, New York University, Syracuse University, Fordham University, Long Island University and St. John's University have agreed to reimburse students a total of $3.27 million for inflated loan prices caused by revenue sharing agreements.

Perhaps we should nationalize those schools also…

And it just seems to never end. In May of 2009, "District attorney's investigators raided City College of San Francisco on Wednesday, seeking evidence that college officials had illegally spent public money on donations to education-related political campaigns. A copy of a search warrant served on the college shows that investigators are scrutinizing the actions of former Chancellor Philip Day, who left the college last year to work for an education lobbying firm in Washington, D.C." (from San Francisco Chronicle) Mr. Day happens to be CEO of the NASFAA, the organization that represents financial aid directors.
http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/05/07/MNJQ17FTEQ.DTL

Again, this is a college with corruption not a lender and not even corruption-
they were “seeking evidence” meaning none had been found as of yet.
Corruption exists from the White House to the taxpayer house. We are
imperfect people and cannot expect to have a perfect world or system.

CHOICE? Choice is a myth or a lie depending on how you look at it. In 2008, more than 100 Universities were under investigation for more than 90% of their FFELP loans going to one provider. The notion that there is competition in this "market" is ridiculous - the student loan companies pay or induce schools for preferred lender status resulting in nearly all loans at any one school going to one provider. In the above instances, those inducements were to the administrators themselves. From "School as Lender" to call centers to printing - the inducements to schools are great and the payoffs for the middlemen even greater.

There is competition; in most schools, you can choose from a multitude of
lenders. Have you had a different experience? Some schools however, do not allow the student to choose; they are forced to go with Direct…the government run lender. My personal experience is any student that enters these doors can choose from any lender who agrees to make the student loan for them.

Of course, some in congress receive so much cash from the student loan industry, they will try to derail this improvement. Particularly, Buck McKeon and John Boehner receive the most from the student loan industry. Buck and Boehner have been the champions of the industry for years and are responsible for much of the elimination of competition and stripping of consumer protections for student loans - all to the benefit of the middlemen lenders. There are no student loan companies in Buck or Boehner's districts and no meaningful employment by student lenders in those districts. Now, Lamar Alexander is joining in with them. This is pure pay for play.

And Barack Obama received a lot of money from Fannie Mae and Freddie Mac yet
bailed them out- Kudos to the President? Fannie Mae….sounds a lot like
Sallie Mae another of Obama’s favorite GSEs?

Regardless, it appears my point has been missed. The employees of these companies will be unemployed; where will they work? Will Obama help or is this the change he promised? There is more corruption in the government than in the private industry, as your comments proved; so why would we want to turn this industry completely over to the government?

Senator Alexander Statement on Motion to Instruct Conferees On the Budget Conference to Preserve Choice in Student Loan programs

Senator Alexander Statement on Motion to Instruct Conferees On the Budget Conference to Preserve Choice in Student Loan programs

April 24th, 2009 - This should be a relatively easy motion for our colleagues to support because it simply instructs the conferees to support a position that the entire Senate adopted unanimously. That provision during our budget debate was to accept the position of maintaining a competitive student loan program that provides students and institutions of higher education with a comprehensive choice of loan products and services.

Madam President, there are three reasons in support of maintaining a competitive student loan system. The first is that 12 million students rely on it today in New Hampshire, in Tennessee, in North Dakota -- all across our country.

Second is that now is not the time to be creating a new half-trillion-dollar national bank that would run up the debt, a bank that would replace 2,000 private lenders, and make $75 billion in new loans a year. That is not a proper function of the U.S. Department of Education.

And third, the cost savings that is alleged is -- and I will be gentle in my words -- a trick on students to make Congressmen look good. What we are going to be doing if we do not preserve this choice is saying to all the students who get a loan that we are going to take money from them and then give it to other students so that Congressmen can go home and brag that he or she has increased the amount of the Pell grants. Let me be specific in what I say.

I was the U.S. Secretary of Education in 1991 and 1992 when we created something called the Direct Loan Program. We have a federal student loan program. Most people who go to college are familiar with it. About two-thirds of the students at our 6,000 different institutions from the University of New Hampshire to the Nashville Auto Diesel College to Harvard to San Francisco State have a Federal grant or a loan. When you get a student loan, you take it to the institution of your choice.

We now have 2,000 lenders who help provide all those different kinds of loans. They give financial aid counseling, they give interest rate deductions, they help students and families plan on how to pay for college. In other words, they service the loans and then the Government supports that by guaranteeing almost all of the loans.

We set up a separate program which we called direct lending. That was, you could come straight to the Government to get your loan. In other words, we created a government bank run by the Department of Education. We said to the students and to the institutions: You make the choice. You may either have a private student loan guaranteed by the Government through your local bank or financial institution, or you may come to the U.S. Department of Education to get your loan.

We have had more than 15 years of experience with that now, and what have the students and institutions said? Three out of four say we like the regular student loan program, we like the choice, we like the private lender. Since we are getting the loan, we like the idea of going to a bank to get a loan because that is what banks do. If you want a car, you go to a car dealer. That may be changing. You may have to go to the Department of Treasury to get a loan the way the country is going. For 15, 16 years we market tested this and so we have that direct loan program.

The situation right now is we have 12 million students at 4,400 different institutions getting $52 billion in loans by their choice from banks instead of from the Government. One-fourth get it from the Government. It has been that way for a long time.

What the President's proposal wants to do is to take all those choices away from the students and say: Line up outside the Department of Education to get your student loan, all 15 million of you. There will be 4,400 institutions and 12 million students who may not like that.

Second point. Is a national bank a good idea? We read in the paper that the Government is going to take stocks in the biggest banks. So we are going to nationalize the banks. Then we read in the paper the Government is going to take stock in General Motors and Chrysler -- hopefully that is not true -- so we are going to have the Government deciding what kind of car we are going to be making, what kind of plants we will have, where the plants are going to be. I cannot think of a worse organization to do that. This is a proposal to say: All right, now the Government is going to be your bank. It is going to be the bank for your student loans. We are going to create a new national bank. It would have over a half trillion dollars in outstanding student loans. It would make 15 million student loans every year, $75 billion in loans a year.

We will run all this out of the U.S. Department of Education, a wonderful Department. I was myself there for 2 years. But what do we know about being a national bank? Not very much. Andrew Jackson would roll over in his grave about the idea of a national bank of this size.

My final point. This proposal, with all due respect, is a trick on students to make Congressmen look good, and here is why.

The budget we originally got said we will take $94 billion in savings and we will spend it on Pell grants. Let's think about that a minute. Common sense will tell you that the Department of Education is not going to know more, is not going to be able to replace 2,000 lenders at a cheaper cost. That simply is not going to work. That is what common sense would tell you.

The Congressional Budget Office has told us that in order for the Department of Education to administer these loans, it would cost about $28 billion over the next 10 years. That is the computation I have made. They estimate that the cost of administering the current Direct Loan Program is about $700 million a year. So if they did them all, that would be at least $2.8 billion a year.

Conservatively speaking, you don't have $94 billion in savings; you have 94 minus 28. So you have around 66. So you have $66 billion that goes somewhere out to banks, maybe to reduce loans, maybe to reduce interest rates, maybe to administer the loan program. But the bottom line is, if the Government takes this program over, it is going to be borrowing money at one-half of 1 percent and loaning it out to 15 million students at 6.8 percent. Borrowing at one-half of 1 percent and loaning it out at 6.8. On every student loan -- and I hope all 15 million students listen to this -- your friendly Government is going to take back 6.5 percent of the 6.8 percent interest you are paying. What is it going to do? The Congressman or Congresswoman can go home to Tennessee or wherever and say: I increased Pell grants. But they won't tell you: I took money from this student to give it to that student. That is not the way to do it.

What we should do, if that spread is too high right now, is let's cut it down -- if the savings is estimated at $90 billion. We know it is closer to $60. Maybe it is $20, maybe it is $30, maybe it is $35. Maybe we should lower the interest rate to 3 or 4 percent or 5 percent or whatever is the appropriate rate.

But that does not justify creating a national bank in the Department of Education to try to handle 15 million loans.

So my argument, Madam President, is this: There are colleagues on both sides of the aisle -- and there are a number of Democrats -- who strongly support the idea of competition and choice in higher education. That is why we have the best higher education system in the world. We have competition and choice all the way through it. The grants and the loans don't go to colleges; they go to the students, and the students choose the college. They can go to Nashville Auto Diesel College if they want or they can go to Harvard; it follows them to the school of their choice. They ought to be able to go to the lending institution of their choice and not line up outside of the Department of Education to get 15 million loans every year. That is not right. It is not the way our country ought to work. So the first is to preserve choice for the 15 million students who now have it at 4,400 institutions.

The second reason is, let's not be creating another nationalized asset in America. We need to be thinking of ways of getting the Government out of the private sector. I mean, this recession is not for the purpose of the Government taking over every auto company, every bank, all the student loans, and every business that is in trouble. We need to be thinking of ways of going the other direction. That is the America we know. That is the America we want.

So we don't need a new national bank.

Arne Duncan is the new Secretary of Education. I think he is the President's best appointee. He ought to be working on paying teachers more for teaching well, creating more charter schools, helping states create higher standards. That is his agenda. I don't think he came from Chicago to Washington to be named banker of the year, which is what he would be doing if he became a national bank president for student loans. That is what this proposal would do unless the Senate sticks to its position.

Finally, I don't want to be a part of any situation which has Congressmen and Senators playing a trick on 15 million students and saying: I am going to borrow money at a quarter of 1 percent and loan it to you at 6.8, and then I am going to take credit for giving the rest of it away. I think that will come home to roost, and it ought to come home to roost.

I appreciate the opportunity to make this motion to instruct, and I hope it will come to a vote. I hope it has the kind of bipartisan support it had before. I hope the President will think of all the other things there are to do that need attention, such as fixing the banks, getting credit flowing, restoring the auto companies, and leave the student loan system to continue to work in the way it should work.

Amazing Article

http://townhall.com/columnists/StarParker/2009/02/09/back_on_uncle_sams_plantation?page=full

Back on Uncle Sam's plantation
Star Parker - Syndicated Columnist



Six years ago I wrote a book called Uncle Sam's Plantation. I wrote the book to tell my own story of what I saw living inside the welfare state and my own transformation out of it. I said in that book that indeed there are two Americas -- a poor America on socialism and a wealthy America on capitalism. I talked about government programs like Temporary Assistance for Needy Families (TANF), Job Opportunities and Basic Skills Training (JOBS), Emergency Assistance to Needy Families with Children (EANF), Section 8 Housing, and Food Stamps.

A vast sea of perhaps well-intentioned government programs, all initially set into motion in the 1960s, that were going to lift the nation's poor out of poverty. A benevolent Uncle Sam welcomed mostly poor black Americans onto the government plantation. Those who accepted the invitation switched mindsets from "How do I take care of myself?" to "What do I have to do to stay on the plantation?"

Instead of solving economic problems, government welfare socialism created monstrous moral and spiritual problems -- the kind of problems that are inevitable when individuals turn responsibility for their lives over to others.. The legacy of American socialism is our blighted inner cities, dysfunctional inner city schools, and broken black families. Through God's grace, I found my way out. It was then that I understood what freedom meant and how great this country is.

I had the privilege of working on welfare reform in 1996, passed by a Republican Congress and signed 50 percent.. I thought we were on the road to moving socialism out of our poor black communities and replacing it with wealth-producing American capitalism. But, incredibly, we are going in the opposite direction. Instead of poor America on socialism becoming more like rich American on capitalism, rich America on capitalism is becoming like poor America on socialism.

Uncle Sam has welcomed our banks onto the plantation and they have said, "Thank you, Suh."

Now, instead of thinking about what creative things need to be done to serve customers, they are thinking about what they have to tell Massah in order to get their cash. There is some kind of irony that this is all happening under our first black president on the 200th anniversary of the birthday of Abraham Lincoln.

Worse, socialism seems to be the element of our new young president. And maybe even more troubling, our corporate executives seem happy to move onto the plantation. In an op-ed on the opinion page of the Washington Post, Mr. Obama is clear that the goal of his trillion dollar spending plan is much more than short term economic stimulus.

"This plan is more than a prescription for short-term spending -- it's a strategy for America 's long-term growth and opportunity in areas such as renewable energy, healthcare, and education."

Perhaps more incredibly, Obama seems to think that government taking over an economy is a new idea. Or that massive growth in government can take place "with unprecedented transparency and accountability." Yes, sir, we heard it from Jimmy Carter when he created the Department of Energy, the SynfuelsCorporation, and the Department of Education. Or how about the Economic Opportunity Act of 1964 -- The War on Poverty -- which President Johnson said "...does not merely expand old programs or improve what is already being done. It charts a new course. It strikes at the causes, not just the consequences of poverty."

Trillions of dollars later, black poverty is the same. But black families are not, with triple the incidence of single-parent homes and out-of-wedlock births.

It's not complicated. Americans can accept Barack Obama's invitation to move onto the plantation.. Or they can choose personal responsibility and freedom.

Does anyone really need to think about what the choice should be?



Great quote on socialism:
"The trouble with socialism is that you eventually run out of other people's money."