Read more: http://huffpostfund.org/stories/2010/01/how-nonprofits-won-special-treatment-student-lending-bill#ixzz0c2PVgMQd Here's the real problem with this sort of half-hearted attempt to reforming student loans: it tries to cure a thoroughly sick system by giving it a vitamin. Higher education should not be distributed on the basis of wealth, but on the merits of the student. In nearly all industrialized countries (and many industrializing countries), this is an obvious fact. This is not to say that other systems don't reproduce class so that the children of the educated tend to be "good students" and the children of the uneducated tend to "fail," but in other systems, higher education is about making the grade, not taking on unbearable debt levels. Free or very low cost university systems create at least the possibility of class mobility. It also frees young people from their "indentured servitude to the man"- allowing them to imagine a better world and a better future without the burden of $100,000 in debt. Obama, a man who loves the middle, cannot fix the problems with higher ed by transferring debt collection from "for profits" to "not for profits." There should be NO debt collection in the first place. But Obama, and our political and educational leaders more generally, are unwilling to admit that the system is so thoroughly broken that we need to trash it and start over. Higher ed should not be something for the rich and upper middle classes, but something for good students who work hard. That's the basis of real democracy. What we have now undermines democracy and forces America's youth into decades of servicing debts for something that should be free and universal.
In an $85-billion-a-year industry dominated by big for-profit lenders such as Sallie Mae and Citigroup, nonprofit lenders have managed to carve out a lucrative niche, with current EFC members reporting about $3.7 billion in revenue on federal tax forms in 2007. Even as their business has grown, nonprofits continue to promote themselves as public-service organizations dedicated, according to the EFC’s Web site, “to the single purpose of making college more affordable.”
But some of them have a checkered past. In recent years, government auditors, state attorneys general and the federal Department of Education have accused many nonprofits of misconduct such as steering students toward high-interest loans, offering cash to universities to drum up student business, providing questionable compensation and perks to top executives and overcharging the government by a total of about $37 million.