Extravagant Education
“Laws for the liberal education of youth, especially for the lower classes of people, are so extremely wise and useful that to a humane and generous mind, no expense for this purpose would be thought extravagant.”
John Adams
The above quotation is a favorite of mine from John Adams. In part, it explains why I went into the business of providing financing for the higher education needs of families. Lately, I know I have been just responding to media reports about the student loan industry. Now, I want to spend a little time writing about why we do what we do at Nelnet.
At Nelnet, we are committed to helping students obtain an education and, moreover, the chance for a better life. It is important to me that the core value of what we do here every day is not lost amid the myriad of issues currently surrounding the private-sector lending industry.
In the U.S., our higher education system has helped make us a great nation. It is manifest then that under our system every American should have an opportunity to earn a quality college education. Yet, at the same time, the cost of a higher education continues to increase (in some cases at twice the rate of inflation), and financial aid resources are not keeping pace with tuition. This has made it difficult – if not impossible – for all Americans to afford and have access to a college education.
We must, therefore, increase access for low- and middle-income families, because even with significantly higher costs to obtain a higher education, it will be the best return on investment that anybody could make in their lifetime. And this is an investment that we want to help more and more Americans make.
In the 2005-2006 academic year, the Federal Family Education Loan Program (FFELP) lenders provided 6.5 million students and their families with $52.5 billion in loans, accounting for more than 75 percent of all student loans. With enrollment in higher education expected to increase by 15 percent between 2003 and 2014, the role that student loan lenders such as Nelnet will play in helping students go to college will necessarily become increasingly more important.
If you go back to 1965, the average person had to work 500 hours to send their child to college for one year. Today, the average person has to work close to 2,000 hours to send their child to college for one year. Consequently, the only way that many students and their families are able to afford a higher education is to borrow some money.
This fact makes it ironic that Congress will soon vote on the largest budget cuts in the history of the federal student loan program. By doing so, they will take away loan financing choices from students and their families and increase college costs for millions of Americans. Fortunately, there are people who understand the reality and implications of this situation. Senators Richard Burr (R-N.C.) and Ben Nelson (D-Neb.) have proposed an alternative that will preserve choice and competition, and I highly recommend everyone support it.
Lenders like Nelnet support the Nelson-Burr amendment, because we know we provide the best options to help families and students effectively plan for college. We can specialize and recommend financing options from the available programs that best suit a family’s circumstances. This is because the private sector possesses the agility and expertise necessary to fulfill a variety of financial needs. The government does not. It would, then, be a shame if one entity – a federal bureaucracy – provided and administered all student loans, a job they really cannot handle.
I just wanted to spend some time making that point. Over time, we need to make higher education more affordable. In the meantime, we at Nelnet are going to try our hardest to help families pay for their educational dreams today. Thank you.Labels: direct loan programs, FFELP, student loans
posted by nelnet at
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