The title of this story is misleading.
The fact that these student loans are "government backed" is IRRELEVANT to the key issue at hand.
Previously the banks were the "loan servicing agents". The loans were STILL "government backed".
President Obama advocated that the "bank middle man" be removed and that a government agency directly service the loan.
The partisan banter broke along the lines of "the banks" or "the government" as the "customer service" agent to which you send your check to every month, etc.
Behind this story is the real world evidence of how people who are laced with expensive government loans are not making enough money to pay their loan obligations.
We keep getting lulled into devise arguments:
- The Banks vs the Government
- For Profit Schools or State Schools/Private Schools
- Subsidized Student Loan Interest Rates at 3% or allow it to rise to 6%
It is clear that with so many students unable to pay their loans due to their job situation - the Federal government BACKING will be yet another draw upon the balance sheet of the nation.
Where is the front end push back against people who go to expensive schools on the hopes of making it big upon graduation? Maybe there needs to be some "risk mitigation", imposed by the government.
We hear attacks upon "for profit schools" because they have low intake standards and, if left unchecked they rake in revenues for the school only to have their students not find a job, the government is left holding the bag.
Since even "not for profit schools" receiving their check at the front end - how are they any different?