Policies create need for private loans

Paul Loeb - Seattle

USA TODAY's article on the traps of private college loans was important and timely. But it glossed over specific Republican policies that have created a perfect storm of financial constraints that threatens the already beleaguered access of low-income students to higher education ("Private student loans pose greater risk," Cover story, Money, Oct. 25).

($39,000 in private loans:  Natalie Jones, 19, a sophomore at Boston’s Northeastern University, borrowed the maximum under the federal Stafford loan program and then turned to private lenders to cover her tuition and other costs. / By Mark Edward Garfinkel for USA TODAY)

The article mentioned the drop in Pell Grant funding. These grants have been underfunded for years, but the situation has been made worse by Congress cutting $12.7 billion last year in federal student financial aid to help pay for the Iraq war and for over $100 billion a year in top-bracket tax cuts. It mentioned the bankruptcy laws, but not how they were lobbied through by immensely profitable credit card companies that will gleefully offer a credit card to your dog, cat or 12-year-old, and that donated massively to Republican coffers to ensure that if individuals went bankrupt they'd be indebted to them for life.

The third aspect is the ban on federal financial aid to students with drug convictions. It has no impact on affluent partiers — such as the president when he was "young and reckless" — but more than 200,000 students have lost their assistance since it went into effect.

Put the most recent changes together and the land of opportunity threatens to become dangerously less so for anyone but the already privileged.

Understand loan's terms

Donald J. Boudreaux, chairman, Department of Economics, George Mason University - Fairfax, Va.

USA TODAY reports that "consumer advocates and student groups worry that the growth of (private student) loans could prove disastrous for borrowers who don't understand the risks."

Well, yes.

Any contractual agreement can prove disastrous for a contracting party who doesn't understand it. But, presumably, people smart enough to attend college are smart enough to grasp the terms and implications of a loan agreement. Those few persons who aren't capable of such understanding should not apply for these loans, much less for admission to college.