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FOR IMMEDIATE RELEASE
April 16, 2007
Contact: Tim Rusch, Demos
Tel: (212) 389-1407 Email: trusch@demos.org
TAMARA DRAUT, AUTHOR AND YOUNG ADULT ECONOMIC EXPERT AT DEMOS, ISSUES STATEMENT ON COLLEGE LOAN SCANDAL:
"Another sign that our debt-for-diploma, PROFIT-DOMINATED FEDERAL student AID SYSTEM needs serious reform"
New York, NY--In light of the ongoing student loan scandal uncovered by New York Attorney General Andrew Cuomo, Tamara Draut, Economic Opportunity Program Director at Demos and author of "Strapped: Why America's 20-and 30-Somethings Can't Get Ahead , issued the following statement:
"The recent investigation by the New York Attorney General has revealed yet another deep flaw with our current system of federal financial aid. Unfortunately, federal grant aid and subsidized student loans have dwindled while tuition has more than doubled over the last 20 years. In response, our federal aid system has become too defined by debt and private lenders, abandoning its original mission of making college affordable and accessible for America's young people.
"With the revelations that financial aid offices promoted certain student loan issuers in exchange for fees, students are finding out that they might not be getting the best dealadding insult to injury, considering the growing financial burden young college students face.
"Add to that the evidence of large stock transactions between student loan issuers and some Department of Education and university officials, and this scandal shows how the $85 billion a year student loan industry is starting to mimic the aggressive, profit-at-any-cost behavior of so many other lending institutions.
"For too long, federal financial aid has been dominated by the profit motives of the lenders rather than the needs of the students. This is yet another sign that our debt-for-diploma, profits-dominated federal aid system needs serious reform, and it is time that we look at alternatives, such as the Direct Student Loan Program and others which would eliminate the subsidy-rich relationship between our government and student lenders.
For more information on young adult economics and the costs of higher education, visit www.demos.org.
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