Students Approve of Obama's Loan Plan
Harvard students and professors said they favored President Barack Obama’s proposals to end government subsidies to banks that provide student loans and to aid students who choose careers in public service, although some questioned the likelihood that these plans will be enacted.
In his State of the Union address last Wednesday, Obama proposed a policy that would limit students’ debt payments to 10 percent of their discretionary income and forgive all student debt after 20 years—or 10 years for those who pursue a career in public service.
Anthony R. Britt ’10, who plans to work for Teach for America after graduation, said that such a policy might make the choice to work in public service easier for students.
“A Harvard graduate might have a choice between doing something in public service and investment banking on Wall Street... For people from a low income background, while public service might correlate better with their values, they might not be able to,” he said.
Sean M. Cuddihy ’11 said that he is currently confronting a similar choice as he seeks summer employment. “This summer I can apply for an IOP grant to work for a congressman and break even, or I can help my family stay afloat financially,” he said.
But some students expressed reservations about the efficacy of such a policy and the likelihood that it will become law.
“I don’t know that it’s enough to incentivize talented people who wouldn’t otherwise go into public service,” said John Chen ’12.
“I think it’s a good idea,” said Samantha R. Reiser ’11. “But we never come to any consensus on policy like that.”
The President also called for a bill that “will finally end the unwarranted taxpayer subsidies that go to banks for student loans,” proposing instead a $10,000 tax credit for families paying for college and increased funding for Pell Grants to assist low-income students.
Government Professor Theda R. Skocpol called this idea “almost a textbook example of some of the things Obama is trying to do. It would reduce subsidies to the privileged, in this case banks, and...use the money to create broader benefits for the middle class and the poor.”
Under current federal law, the government subsidizes banks that give student loans and promises to repay them if families default, making student lending a lucrative industry, according to Suzanne Mettler, a government professor at Cornell University.
Harvard College Director of Financial Aid Sally C. Donahue noted that the College does not participate in the Family Federal Education Loan program, the bank-subsidizing program Obama has proposed ending. She added that the College’s financial aid consists of grants rather than loans. However, she said that many Harvard graduate students receive federal loans and stand to benefit from the new policies.
“[The proposed policy] “is going to be controversial just like healthcare reform,” Mettler said. “The battle lines are similar.”
—Staff writer Julie M. Zauzmer can be reached at email@example.com.