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Saturday, September 12, 2009

KELO Airs GOP Argument Against Student Loan Reform as "News"

Let me check: is KELO still a CBS affiliate? Or did Fox buy them?

Senator John Thune and the GOP just got a lengthy and free political advertisement from KELO. Angela Kennecke put together a 3-minute-37-second feature on President Obama's proposed direct student loan program. (When Angela or Don steps out from behind the anchor desk, you know it's a big story.)

Is this program a good idea? Well, from the KELO story, I really can't tell. Kennecke mentions that the plan might save $90 billion that could be directed toward increasing Pell grants, but we get no sources on that side of the story. All of her sources are people who don't like the President's plan: Senator Thune, Augustana financial aid officer Brenda Murtha, and an oddly anonymous laid-off Citibank worker. And they're all convinced President Obama and those darn Democrats are going to drop the other shoe on us and hurt competition and college kids and, as usual, cost us South Dakotans thousands of good jobs in the usury industry.

(By the way, Credit CARD Act of 2009 has been in effect for three weeks, and still no mass layoffs.)

In an abdication of good journalistic practice, KELO doesn't cite one source on the "pro" side of the student loan issue. They might as well be bloggers, right?

I guess that's why we have bloggers: to offer information to balance the bias in the corporate media:

President Obama's push for direct student loans is actually an effort to expand a program created by President Clinton and end a government subsidy to private lenders. Think about this: if the government is offering a service, why subsidize a middle man to skim some profit off the deal? Why not save the subsidy and just get the job done? Sounds like a great way to save students and taxpayers money and send more people to college. According to USA Today, some colleges agree. The number of colleges doing direct government loans last year jumped 50% as the credit crunch made lots of private lenders decide they weren't terribly interested in promoting the general welfare and taking on student borrowers.

The New America Foundation thinks eliminating subsidized federal student loans and moving to the direct lending program is a good idea, though it will be a hard fight in the Senate to get it past the private student loan lobbyists (Senator Johnson, pay attention!). President Obama's plan is a gutsy proposal that creates a less costly, more stable student loan program and strengthens Pell grants... without raising taxes!

Sounds like a heck of a deal... and a side of the story we sure didn't hear last night from our professional journalists.


  1. Corey, clearly the reason that KELO didn't give the pro side of the argument is because of the "Liberal Bias" in the news media. Clearly they have an agenda...(note, there is a lot of sarcasm in this post)

  2. Collegeloanconsultant:

    The default rate is ~5%:


    which I image is due to them not really being discharged except under extreme circumstances. Still, private institutions enter the program because they can make some coin. Also, from a lender stand point, the most they can lose is 3%, right? What other type of loan has such a low risk and high rate of return (~8% interest rate)? It's nearly as good as a CD/Bond with about double the interest rate!

    Besides, what are the lenders doing to earn this money? The risk seems way too low for the reward and competition is nearly eliminated in this sector.


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