Senator John ThuneAcross South Dakota, high school seniors are looking to the future, which for many of them will include attending college. Unfortunately the costs of attending college can create a challenging and stressful situation. Many students choose to borrow money for college, but the federal government may soon limit the choice of lenders available.
Currently, students can take out loans from private financial institutions that are then repaid when students finish their studies and start earning money. Students also have the option to borrow directly from the federal government. However, a new proposal championed by President Obama would end the competition between private lenders and the government. Not only would the government be driving private businesses out of the market which could eliminate 35,000 jobs nationwide – including roughly 1,000 in South Dakota, but it would do so at a loss because the reported “savings” would be directed to other programs. Expanding the government’s role in student lending and passing a bill similar to the one already approved by the House of Representatives would likely add an additional $5 billion to our ballooning deficit.
What makes this change in the lending market even more distressing is the fact that Senate Democrats are trying to jam this controversial student lending proposal through as part of the budget reconciliation process that they are attempting to use to pass their partisan health care reform bill. Keep in mind, the budget reconciliation process is designed to give the Senate an option for making difficult decisions related to balancing the budget, not force through major policy changes that will accelerate the growth of our national debt.
The decisions students and their parents face about choosing a college and paying for it are not easy ones. In many cases, private lenders can help students make wise choices with competitive loans and reasonable plans to pay them back. If these private lenders are removed from the market, parents and students will see their choices reduced, their service curtailed, and their educational opportunities diminished.
For many South Dakota students, college represents the next chapter in life. The process of applying and moving away from home can be daunting for some, and in many cases the costs present a challenge. I believe that competition in lending is a good thing, and I will continue working to preserve it.